New Delhi, Jul 27 (IANS): Amid concerns that India may not be able to meet its fiscal deficit target for this fiscal, Finance Minister Pranab Mukherjee Wednesday said tax collections, especially from services, were encouraging.

Starting his press conference here with the proverb: "When going gets tough, the tough get going", the finance minister said the growth in direct tax mop-up in the first quarter was 26 percent and from indirect taxes it was higher at 30 percent.

"There is all-round revenue buoyancy," Mukherjee said, adding: "An important point to be recognised is that service tax growth is encouraging and I welcome this because services have been contributing substantially to the overall gross domestic product."

In its monetary policy update Tuesday, the Reserve Bank of India (RBI) had said the the federal government's revenue and fiscal deficit in the first two months of 2011-12 were higher than the levels in the corresponding period of the previous year.

Stating that this reflected both lower revenue receipt and higher expenditure, the apex bank said up to July 18, the federal government had also completed 34 percent of its net market borrowing programme, against 37 percent in the like period of last year.

"The central government has budgeted a fiscal deficit of 4.6 percent of gross domestic product for 2011-12. Subsequent developments have made the achievement of this target much more of a challenge."

Mukherjee, nevertheless, said India has been able to bring down its fiscal deficit from 6 in percent of the gross domestic product in 2008-09 to 4.7 percent in 2010-11, after a step up to 6.6 percent in 2009-10.

"Therefore, the process of fiscal consolidation, which we thought absolutely necessary to maintain fiscal discipline and also to have growth on a sustainable basis is on," the finance minister added.