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One key headline-point from the Narendra Modi government’s latest Budget is the raising of top tax rates for the rich earning more than Rs 2 crore a year. The increase is steeper for the super-rich — above Rs 5 crore per year. The top tax rate now goes to 42.3 per cent.

It seems like such an awful example of the Indira Gandhi-style ‘soak-the-rich’ politics, people like us might say. Many others in deeply pink polity would hail it as uplifting evidence that Modi too has fully embraced the principles of socialism as mandated in the Constitution’s post-Emergency preamble. Never mind that he leads India’s most unabashed government of the Right into its second term.

Both are wrong. Because the Modi government isn’t really soaking the rich, but the middle classes, who also happen to be its most loyal vote bank. Question: Is their unquestioning loyalty the reason the government can afford to treat them like this?

Over the past five years, the Modi government has carried out probably the most spectacular and efficient transfer, or redistribution, of national wealth to the poor. It is tough to estimate it to the last decimal point, but between housing, toilets, cooking gas and Mudra loans, anything between Rs 9-11 lakh crore was distributed to the poor. That it was done with minimal leakage and with no discrimination of caste or religion has been acknowledged. It helped Modi win a bigger second majority. And where did this money come from?

Our immediate instinct would be to imagine it came from the rich. But not quite so. The government kept raising taxes on fuel as crude prices fell, and folding the bonanza into its pocket. Most of this came from the vehicle-owning middle classes.

You can conclude, therefore, that a spectacular transfer of wealth did indeed take place to the poor. But it came from the middle classes of all strata and not particularly the rich. It also bought enough votes from the grateful poor for Modi to sweep the election.


Also read: Budget 2019 will boost growth only if Modi govt is friendly towards business and profits

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All exit poll data, from the big cities to the urbanising states, tells you that the middle classes too voted overwhelmingly for the BJP. The rapidly urbanising state of Haryana, the richest in India with very few extreme poor, is a good example. The BJP was marginal here until 2014. This time it collected 58 per cent of the vote.

This is the most important political takeaway from the way Modi has run his economy. He has taken from those in the middle to give to those at the bottom, and both are voting for him with equal enthusiasm. The middle classes have emerged as his most rock-solid vote bank. And they happily pay for it.

Now come to the latest budget. Once again, there is that mere pretence of taking from the rich. But should it bother the rich?

CBDT data shows that in the last financial year only 6,351 individuals returned incomes above Rs 5 crore, with an average income of Rs 13 crore. How much additional revenue will the new tax rate bring? Just about Rs 5,000 crore. Not much more than a year’s turnover of the Indian Premier League. The poor will be thrilled the rich are being socked. And the really rich will complain in whispers but keep buying anonymous electoral bonds and dropping them off in one letter box — you can guess which one. Because if they don’t, the taxman might call.


Also read: Modi govt wants more Muslims in IAS & IPS, raises budget for free UPSC coaching


The poor are easily fooled, purely for their cheap thrills and entertainment, but the real joke is on the middle classes. Because, as in 2014-19, they’re the ones who will contribute the wealth to be transferred to the poor. To begin with, the finance minister gifted them additional taxes on petrol and diesel in the budget to ‘make up’, hold your breath, for the drop in crude prices.

This has followed a string of policies that can only be described as “soak the middle class” and not the rich. During the Modi years, Long Term Capital Gains tax (LTCG) on equities was introduced, dividend distribution tax (DDT) was increased, additional tax was levied on dividend income above Rs 10 lakh per year, surcharge on incomes between Rs 50 lakh and one crore was raised (unless you call them super-rich today), import duty on gold increased to 12.5 per cent from 10 per cent, and subsidies were reduced and taken away from the middle class, including on cooking gas. We’d welcome the removal of these non-merit subsidies. But remember who is paying.

That Modi and the BJP can continue to treat the rising and expanding middle class this way shows that they have gamed its mind perfectly. Its loyalty to them is fired not so much by economic impulse as by something more visceral: The resurgent, muscular Hindu definition of Indian nationalism that they have bought into. Add to this the dislike of the Muslim. Many of them may still find lynchings abhorrent, but they are quite happy to see Muslims completely out of the power structure: Cabinet, top government positions, and greatly reduced in Parliament.

