Of waves and undercurrents

Budget 2023 will not just be about controlling prices and the recession round the corner. It will set the direction the Indian economy will take in the new world order

- K. SUNIL THOMAS

FORGET COVID WAVES; it is time to ponder over the waves and undercurrents of the river. The river of economics we all are swimming in, that is. Sanjay Kumar, a tax and public policy veteran and a former bureaucrat, uses the analogy to convey the mood on the eve of this year's union budget.

THE WAY OF WATER

"Growth is like the water flowing in the river. As long as there is water in the river, we can manage the economy. But if the water dries up, [the pebbles and rocks on the river bed] will hurt us.," Kumar, now a partner with Deloitte India, said.

It could well be a case of your river being half full or half empty, depending on how you look at it. Referring to all the business confidence and CEO surveys pouring in expressing optimism about stellar growth in the coming financial year, Indian economy's future sounds all hunky dory in the year of a possible recession-good (news) enough to warm the cockles of Finance Minister Nirmala Sitharaman's heart. The river is full and flowing, and hey, $5 trillion economy, here we come sailing in, it would seem.

But there are also the veritable pessimists in the mix, who see the river not just half empty, but running shallow. They point to the over-the-board spending the government was forced to do in the Covid years, which saw fiscal deficit (the gap between the money government spends and the money it earns via taxes) shooting up to 9.3 per cent. The recommended upper limit is 3 per cent. Right now, even the best estimates are that it will not fall back to the recommended level for at least another three years.

Or the current account deficit (the difference between the country's exports and imports) being at a nine-year high. 'Private consumption, the term that refers to spending by the common man, an important requisite for any economy to be buoyant, has not yet picked up despite some 'revenge buying' and festive season spurts.