Capex orientation of Budget to support growth amid geopolitical turmoil, says Finmin report

New Delhi: 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.

"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.

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.