Balancing between growth and inflation: IIFL

IIFL has come out with a report on Union Budget Preview 2011-12.

Union Budget Preview 2011-12- Balancing between growth and inflation:

The Union Budget 2011-12 will revolve around fiscal consolidation, inflation control, administrative checks and inclusive growth. We do not anticipate any major roll-back of stimulus (indirect taxes) since some concerns lurk about pace of economic growth in 2011. Further, given the upcoming elections in key states, the Government will, in all likelihood, follow certain populist measures. Notwithstanding fiscal pressures, we believe the Budget presents a golden opportunity to the incumbent Government to send a strong signal on the policy front. All-in-all, the Budget is expected to be a mixed one with a marginal positive bias.

Direct tax: Raising of personal income tax slab for lower income group:

Inflation pressure is resulting in low income groups spending a bigger share of their wallet on food and other basic necessities. The Government will look to appease this class of people, especially with key states going into elections soon. We expect an increase in personal income tax exemption limit, for the lower income bracket from Rs 160,000 to Rs 175,000-180,000. The Government can afford this largesse given last year

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