The Union budget should take a bifocal view of India's economy

It should address near-term challenges while laying the foundation for sustainable economic growth over the medium-term

- ARUN CHAWLA

After three waves of the covid pandemic, the Indian economy has rebounded strongly, with signs of improvement becoming visible from the second quarter of 2021-22. The Centre's focus on reforms and the deft calibration of policies by the Reserve Bank of India (RBI) are paying dividends and India today is in an advantageous position. With growth expected at around 7% in the current fiscal year, India will rank among the world's fastest-growing economies. India, however, has not remained sheltered from intensifying external headwinds. Geopolitical tensions, especially due to the Russia-Ukraine conflict, have caught the world in a frenzy of supply-chain disruptions, commodity shortages and inflationary spikes. It has caused a severe shortage of critical raw materials for Indian industry, leading to skyrocketing input prices. With the world already struggling to recover from covid waves, these additional shocks have triggered a global slowdown and the outlook for 2023 is worrying. A slowdown in the growth performance of India's major export partners has impacted our trade prospects, which is a reflection of the second-degree impact of persistently high inflation in the developed economies of the West. Add to this recent developments, such as the resurgence of covid in China and its larger ramifications. This economic backdrop should play an important role in defining the contours of the upcoming Union budget. Overall, the budget proposals for 2023-24 should address near-term downsides while laying the foundation for a medium-term upside. If this is done, it would prove to be a ladder in the economic board game.