Budget 2016 : Middle Class Perspective Analysed

The recent budget presented by the FM Mr Jaitley took quite a few people by surprise, with especially the middle class – some members at any rate- feeling short changed. Despite that, I personally rate this budget as being among the best to come since 1991; sure there are negatives. Let me take the bull by the horns : Middle Class, you say. Let me be blunt : The Middle Class got nothing, which exactly what it deserved. No more, no less. And yet, in this nothing lies the true benefit to this class from this budget.  


This Middle Class represents those educated people {should / dare I say barely literate? Education implies much more than degrees}; Those literate and degreed people who you can spot spitting on the roads, peeing on the roadside, paying bribes, ignoring accident victims. migrating from India... these people are in a position to do something about such ugliness - and CHOOSE to do nothing. Do they really deserve more than their fair share? Call me an idealist – but I don’t think so.




THE BUDGET : PREVIOUS EXPERIENCES OF THE NDA2


This budget is more of  an ideation session, a set of ideas and promises that can transform ALL India in a very short time - like MII and Digital India never can. India lives not in the cities, but in the rural areas, with 84% residing outside top 200 agglomerations {let alone cities!}. That is why the budget -any budget - should be only for these, the majority. Kudos to the BJP for doing it. It is noteworthy that they are attempting to reform agriculture and develop it, not give doles - which is what is needed.


Note that I focus not on numbers, but on ideas. Ideas lead to numbers each and every time; I have never ever seen numbers leading to ideas...


Also note that all three major national level forces are now concentrated on Rural India {or the poorer classes} - BJP, The Congress, and the Up-and-coming AAP. The cities may not like it, but there is nothing they can do about it. They are outnumbered 5.5 - 1 in Rural Urban Split, or perhaps nearer aproximately {from memory, could be off target} 9-to-1 in terms of income..


First this is the 3rd Budget of this Government. The initial approach was giving a mistaken impression of Suit Boot Ki Sarkar, with their Urban focussed approach; the previous budget and years contained premature moves like Make In India, Digital India, Smart Cities, Bullet Trains, none of which we require. I say mistaken for the reason that some of their other steps have very likely not been advertised, as the third article in this series brings out – which lays open the feasibility that they have done more than they are advertising.


We dont have the existing systems and the overall ecosystem to support even one of the above initiatives. Take Make In India, for example - in an atmosphere of 58% MSME contribution to GDP, how can any such initiative succeed without sorting out ecosystem issues? There are capacity, credit constraints in that sector to name just two; there are the issues relating to inverted duty structures, skill related problems, outdated technology issues and market access issues that need attending to.


You cannot dismantle inverted duty structures overnight, to consider just one small parameter; it impacts internal equilibrium, erodes profitability over the short term {another ex - Telecom; cant say more as am from same trade. Read latest news please}, and creates a churn. It requires a carefully calibrated approach and a defined plan to execute a successful turnaround. The beginning has been made, but a lot more needs to be done, as industry pundits have been at pains to point out.


You cannot rush in and change everything; the impression the Government was giving was, to me at least, is that it was in a rush to do too much, leading to premature steps. If you have to encourage manufacturing, it is true that you have to make finished products costlier to import – using the exchange rate, duties and other mechanisms to create a favourable internal atmosphere. But you also have to create the internal systems, structures that can enable investment in capacity building, which requires time and a host of changes in quite a few parameters.



BENEFITS OF FOCUSSING ON RURAL INDIA


While constraints are being sorted our - another sector is begging for attention, which also holds the promise of relief for all. Focussing on Rural India makes sense- it will increase rural consumption in line with increasing disposable rural incomes, which will eventually effect positively the business cycle in the economy as well as Urban Indians, as Manufacturing and Services both will grow, which are largely Middle Class driven. The population behind it is so large, that the impact will be much larger than a mere-Urban growth hoping for trickle down {which - trickle down - is highly debatable, if you consider consumption data from 1978}


Thus, the point is moot; the strategy is for the benefit of all. Everyone stands to gain if Rural Incomes improve, that is a fact.


Where are the products manufactured that Rural India consumes? Who works in those factories? Either Urban Indians, or Middle Classes. Thus, what benefits Rural India benefits all India. GIven the scale- 9-1 and 5.5-1, the impact will be proportionately larger and of a much wider breadth. Given the finite resources a their command, the Government has to make some hard choices. The point of taxing the Uber Rich and the creamy layer, while attractive at first sight, is both difficult to implement, as well as being a dodby strategem to resort to, as past history of the Global Economy shows. Thus, some compromises have to be made.




A WORD ON THE MIDDLE CLASS - AGAIN


As far the emotional aspect of the matter is concerned, the middle class being overlooked  - what middle class are we talking about? The one who doesnt even bat an eyelid from the comfy AC interiors of their cars as beggars in tattered clothes beg for the right to survive, as a Nirbhay lies naked, bleeding and dying in the bitter Delhi winter?  The ones who take a bribe from smugglers, with little concern for the health and safety of their countrymen and women? {Read S Hussain Zaidi for stomach turning proof of the integrity of our oh-so-great Middle Class}! The ones who do untold damage to the nation by giving and asking bribes, using substandard raw materials in their output? The ones who throw litter on the roads?


Or perhaps the ones who use every benefit the nation gives them, study till the best levels, and then promptly run away from the country, raising nonsense like the country did not care for me, my skills? It was the same country that gave them those skills, by the way. The same country people find unliveabe - other Indians find good enough to lay their lives for. They are all the people with the benefit of an education. Makes me wonder at our education system!


The fact that educated and uneducated alike show the same behaviour pattern is hardly exculpatory, otherwise, what is the whole point of an education? There has to be some improvement if you manage to get an education, isn’t it? For the Middle Class to ask their rights, collectively we the educated, the Middle Class need to justify the nation's investment in us. This we collectively are not doing. Sad part is, in the bargain, those of us who are doing our bit have to pay a little bit extra.



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