Rejoiced by a booming economy and resultant buoyancy in tax revenues, Finance Minister P Chidambaram said on Wednesday fiscal discipline had paid rich dividend, with both fiscal and revenue deficits being reined in much below the target.

The fiscal deficit during 2007-07 was cut to 3.7 per cent of growth against the targeted 3.8 per cent, while the revenue deficit at 2 per cent was below the target of 2.1 per cent.

It hopes to beat its own performance next fiscal by bringing down fiscal and revenue deficit to 3.3 per cent and 1.5 per cent of GDP respectively -- a move that would help the government cut down its dependence on borrowing.

Had it not met the target set under the FRBM, the government would have found the challenge of containing inflation much daunting.

"I am happy to report that we are on course to achieve the FRBM Act targets," Chidambaram said.