Budget balanced, neutral to equity market: UTI MF

Mumbai, Feb 29 (UNI) The Union Budget 2008-09 has tried to achieve a balance between the objectives of control of inflation and maintaining growth in the economy, but is largely neutral to equity market, according to UTI Mutual Fund.

The Budget has reduced excise duty on various classes of consumer goods such as auto and pharmaceuticals that should propel consumer demand and help ease the effect of inflation, UTI MF said in a release here today.

Nevertheless, this budget has expressed the intentions of the Government regarding the forthcoming general elections, it said.

UTI MF Equity Head Anoop Bhaskar said, ''We find that the Government's emphasis on agriculture sector and the loan waiver scheme has been designed to address the needs of large segment of agri-based community and the 'aam aadmi'.'' On the negative side, the lack of any economic reforms, lack of initiatives in infrastructure segment, barring expression of intention for five further Ultra Mega Power Projects (UMPP), have come as a major disappointment, Mr Bhaskar asserted.

He said there was a fierce debate on the issue of debt waiver schemes announced for marginal and small farmers. Based on the interaction with the PSU Bank's management, it was expected that the Government will make budgetary provision to enable banks waive-off the outstanding amounts.

However, post budget, the Finance Minister has mentioned a lack of budgetary provision for this populist move, which could expand fiscal deficit to GDP ratio by one per cent, Mr Bhaskar said.

The increase in personal income tax slab will save Rs 44,000 to 47,000 as income tax in the hands of the assessee based on their gender (for taxable income upto Rs 5 lakh). This could spur personal consumption, as the disposable income will increase, he added.

''There is no change in corporate tax and surcharge. However, the cascading effect of Dividend Distribution Tax from subsidiaries to parent companies has been removed by allowing an offset mechanism,'' Mr Bhaskar said.

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