My colleague and Political Editor D.K. Singh points out a remarkable set of figures on the number of times the BJP finance ministers have mentioned the middle class in their budget speeches. Generally, it’s averaged five. In Piyush Goyal’s interim budget speech, it suddenly shot up to 13 times. It was election eve, after all. In Nirmala Sitharaman’s now, it fell to three. Of course, she also completely forgot the promises Goyal had made to the middle class in his speech in February: Increase in standard deduction, TDS threshold, relaxation of tax slabs. Why should we bother when you will vote for us out of your love for us, while the poor vote with gratitude?

For decades, India’s Muslim minority was similarly gamed by our ‘secular’ parties. They knew Muslims will vote for them out of their fear of the RSS/BJP. That’s the reason they saw no need to do anything for the Muslims. Their vote came as ransom for protection. The BJP has now realised the majority middle class sees a similar fundamental compulsion to vote for it. That’s the reason we call them Modi’s ‘Muslims’.


Also read: What is Zero-budget farming – Nirmala Sitharaman’s fix to double farm income


 

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64 Comments Share Your Views

64 COMMENTS

  1. Dear sir
    This government is fooling poor n middle class people. All middle class n poor peoples not hate muslims, we r not enemies of each others but this politician’s provocating people to hate each other n they take advantage of this situation

  2. i find your articles very interesting they are very few persons who do very good analysis and you are one of them.

  3. The entire serif assumptions are true and the middle class knows. But what you got on the other side, a set of self-serving corrupt politicians. Congress has ditched the middle class by not providing an alternative. That’s the clear and present truth. The day a viable opposition blooms, the present dispensation will come to it’s senses.

  4. Dear Mr. Gupta,
    I consider myself as middle class. I also consider myself very privileged that my basic necessities are met. I am happy to pay taxes to help poorer citizens of the country. By the way, I don’t hate Muslims and I still vote for BJP because I was sure that the Congress would use my tax money to fill their coffers. You have made too many assumption about me which perfectly explains why most journalists are out of touch with the country.

  5. Sir,
    I agree to most of what you have written.
    Though some got offended when you wrote ‘ Middle class hate Muslims’ but I agree.
    Today’s India is changed. Today’s Hindus most of middle class have completely been radicalized as was desired by their masters same as was done in Afghanistan and Pakistan by others’ masters. I pray things subside faster it’s better. But I don’t foresee as some vested interests won’t let it happen as same has been happening in notorious Pakistan. Freedom and peace loving people have hard times ahead.
    Let’s pray for them.

  6. Sir One flaw in your argument. In the same breadth you have said Modi is fooling Poor, Middle Class and Rich all three. So that means all 3 are losing. Which means money is being siphoned off. But then you also mentioned that he gave to Poor so then does it mean he is not fooling poor?

    “The poor are easily fooled, purely for their cheap thrills and entertainment, but the real joke is on the middle classes. Because, as in 2014-19, they’re the ones who will contribute the wealth to be transferred to the poor. To begin with, the finance minister gifted them additional taxes on petrol and diesel in the budget to ‘make up’, hold your breath, for the drop in crude prices.”

  7. Middle class is not comparable with Muslims. Muslim appeasement was always been at the cost of middle class.It began with Mahatma Gandhi favouring Muslim 1921 Malabar massacre where thousands of Middle class Hindus butchered and Gandhi praised maulana and blamed Hindu for running away or accepted Islam instead being killed like many of them killed by Muslim. and Khialphat kingdom established in and around. Wayanad . Middle class always sacrificed be it Jaliyanwalabagh, Partition or in Kashmir ,Godhra during Sikh Riots all during Congress regime. It is for the first time middle class had some hope ,they are true lover of Mother India .They are not begars or looters..So stop shedding crocodile tears.

  8. At first, I couldn’t believe this article – it is simply ridiculous. According to Shekhar Gupta, every time a toilet is built money is transferred from the middle class to the poor. The same would be true, if a road was built in a village or food was given to children during school lunch. This is an incredibly short sighted view, that treats Indian economy as a zero sum game. By improving education and public services we are improving not just the lives of the poor, we are boosting the economy by making them healthier and more productive. This in turn benefits all of us – rich, middle class, and poor. It is outrageous to put up a Nazi image because Modi supports programs for the poor.

