Govt should be able to keep fiscal deficit target of 3.2-3.3%: JPMorgan

Jahangir Aziz of JPMorgan is expecting the government to maintain fiscal deficit target of 3.2-3.3 percent.

“We do expect the government to make it (fiscal deficit) to 3.2 whether it is through finding new sources of revenue in the last few months or through contraction expenditure, most likely you will get 3.3 or slightly higher than 3.3 for the central government,” he said.

Indian economy is expected to grow at 7.2 percent in 2018-19 against 6.7 percent in the previous fiscal mainly due to improvement in the performance of agriculture and manufacturing sectors, the Central Statistics Office (CSO) said on January 7.

The CSO estimate is, however, a bit lower than 7.4 percent growth projected by the Reserve Bank for the current fiscal.

“I have stopped focusing on levels of growth numbers given the uncertainty associated with them. So let us just focus on the trajectory of it. We had a decent first half and clearly there is a slowdown in the second half. At least the slowdown in the second half is consistent with what is happening elsewhere in the economy, what is happening to credit numbers, what is happening to credit situation including what has happened to global trade, which has slowed down quite a bit. So at least we have the first half and the second half consistent, which is a relief. The way we are looking at it, this slowdown is probably going to continue till the second calendar quarter of 2019. So the first quarter of next year and then once the impact of the liquidity and the financial conditions tightening fade, we should see some recovery beginning in the second half of calendar 2019,” said Aziz.