Building resilience for the long game

The Budget should focus on keeping the domestic house in order. If it manages to do so, then India could attract large capital inflows once the global shocks fade

India’s coming Budget will be presented against a crucial macro-political backdrop. This will be the last full Budget ahead of the 2024 general elections, but the economic backdrop is equally important.

The economic backdrop

2023 is likely to be a year of global economic slowdown, with the impact of one of the most synchronised and aggressive monetary policy tightening cycles still to be felt. Our baseline view is a mild recession in both the US and Europe, with global gross domestic product (GDP) growth slowing below trend to 1.8 per cent year-on-year in 2023, from 3.2 per cent in 2022.