Budget 2012-13: Fiscal deficit not necessarily a problem for India, says Shankar Sharma

NEW DELHI: Even with the fiscal deficit ballooning out of control, Shankar Sharma, Chief Strategist, First Global is of the opinion that India as a country is doing fine in terms of the macroeconomic fundamentals. In an interview with ET Now on his pre-budget expectations Sharma said, " You might have some slippage on the fiscal deficit but if you go back to the history of India, fiscal deficit has always been a problem that has not prevented the markets from doing well."

Deficit is not necessarily a problem in a growth country growth economy like India he adds.

"What is more important is if the deficits were to be accompanied by rising interest burden and a rising public debt to GDP ratio and both those ratios have improved dramatically in the last 10 years time," he said.

He dismissed concerns on a fiscal deficit target of 4.5% becoming 5% or 5.2%. He says that the country has seen big downtrends in public debt to GDP down from 90% 10 years back to 62% now. "Interests as a proportion receipts used to be 50-55% 10 years back, that is now down to 32%. I am very comfortable if for a year or two we have a problem situation on the fiscal deficit because I focus more on the gross leverage in the economy and that is very comfortable." he opined.