The Budget of the Middle Class | Vidyut Kale

The Budget of the Middle Class

India's Finance Minister P Chidambaram poses as he leaves his office to present the 2013/14 Budget. Photo by Shailendra Pandey/Tehelka

Finance Minister P Chidambaram on his way to present the Union Budget 2013. Photo: Shailendra Pandey

Yet another budget, yet another highly predictable tamasha. Even as Chidambaram was speaking, TV Channels had already taken off with their captioned mourning dotted with quotes from the “middle class aam aadmi”. I will leave the merits of the budgets to better experts, but what I saw of the people was less than graceful.

My first impression of the media cacophony was that it seemed highly organised. Almost all channels were saying almost the same thing. Mainly:

  • No relief for the middle class (other than a piddly little two thousand or so for incomes under 5 lakhs)
  • Taxes gone up on things the middle class needs – AC restaurants, mobile phones imported cars and what not.

In other words, this was a disappointing budget.

My default suspicious nature meant that when a conclusion was pushed this early on into the situation and so comprehensively, the urgent question was what else is there.

I found myself vaguely disappointed that very little was said about the significance of the budget for the lower classes – which actually form the vast majority of India’s population. There was less than nothing said about the super rich as in the really super rich. Not the 1 crore guys, but as Shekhar Kapur put it, the 1000 crore guys. This is one cat we never touch. Let alone bell.

There seemed to be vague noises about “pandering” to populist sentiments, an “election budget” etc, but frankly, the amounts did not seem unreasonably inflated considering inflation. The budget presented amounts that got trimmed down quite drastically, I think.

For example, these values are highly unlikely to be “pandering to the masses”

  1. Agriculture and Allied Activities got 16,194 crores in previous budget, but 15,971 in this one.
  2. Irrigation and Flood Control got 506 crores in previous budget, and 428 in this one
  3. Rural Development got 47,471 crores in previous budget, but 43,704 in this one.
  4. Ministry of Tribal Affairs came down from 1562 crores to 1427 crores
  5. Ministry of Rural Development came down from 66,638 crores to 55,000 crores.

In each of these cases, the budgeted amounts were more than the previous year’s amounts, but the revised amounts were less. Some of these areas can be considered to be crisis situations. We have drought like conditions and issues with water in many parts of the country. Agriculture and manufacturing sectors have not been able to add any jobs since 1995… so this is most certainly not an election budget in the sense of depriving the middle classes to spend on the vote banks, but I’ll leave it to the opposition to find a way to interpret this to taste.

What was shocking was the idea that people earning over 5 lakh rupees a year are middle class (and thus middle class is not helped by this budget). An income over 5 lakh a year is over 42 thousand rupees a month. This amounts to more than 1366 rupees per day and is about 40 times our poverty line and hardly a symptom of middle class – generally understood to be living with modest means and barely covering essentials. To imagine this bracket as somehow harmed by this budget is beyond bizarre and it was quite astonishing to see the debates fixate on it.

I lack the understanding to analyze a budget with any authority, but it seems to me that the larger problem is one of priorities and implementation. With the amount of money wasted, lost, badly used, what the budget says is hardly going to matter more than which department or ministry gets to misuse it. What is more necessary is using it wisely, which is something today gives me no idea about.

There is also a need for a national level dialogue that establishes the needs of the nation correctly and is transparent and unapologetic about putting needs assessed as more grave as priorities, so that the “expectations” of what a budget must do for people are more rational and there is a sense of India rather than seeking advantages for “people like us”.

There is also a need to be absolutely clear that paying tax is not the same as paying a bribe and that a citizen being a tax payer does not mean that his needs are more important than those not paying tax. There is also a need to see that income tax is not the only tax people pay, and everyone from the richest to the poorest end up paying tax when they purchase goods or property or travel and so on.

Without this sense of the budget being about how India’s money gets spent to India’s holistic growth, the conversations around the budget are sounding very like a lottery, or at best a class that is deeply suspicious of a teacher playing favorites.

(The views expressed in this column are the writer’s own)

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  • http://Website Karthi Sivaraman

    The author makes a point about how ’42000 hardly qualifies’ as middle class. Let me lay out a few numbers. Food (decent, no worms in my rice, no pests in my pulses, no insects in my veggies kind of food) costs anywhere between 1500 to 2000 INR in a city like Mumbai every month, for a small family. Rental in Mumbai for a single bedroom apartment, where I do not have ditches running before my front gate costs me close to 25000. Everyone carries a cell phone today – it has long ceased to be a ‘class indicator’ – that costs me another 500 INR as does milk (500). Any visit to a doctor costs me close to 1000 INR per visit including all the tests they ask me. My utilities every month go for about 1000 INR per month – including my expenses on electricity and water. My child has to be schooled properly, and that takes about 5000 – 7000 (at least) in any decent school. So, of the great 42000 that I earn: deduct 2500 as taxes – and I am left with 39500 in hand. I spend a sum total of 35000 to 37000 eking out an existence. When my parents get sick, I have a princely sum of 2500 INR to help them out.

    Now, the author, no doubt, will give a spiel about how people live in huts, without electricity, without drinking water, without access to medicine or education and therefore I should compare myself to them. My retort is why? Why on earth should I, a honestly working and tax paying citizen always aspire to the lowest common denominator.

