If i enable diagnostic setting for vm in azure and send it to storage account.
I can't able to specify retention period.
Should we manually delete the older logs.
Yes, if you send the logs to storage account, there is no way to configure the retention day. You need to delete it manually.
But there is a feature azure storage lifecycle management, you can use this feature to define a delete policy. For example, define a delete policy for a specific blob/container which can be deleted after x days.