India's macroeconomic challenges deepen

The deteriorating world outlook has added to the complexity of macroeconomic policy-making

Against the backdrop of sharply slowing economic growth over 2018-20, the Covid/lockdown shock of 2020-21, the K-shaped recovery thereafter and the legacy of record fiscal deficits and government debt-GDP ratios, fiscal year 2022-23 (FY23) was always going to be challenging for macroeconomic management. After the Union Budget a couple of months ago, I expected real GDP growth in FY23 to be about 7 per cent (mainly thanks to the low-base “benefit” of the Delta shock in 2021-22 Q1), inflation, as measured by the broad-based GDP deflator, to be around 6-7 per cent and nominal GDP growth to be 13-14 per