New Delhi : In the fiscal year 2022-23, India’s economy is expected to grow at 7 per cent while retail inflation would moderate despite global headwinds, said the Finance Ministry on Monday.

It would be in line with wholesale inflation which fell to a 25-month low in January.

India’s current account deficit is estimated to fall in FY23 and FY24 supported by the gains from high services exports, the moderation in oil prices, and the recent fall in import-intensive consumption demand.

It will provide a buffer to the rupee in uncertain times, Monthly Economic Review by the ministry said.

This will provide a much-needed cushion to India’s external sector at a time when the Fed is likely to raise rates further and ensure that India’s external finances are not a major cause of concern, it said.

The jump in net service exports over the previous year is a critical development as India increases its market share in both IT and non-IT services, whose demand has been triggered by the pandemic, it said, adding, imports are also less costly now with the easing of global commodity prices.

“With a manageable current account deficit and a growth rate highest among the major economies in FY23, the Indian economy has shown a new-found resilience in sailing through the turbulence caused by the pandemic and geopolitical stress,” it said.

Macroeconomic stability is likely to receive a further boost in FY23 as the current account deficit is set to narrow from the year-beginning estimates, it added