Deficit figure projected by Economic Survey an intriguing one: Sajjid Z Chinoy, JP Morgan

In a chat with ET Now, Sajjid Z Chinoy, Asia Economics, JP Morgan, talks about the Economic Survey 2014-15. Excerpts:

ET Now: Your reactions to the initial GDP number as well as the fiscal deficit number?

Sajjid Z Chinoy: The fiscal deficit number is quite intriguing. The 14th Finance Commission was quite direct about the fact that you need to reach 3% in two years’ time. Now, if medium term is seen to be a longer that that, then this target will be possible to achieve.

Next year’s deficit number may not necessarily be 3.6%; there could be some relaxations. I actually think this is one of those years when despite positive GDP numbers, economic conditions on the ground appear quite depressed.

Whether or not the number is 3.6% or 3.9% is less important. More important is the assumption that the revenue side looks realistic and credible. It's important that fiscal space is being created to jump-start public investment.

Investors around the world will be more focussed on these kinds of questions. Of course, ideally you would want the government to stick to the 3.6% target. Otherwise, fiscal credibility will be at stake.

However, for the sake of arguments, even it deficit climbs to 3.9%, I don't think heavens will fall down as long as the pre-conditions on revenue and fiscal space are met.