Finance Minister Nirmala Sitharaman will present the Union Budget on Wednesday. This will be the last full-fledged Budget before the upcoming 2024 Lok Sabha election. In the economic front, although India is doing quite well, the shadow of another global economic slowdown is looming. Inflation is bit under control, but the twin deficit situation, dull exports, growth revival, etc. are some major challenges lying ahead of us.

Retail inflation for December fell to a one-year low of 5.72 percent, compared to 5.88 percent in November and 5.66 percent in December 2021. Ahead of the Budget, these figures will certainly provide some relief. They are now within the RBI’s tolerance band of 2-6 percent. Also, the IMF on Monday, while viewing that India’s growth trajectory will continue in 2023, estimated that India’s inflation will come down to 5 percent the next fiscal and to 4 percent in 2024.

Meanwhile, our current account deficit (CAD) in July-September of the current fiscal doubled to $36.4 billion from $18.2 billion from the first quarter of the fiscal. This is a concern, although the RBI Governor last week claimed that it is "eminently manageable and within parameters of viability" as strong services exports and remittances will help to mitigate the impact of slowing merchandise exports on external deficit due.

Merchandise exports has for quite some time driven India’s growth, but now amid fear of a global slowdown, the situation is expected to change and the sector at this juncture needs major support. While according to experts, GDP growth may be lower than the 7 percent this year, in a similar tone the IMF today predicted that India’s growth will slow down to 6.1 percent in 2023 from 6.8 percent in 2022. In the background of this, it will be interesting to see what the Budget 2023 has in store.

I invite your opinions.