"Restoring the health of public finances is one of our topmost priorities... The encouraging growth in tax collections during the current year has made us cautiously optimistic about achieving the budget targets," he told the economic editors conference in New Delhi.

Referring to the Fiscal Responsibility and Budget Management Act that came into effect this year, he said "the rules mandate us to reduce the revenue deficit by 0.5 per cent of GDP and fiscal deficit by 0.3 per cent of GDP at the end of each financial year."

The government targets to bring down revenue deficit to 2.5 per cent and fiscal deficit to 4.4 per cent in 2004-05.

Elaborating on various fiscal measures, Chidambaram said the National Institute for Public Finance and Policy has prepared a report on effective targeting of subsidies. "The report is currently under examination before it is placed before Parliament," he said.

While stressing on higher growth on the back of a global economic recovery, Chidambaram said the country needs to move forward with more bold reforms.

"It is an opportune moment for India to expand business with the rest of the world by taking advantage of the existing policies that aim at facilitating global integration. We should also go forward with more bold reforms," he said.