    If the government is providing state of the art medical facilities at a reasonable rate – or for free (as we are talking socialism), if the government is running state of the art schools that the author wouldn’t mind sending her kids to (no – KVs don’t count: try one government run school inside Dharavi, where mostly cattle attend the classes), if the government is providing electricity, roads and access to information to all citizens, then these people about whom the author sheds tears wouldn’t be living like this.

    What the author refuses to admit is that the same socialist policies that she agrees with, and the same aspiring to the lowest common denominator is exactly the attitude that put 40% of my population below poverty line in 60 years. Modern India is being a rootless and immature country that neither learns from its rich heritage and culture nor from the mistakes of the others. Much of our goodwill (similar to that of the author) is wasted on harebrained schemes that try to alleviate the troubles of the poor by doling out freebies. As they say, there ain’t no free lunch. If you are getting one – some one, somewhere, some how is working his/her hide off to pay for it. That applies all doles – even those given to poorest of the poor.

    Had the government and well wishers like the authors thought about teaching the poor to make money instead of taking it, probably many of them wouldn’t be still poor.

    So, stop patronizing and admonishing the middle class for aspiring. Stop telling us that the best way to bring the poor out of poverty is for the government to give doles. I brought my life up from nothing (literally) simply on the help provided by a supportive family. This simply means that there is enough philanthropy running in our society – no need for the government to indulge in that exercise using tax payer’s money.

    And, No, we will not feel guilty for aspiring to lead better lives, out of a squalor – just because our government and the elite who travel in swanky cars tell us to be. It is not our fault – it never was. And it is time that learned people like the author understood this.

    Best,
    k

    • http://themiddleclassindian.blogspot.com Leo G

      I strongly agree to karthi,

      I think tax is a hafta by the government and not used for the benefit of the common man.

      To make my point I wonder what tax money is spent on?

      Road Tax — Wat roads?
      Transportation– I put my life on the line everyday travelling by train
      Sanitation–I see shit piling up in the gutter outside my building everyday but who cares?

      So where is the tax going? Into swiss bank accounts? Then you might as well give it to me back

    • http://Website srinivas

      I admire your idea of authors or people to move and make people work but, its just not authors. There should be belonging to the country feeling in the minds of all the people of the country. we can see in our country people leading life with 3000INR salary and 30000INR think how these peoples lifestyle is! contained living with proper planning and belongingness to the country creates the difference.

  • http://Website DK Cooper

    I wonder how one decides middle class? Is earning around 5 lakhs, with a family of three to four to feed, clothe and educate, considered rich? I would disagree.

    It’s becoming fashionable to castigate the middle class as a bunch of whiners. Paying tax doesn’t entitle you to benefits, nor would people resent it. What they resent is being derided, ignored and being short changed on their entitlements. Thats adds insult to injury.

  • http://Website saran

    I pay taxes…rather, my tax gets deducted at source…so, I may not be enthralled about the taxes I pay, but then , I do pay nevertheless.. So, Am I a good , law abiding, tax paying middle class Indian. You bet I am! Now, how many Indians can we find who fall in that bracket? Hardly any. So, I think I have a right to know where my tax money goes…NO NO …I ain’t in the mood today to listen to the nonsense of “your tax money pays for national security, building roads, education, food for the poor”…

    I want accountability. I want to track every single rupee which I paid out of the 25000 tax I paid this month. Can someone show me a path or at least a general direction, rather than a bottomless blackhole called a “WELFARE STATE”.

    I did not sign up for this, when I voted last time, wherein I would work my behind off, to pay for someone who spends a lazy time sitting on his behind.

    Warped ideas of socialism kept us poor for the first 50 years of independence. A legacy of a welfare state borne out of our misplaced notions of equality without responsibility. Our post independence era leadership believed in dole outs and found that the rich would fund the largesse.

    Then the rich Indians became smarter and they stopped paying taxes and they continue to become richer. The salaried class continues to be the pall bearers of the nominated morose class , the so-called poor.

    Isn’t it logically the responsibility of the highest echelons to look after the lowest echelons and so forth. But hey… this is India.. we believe in lopsided logic… the highest echelons vanished from the tax net… the lowest was never in the tax net… and the middle class is “contained” in the TDS net, so that the largesse of freebie loving political parties are funded by the me and the guy next door…

    Democracy.. My foot!

  • http://Website Tarsh

    Oh us middle class. We always have the room to whine about how hard our lives our.We get no subsidies, we just do hard (and honest!) work and pay taxes to the government.
    Those stupid farmers and tribals (the lazy 60% of India who intentionally wallow in poverty) who get massive subsidies and free rice through the PDS (though with a few worms) commit suicide just out of pure laziness. They should all move to cities and do some honest work and let monsanto and the like grow food more efficiently. In fact they should all join monsanto as labourers and learn the joys of honest work.
    There some socialist fools are going as far as to suggest that things like good roads, infrastructure, tax breaks to corporations we all work so hard (and honestly) for, fuel and energy subsidies given to us middle class are much more than that given to the lazy 60%. But we all know that’s nonsense. We want more more more. We are the shining India.

  • http://Website PS

    Also, income tax is not the only form of tax. Indirect taxes are paid by everyone–when a poor person buys anythings packaged, even soap, he pays tax–that is conveniently forgotten by “tax payers”. So, the idea that “tax payers” deserve better is absolutely correct, although the people who say this only mean themselves! ALL payers of ANY tax deserve better–which means practically everyone in the country–the rich, the poor, the wretched.