New Delhi, Mar 15 (PTI) The capital expenditure (capex) orientation of the Budget will support growth amid geopolitical turmoil and volatility in financial market, a finance ministry report said.

Real GDP estimates for Q3 of 2021-22, at y-o-y growth of 5.4 per cent, is reflective of a strong growth momentum, which has been aided by rapid vaccination coverage and accommodative monetary and fiscal policy support, as per the monthly Economic Review prepared by the ministry.

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"Recent geopolitical developments have introduced an element of uncertainty into the economic growth and inflation outlooks in the new financial year," it noted.

The geopolitical crisis is still evolving and these are early days to make a plausible forecast of its impact on India's economy in the year ahead, it said.

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However, it said, the Budget with its capex orientation and prudent assumptions along with strong macroeconomic fundamentals will support growth and provide a floor to it amidst global political turmoil and likely higher volatility in financial markets.

The second advance estimates of GDP released on February 28 have reaffirmed full recovery of India's economy, with real GDP of FY 2021-22 estimated to go past the output of the most recent pre-pandemic year of 2019-20, it said.

It further reaffirms the completion of the recovery as early as at the end of the third quarter itself, with real GDP in the first nine months of the current year nudging the corresponding output level of 2019-20, it said.

The fact that the implied real GDP in the fourth quarter of the current year is also ahead of the corresponding output level of 2019-20, shows that the Omicron variant of COVID-19, that peaked in the second half of January, 2022, has had a negligible impact on the activity levels in the economy, the report said.

Observing that India has braced well to meet the impact of rising commodity prices, the report said foreign exchange reserves continue to be at a record high and are large enough to finance more than 12 months of imports.

Foreign investors have largely stayed invested in the economy as the exchange rate depreciates on a flatter trajectory shaped by exceptional growth of exports.

External debt, it said, with one-third of its value denominated in Indian currency, is considerably light at 20 per cent of GDP to accommodate deterioration of trade balance, if any.

Economic activity continues to recover with upswing in mobility, resilient power demand, healthy toll collection and e-way bill generations.

Sustained momentum in GST revenue collection with year-on-year growth of 18 per cent mobilising Rs 1.33 lakh crore in February 2022 also bespeaks growing business and trading turnover going beyond the festival season, it pointed out.

"Headline CPI inflation averaged 5.4 per cent for the period April-February 2021-22 as compared to 6.2 per cent in the corresponding period last year. Measures taken by government like imposition of stockholding limits on edible oils, open market sale and rationalisation of tariff and cess have aided stability in prices of essential commodities," it said.

For the coming fiscal year 2022-23, RBI has projected CPI inflation at 4.5 per cent with risk broadly balanced.

To help nurture growth, systemic liquidity continues to be in surplus, it said.

The agriculture sector has witnessed continued growth momentum with Rabi sowing registering a YoY growth of 1.5 per cent in the current year, and record sowing achieved in case of oilseeds.

The increase in acreage along with sufficient reservoir levels, normal rainfall and moisture conditions indicate reasonable prospects for Rabi crops.

With higher output of Kharif crops and record acreage under Rabi crops, total foodgrain production in 2021-22 is estimated to reach a record high.

Further, increase in MSPs for both kharif and rabi crops in 2021-22 and ongoing procurement under Kharif marketing season (KMS) benefitting 1 crore farmers so far, have also raised rural incomes, it said.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)