The advance gross domestic product (GDP) estimates for the current year, put out by the Central Statistical Organisation (CSO) earlier this week, is usually the first step to the formation of the union budget numbers.

On January 7, CSO said the nominal GDP for the current year grew by 7.6 percent to Rs 204 trillion. Last year's budget estimated that in the current year, the nominal GDP will grow by 12 percent to Rs 211 trillion. So the GDP number is Rs 7 trillion less than what the budget had estimated and therefore, the fiscal deficit willy-nilly becomes not 3.3 percent as originally put in the budget but 3.5 percent which is just an arithmetic calculation.

Now with the Rs 204 trillion with us, the budget has to estimate, what will be next year's nominal GDP growth and also what is the working fiscal deficit that it can go with. The key question that will be thrown up is, what is the rate of growth to assume in the first place?

Secondly, should one go with this 3.5 percent fiscal deficit for the current year and therefore work it lower to 3.2 percent as the Fiscal Responsibility and Budget Management Act (FRBM) would require or should the budget use the escape route given by the FRBM and take that 0.5 percent increase in fiscal deficit that it allows in a very difficult year?

To answer these questions Latha Venkatesh spoke with Pronab Sen, former chief statistician; Sudipto Mundle, former chairman of National Statistical Commission and Abhishek Upadhyay, senior economist at ICICI Sec PD.