  9. Soaking up middle class can backfire. Historically it is middle class that works and pays taxes and provides stability. Shrinkage middle class is seen in shrinking sales of cars and two wheelers

  10. I viewed Shekhar Gupta’s another video on organic farming. It really disappointed me. Negativity seems to be recapturing Shekhar Gupta and he seems to be returning to his old style of analysis and reporting that has nothing useful to new India. Criticism that can’t influence the government actions has no value except adding unrest among people. It’s a well proven method of opposition politics that Indian voters has rejected wholeheartedly. Shekhar Gupta would be wasting his and his followers time by not positively contributing. For example instead of outright rejecting he could have researched on improving the organic farming to make it a viable option available to farmers. Though I don’t believe at the moment, that Shekhar Gupta is batting for multinational companies rather than what the Indian government wants to do.

  11. Come on Sekhar !! After all the good analysis you do, you come up with something very dumb like this. What comparision is this? Muslims and middle class? You are not that naive not to know that middle class is a heterogeneous group and cannot be grouped like a caste or religion. Either you are coming up with a new social science concept by mixing up religious group and economic strata or want to make up some cheap controversial stuff to increase eyeballs for your site. For the country’s sake try maintaining the decent level of analysis you do. Be a true liberal that you claim to be…

  12. Middle class is always the one that pays most of the taxes. Poor do not pay and there are not enough rich.

  13. Did we see any middle class person becoming poor? giving up car? They benefited from expanding economy and so willing pay to keep poor content. They don’t want massive street agitation & violent uprising from poor. Do they? So they are not fools or taken for ride. They are smart.
    Reply

  14. Well said @ SG.

    And this frenzy can continue for atleast two terms untill the Middle Class feels the Heat and changes their mind set.

  15. It is a brilliant analysis, lucidly written. Sekhar has done a yeoman service. Yes, the middle class, the solid supporter of BJP, is being targeted. But this is not the first time BJP is doing that. Even Yeshwant Sinha did precisely that. After presenting the budget, in an open encounter with Press in Mumbai airport, Yeshwantjee was specifically asked whether his budget would give the “feel good factor” to common man. He said ” I am not the merchandizer of the feel good factor”. In the next election, common man told the BJP in unmistakable terms that they were not the merchandizer of feel good factor for BJP, despite the fact it was being headed by the redoubtable Ataljee. Let the present dispensation thoughtlessly continue with its anti middle class attitude, the middle class will certainly show the BJP its place, Amit Shah or No Amit Shah. Sekharji, you are a fearless writer with a powerful pen and more powerful facts. God Bless you.
    A K Pattabiraman, Chennai

  16. Prof PK Sharma, Freelance Journalist, Barnala (Punjab)

    Please think of altering the name of this weekly column now National Interest to
    ” National Interest In Darkness ” !

    Yes, because nation is to grope in the dark and uncertainty now !

    Transparency, accountability, responsibility,truth, merit and calibre would not be
    the order of the day !

    The nation will turn into “dramatical rhetoric” and “theatre of the absurd”, nothing
    else !

    Clinging to power by hook or crook will be the only and only leitmotif in the bargain !

    “Saying ” and “Doing” will remain separate entities as we have experienced in the
    past five years !

    No denying the fact that we are collectively responsible in general for bringing things
    and scenario to this gloomy pass including the Media too in particular !

    Now Mr. Gupta, you may go on asking Why India’s middle classes are Modi’s ‘Muslims’?
    or vice-versa, how is it going to make any difference ?

    The regime is going to rule the nation with an iron hand to keep it firmly saddled in the
    hot seat for pretty long a period irrespective of the means whether ” fair” or “foul ”
    branding and justifying the same as fair publically ?

    Prof PK Sharma, Freelance Journalist
    Pom Anm Nest,Barnala (Punjab)

    • Prof PK Sharma, one personal request. Kindly do not write such long letters in the comments section. We simply skip them.

      • Mr.Ramesh,
        I cannot help wondering at your response ! On the one hand, you are making a personal request and then on the other hand out to startle me by saying ,”We simply skip them” in the same breath.
        Now you are at liberty to deem my comments as letters, a play, a novel, a short story, a poem or whatever you like !

