8% GDP growth as projected by Economic Survey looks achievable: Sonal Varma, Nomura

In a chat with ET Now, Sonal Varma, ED & India Economist, Nomura Financial Advisory and Securities, talks about the Economic Survey 2014-15. Excerpts:

ET Now: What is your take on the GDP number which the Economic Survey seems to be projecting for FY16? Won't 8% be a bit ambitious?

Sonal Varma: Obviously, there has been a big shift between the old and the new GDP numbers. As per the new GDP numbers, the actual value addition in the economy was already growing — or is expected to grow at 7.5% — this year.

Going by the old numbers, our expectation was 5.5% growth for FY15, and about 6.5% for FY16. So, as far as the new numbers are concerned, 8% is clearly achievable. So, this number is quite realistic based on the new GDP numbers.

ET Now: The survey says that the government expects a huge surge in revenue from spectrum sale and coal block auctions. But is this really revenue? Ideally, isn't the government's revenue supposed to come from tax?

Sonal Varma: That is how most multilateral agencies and rating agencies look at it. They remove the amount that the government receives from asset sales.

What you say is basically true, but there are huge segments of the population that still do not pay taxes. Tax penetration in the services sector still needs to increase quite substantially in India. Even some rich farmers do not pay taxes.

In such a backdrop, using asset sales to shore up revenue is not outright wrong. But it can't be used to kick-start public investment and infrastructure spending.