The Reserve Bank of India on Friday said fiscal deficit situation would be better than the budget estimate of 5.6 per cent of GDP for 2003-04, while inflation rate will start falling in the coming days.

Despite the cuts in custom duties and other sops announced by Finance Minister Jaswant Singh last week, RBI Governor Y V Reddy indicated it would not have an adverse impact on the government finances.

"We had discussions with the finance ministry on this issue and the outlook would be better," Reddy told reporters on the sidelines of a function organised by Bombay Management Association to felicitate former Governor Bimal Jalan in Mumbai.

Inflation, which is currently ruling high at over 6.0 per cent, is expected to fall and should range between 4-4.5 per cent by the end of this fiscal, he said.

"By the current assessment, we do not expect any additional borrowings by the government despite a range of duty cuts announced last week," Reddy added.