        Then, I do not remember any moment when I called upon you and other viewers (we) not to skip my comments in black and white or in any other fashion !

        We the people of India have the right to freedom of expression, likes and dislikes too ! No taboo or problem at all, but openness of ideas and free thoughts are infact the need of the hour !
        Prof PK Sharma, Freelance Journalist
        Pom Anm Nest,Barnala (Punjab)

  17. Predictably middle class comes to defense of BJP. So the premise of Shekhar Gupta isn’t wrong. Instead of finding holes in Gupta’s assumptions they attack his credibility. How does it matter what colour is the paper on which the article is written?

  18. It has come out in Shekhar Gupta ‘s column that the government’s of the parties who professed to be secular and pro-poor were in reality playing vote bank politics posing as protectors of Muslims from the BJP and middle class (as he says middle class does not like Muslims). As he never put this fact before his readers earlier either as journalist he was dishonest or incompetent to understand the reality then. Both are equally hurting for the reputation of journalists.
    The statesmen who thing of welfare of all citizens do not think in terms of which section is benefited and which has to bear more burden in every policy decision. Of course some segments will get some advantage by some decision but the losers can be compensated later. The immediate objective is to look after the more needy, more vulnerable and keep the discontent under control to keep all diverse sections of society together.
    Inherently people have brotherly feelings for fellow citizens and would not mind giving for helping the more needy. The government’s job is to appeal for these sentiments and create goodwill among the rich and the poor. Instead if it appears to be partison to some segment and favouring some others they may be able to divide and rule but can never have a healthy society with empathy for all fellow citizens. The Left Liberals and the Right Liberals have love for some sections and hate for others. The journalists also are carry biases. This article also betrays some.

  19. Till we have strong opposition parties, we need people to highlight current government’s mistake/ aberration – small or big. Thanks Shekhar for assuming this role. But, why to underline ‘Muslim’ in this piece.

    We expect analysis (current status, flaws, possible solution) from Shekhar on major issues like a) river connectivity b) education policy c) Water scarcity d) malnutrition e) scientific research and many more.

    Shekhar can leave Hindu Muslim to political parties. Please do not disappoint us.

  20. I don’t know if he is dynasty loving or not but i would like remind fellow commentors that he was the one instrumental in defacing the AugustaWestland VVIP chopper deal, so at that time by your logic he became sangh/bjp lover.

  21. Shekar Gupta is back to his usual form!

    #1. Vicious anti-Modi venom and hatred before election.

    #2. Pretending to be a fair minded political analyst 4 weeks after Modi Tsunami

    #3. Back to #1

  22. Shekarji, Write as much you can. Create as much anti Modi in your saying. If you think, you are the torch bearer of middle class… forget about it. Everyone know for whom you work for.

  23. It seems that the dynasty- supporting journalists have been more offended than dynasty or Congress party by the election verdict of 2019 . They failed to gauge the impact of the actions of Modi government on the mind of voters and their likely voting behavior . Modi -2 is going to be better than Modi -1 . So any amount of sermonizing is useless. Middle –class got hefty boost in take home income by two budgets- one presented on 1st February and then on 5th July taken together. It never got so much tax rebates . tax reductions or avenues for tax-saving during UPA rule of 10 years in a single year. Please come out of your old thinking trap and see India is moving ahead with new promises and action on what is/was promised by Modi and BJP.

  24. Shekhar Gupta What Shekhar says is not something new that he has discovered it now. It’s well known fact that Modi has milked India’s middle class to extend benefits to India’s poor. However, his terming of middle class as Modi’s Muslims is provocative and also abusive. India’s middle class has Hindus as well as Muslims. By calling India’s middle class as Modi’s Muslims, Shekhar has given the impression that India,’s middle class has only Hindus.

    It’s not just middle class but in general once a tax payer is assured that the tax he/she pays goes to poor and not into the pockets of politicians, most tax payers don’t mind paying more taxes as long as it doesn’t starting hurting them.

