Samir Bimal, Country Head, ING Private Banking India

The Union Budget for 2011-12 would be prepared on the back of challenging macro economic environment such as high inflation, interest rates, high current account deficit, IIP coming down etc., besides State elections during May-June. The next financial year would also be the last year of the 11th Five Year Plan. The high fiscal deficit would restrict effective management of inflation by monetary policy. The supply side inflationary pressures may be addressed by committing more resources to capital expenditure. The food inflation is a serious concern and the Prime Minister said a lasting solution to tackling high food inflation lay in improving farm productivity. Hence more budgetary push for increasing productivity is expected viz. agriculture research, tax benefit on agricultural tools and other mechanization equipment etc. In view of the above, the finance minister is expected to present a more balanced budget with a priority to keep fiscal deficit under control while facilitating inclusive growth.