Besides, the 4.1 per cent fiscal deficit target for the current financial year is "challenging but achievable", the report said.
"While the FY15 targets are challenging, recent steps on fuel reforms, coupled with austerity measures, could enable the govt to meet its 4.1 per cent fiscal deficit estimate," it said.
As per the official data, fiscal deficit has touched 82.6 per cent of budget estimates for 2014-15 to cross Rs 4.38 lakh crore at the end of September.
For entire 2014-15, fiscal deficit -- gap between government expenditure and revenue -- has been pegged at Rs 5.31 lakh crore or 4.1 per cent of GDP.
To reduce the fiscal deficit to the 7-year low level, the government had announced a slew of austerity measures aimed at cutting non-plan spending by 10 per cent. According to Citigroup, such an initiative "could lead to an expenditure cut of Rs 400 billion or 0.3 per cent of GDP".
As per the austerity measures, the government has banned first class air travel for bureaucrats, meetings in five-star hotels and purchase of cars. It also decided to freeze new appointments.
"Over the medium term, fiscal reforms such as subsidy rationalisation, Goods and Services Tax, expenditure commission review could enable the govt meet its fiscal consolidation goal of a 3 per cent fiscal deficit by FY17," the report noted.
The government had put in place a fiscal consolidation roadmap as per which the fiscal deficit has to be brought down to 3 per cent of the GDP by 2016-17.