  25. Shekhar Gupta fails to take his ‘I GOT IT’ insight to a higher level: (1) he fails to acknowledge that India’s middle class in NO babe in the woods who, unlike him, will miss the woods for the trees. They voted for Modi to pave the way for grander, more stable and less corrupt way of governance, and are now sleeping peacefully knowing well that India is in safe hands; (2) a large section of muslims are a subset of India’s middle class, and therefore, as journalists are always trying to seek a link between politics and economics, Modi is already fulfilling his promise of ‘Sabka Saath, Sabka Vikas’ even though he refuses to wear a skull cap or attend Iftar parties for photo-ops.

  26. Yes the article is spot on . Modi’s government is taking the middle class for granted but he also knows that we will continue to vote for him as pious Hindus . Shekar Gupta is the only Lutyens media person to acknowledge the fact that the poor of this country have finally begin to live a life of dignity because of Modi government’s policies of giving them their due for long without indulging in corruption . Unlike other leaders, parties Modi is not indulging in patronage politics with the poor. He is helping them from his heart . Finally yes the middle class r the favourite whipping boys but as long as Modiji is there our vote is for him only

  27. I am just thinking about Modi’s target of making India 5 trillion economy… I wonder at the end by 2024 if he fails to make it that target, he may invent a formula to calculate the economy by averaging GDP and GDP (PPP)… atleast to appeal to loyal middle class… YOU KNOW THE BEAUTY OF MIDDLE CLASS? THEY ARE RELIGIOUS AND GOD FEARING AND MAJORITY OF THEM STRUGGLE FROM SLIPPING TO POOR…ON THE OTHER SIDE POOR’S FIGHT IS HAND TO MOUTH AND WILL WORSHIP WHO EVER FULFILS THE DAY AND THE RICH STRIVES TO INCREASE THEIR FORTUNES BY HOOK OR CROOK… AT THE END FOR BOTH RICH AND POOR NO TIME FOR GOD AND RELIGION. SO IT IS MIDDLE CLASS WBO ARE TARGET OF EXPLORATION BY BJP AND RSS.

  28. It is not clear what Sekhar Gupta wants. Only till the other day he was a vitriolic crticiser of Modi. Nowadays, he is extending some positives about Modi. But, at the same time he principally remains a detracter, often trying to fight the political battle against Modi all by himself! This piece is a part of that effort.
    India is basically a poor country. It has super rich, rich, middle class and poor. The number for poor so large that India remains a poor country. Therefore, the total collection from super rich and rich will be insignificant for any meaningful redistribution of Income and wealth. Here comes the burgeoning middle class whose contribution can make a significant contribution for redistribution of income and wealth. Remember, the super rich, rich and middle class cannot, repeat cannot have any real life of Power, Dignity and Peace of the poors were to always remain poor. No super rich, rich and middle class can enjoy their life of supposed bliss in isolation. There is bound to be a prolonged, life – threatening civil strife, to say the least. if poors are that uplifted.
    The last. Sekhar Gupta has an ulterior motive. Does he think that he deserved his Rs. 10 Crs a year at Indian Express? Was his earnings not skewed against the poor and Middle class?
    These people are most selfish, have scant regard for the Country and country men, are filthy rich but at present do not enjoy that much power. They are now what they are to get back that power. The leftists, ideologically bang opposite the BJP, have the same goal of redistribution of wealth but have fallen prey unwittingly to these power – mongers in society, now unfortunately toeing the line of these people at the detriment of poor.

  29. So far so good, Mr Gupta. Very clever word play. Some genuine points mixed with some fluffy ones.

    But would your Rahul Gandhi (or any other Tom, Dick, Harry) offer any credible alternative? All are busy playing to the gallery and making ‘poor vs Ambani’ comparison. Does anyone have the sense to champion the cause of the middle class?

    If no one, then the middle class will continue to support Modi merely for nationalism and other ‘higher ideals’.

  30. Modi is fooling everybody – cow protection, privatisation, population control. It is high time his supporters either quit Modi or be ready to pay even higher costs in future. Hindutv is his currency to fool people

  31. Very good attempt to mislead the middle class. Unfortunately it picks the wrong reasons for the middle class support to Namo.
    1. What was the inflation rate during U(tterly) P(athetic) Alliance & during the last 5 years of Modi Sarkar.
    2. Compare the scam-ridden Ulta Pulta Alliance with the Modi sarkar. Futile attempts by the dynast was thrown into the dustbin by the public.
    3. Add to this sensible & critical decisions like Swachh Bharat, DBT etc. People like Mr Gupta should understand the we middle class do not mind sharing to the lower class in a genuine manner without any middle men / leakage. Knowing this only, the alliance for middle men (UPA) never did this, despite initiating the Aadhar scheme.

