Middle Class’s frustration with Budget 2018 – Pointless and Puerile

What is middle class morality? Just an excuse for never giving me anything – The satirical thrust of George Bernard Shaw’s words from Pygmalion has come to haunt and taunt the middle class once again. The eerie sense of déja vu—of being caught between expectations and reality, between the haves and the have-nots, between the conscience and the consciousness of wants—visited the middle class again in Budget 2018.

Since it was the last full budget before the next Lok Sabha election, many people had expected that it would be populist. Salaried middle class had anticipated a significant relief in Income Tax. However, Jaitley did not give the expected relief to taxpayers. And all hell broke loose after that…

Twitter was flooded with joke and memes about how the budget was a letdown for middle class. There were massive rants and piles of frustration on Social media. In fact, for the first time on a large scale, India without Modi post 2019 was discussed with loud proclamations of not voting for BJP in future.

Was it justified for people to feel short changed about not getting any Tax benefits? Considering that none was offered in this budget the answer is maybe. Does the budget warrant people to term the government as Anti Middle class? – Clearly No.

The way to look at that objectively is through evaluating last 4 years of this government’s policy towards salaried middle class and tax benefits which have been passed on

The Math

While there are many versions of how tax benefits have been under NDA govt., following comes closest in capturing the same

Let’s look at Fixed benefits

In FY 2014-15, base exemption limit was increased from Rs. 2 lacs to 2.5 lac. This leads to a saving of Rs. 5000

In FY 2017-18, tax rate for lowest slab was reduced from 10% to 5%. Basis which an individual can save around Rs. 12500

In Totality, a net benefit of Rs 17500 in last 4 years

On evaluating the variable benefits, the summary looks like below

FY 2014-15

Deduction limit under 80 C increased by Rs. 50000
Deduction for Interest payable on home loan increased for self-occupied for self-occupied by Rs. 50000

FY 2015-16

Transport allowance exemption increased by Rs. 9600
Health insurance premium deduction increased by Rs 10000
New deduction for NPS contribution Rs. 50000

FY 2016-17

Additional deduction on home loan for 1st time buyers by Rs. 50000

FY 2017-18

Standard deduction reintroduced by Rs. 40000

However, Transport allowance, medical exemption was withdrawn. Additionally, which adds up to Rs. 34200

Net benefit Rs. 5800

Additionally, 1% Cess was reintroduced.

If ones add up all the above nos. (both fixed as well as variable), net increase in deductions is around 225400 – 1% increase in cess

Anyway, ones look at it, deductions have only increased in last 4 years. It may have fallen short of expectations (because there is no limit to it) but it is in no measure anti middle class.

The Intangibles

Tax money not being lost in corruption, higher visibility of tax money being spent, Direct transfers leading to less leakage are all instances which should be considered as benefits. It being non-quantifiable cannot be used as a case for its absence. Additionally, a controlled inflation rate, reduction in prices post tax reform like GST merits consideration.

The Paradox

A budget which was meant for Bharat meaning focused on Rural India, agriculture, health, employment and other important sectors for the ones at the bottom of pyramid being criticized for not doing enough for middle class is looking down upon the requirements of the have-nots in Indian society.

Hyper reactions by so called representatives of middle class reeks of elitism as when the UPA 2 was going all out in corruption then it was not as if salaried middle class was facing any dire circumstances, Jobs were not being cut and while one family might be laughing their way to bank, we salaried educated masses were not direct victims. At that time these corruptions were directly impacting big government aided labor intensive projects who had rural class as beneficiaries. They were the ones who were getting the raw deal. Today programs such as DBT, Aadhar, Jan Dhan, Ujwala etc. are ensuring that the poor class get the very same benefits which we took for granted. While our angst may be real, we the middle class have no business making fun of these measures as government continues to rightfully focus on them.

Nation building is indeed a long arduous journey and its always time consuming. There are many firsts with respect to government policy which are being actioned in last 4 years. To put an obstacle to these and trade it off with your voting power so that one gets benefits of few thousands at the end of FY is shortsighted as well non-coherent with the role that educated salaried class should play in growth of a nation. Indian middle class will have to let go off short term benefits and look at the bigger picture.