    • It is true. Mr Sekhar Gupta who is a blind opposer of Modi, is trying to mislead. When inflation is very much under control, the cess on diesel is not a burden to the common man
      During UPA, common man was getting 100 RUPEES FROM FRONT SIDE, BUT WAS LOOSING RS.200 FROM BACKSIDE.(due to high rate of inflation). But in MODI rule ,COMMON MAN IS GETTING RS.50 FROM FRONT AND NOT LOOSING ANYTHING FROM BACK SIDE.(due to low inflation rate).
      Mr Gupta has to understand that Modi is a true secular, as he does not resort to APPEASEMENT TACTICS.

  32. Most of the comments just go on to validate what SG is trying to state in his article. The middle class will be loyal supporters and defend the government’s decision of not providing tax relief to them as their contribution to the society and nation in general. But they will never question false assurances of raising of standard deduction, raising limit for no-tax income, etc. Moreover, the finance ministry didn’t even want EPFO to pay 8.65% for FY19 that it promised in March telling it to review it’s surplus. They wanted EPFO to pay just 8.55%. And this didn’t rile anyone up, because the middle class is busy fighting for saving RS. 10 while buying vegetables and would not worry about 0.1% interest in it’s PF savings of entire career. In short, the middle class has become subversive. Now adding to what SG has stated in his article, the middle class is also divided into those who do business and those who are in service. As it is an open secret, that those who do business get to state their income in ITR in the form of self declaration as against salaried people for whom the salary comes with tax deducted. In the budget, the govt. takes care of the former by proposing a pension for business persons with less than Rs. 1.5 crore turnover. So essentially, it’s the tax paying, salaried middle class for whom there is no benefit and for whom there has been no tax sops in this budget, who have been taken granted post elections.

  33. Middle class voted for Modi, as there was no alternative. Rahul Gandhi is no match for Modi and there was no other option. 2024 is still far away. Let us wait and watch. However, no one can take any segment of our population for granted. Indira Gandhi won a landslide in 1971. Soon thereafter, she won Bangla Desh liberation war. Her popularity zoomed. However later, the global oil crisis hit Indian economy badly, inflation soared and by 1975, she lost her popularity. There was a mass resentment against her government. Emergency followed and the rest is history. Story of Rajiv Gandhi is no different. In democracy, no one continues to be invincible always. Unless economy is properly managed, the end comes sooner than expected. Hope that the story doesn’t repeat for Modi.

  34. The middle class are not stupid and can perspire any politician worth their salt. For Modi, the middle class expressed their tolerance by voting BJP out of power in MP, CG, and RJ. And the interim budget showed Modi government took notice.
    As for why middle class votes for Modi 1. No corruption 2. Modi is a doer vs the rights based (thereby outsourcing) jholawala advisories of the UPA.
    It is not for no reason that Give Up subsidy was participated in large numbers.
    The middle class will punish BJP state governments for infractions.

  35. Hindutva can’t be achieved with lip service. One has to contribute for it . A *hindu*either upper or dalit,rich,poor or middle is ready to pay for it whatcomemay. Views of author can neither create fissures nor deviate hindus from their goal.

  36. The comments are filtered by number of websites including this one. The algorithm check chemistry of comment. If it is toxic it is blocked or go to moderator. The readers should also be empowered to report an article toxic,blockable and removable from websites. If it did happen ,the pr*nt may go of from website.

  37. God save this country from seculars and liberals…

    The poor journalism is fairly visible in the “Title” of this article…

    Enjoy your freedom of speech and continue your Pen-Terror

  38. This column partially answers a question that has puzzled me for the last few years : Where did the oil bonanza – along with the rest of our normal taxes – go ? For all the talk of roads / rail, we don’t really see a lot of spanking new infrastructure. Plus, had a lot of genuine public investment taken place, that should have stimulated the economy, rippled outward to industries like steel and cement, not given us the secular sag which even the dodgy official data can no longer conceal. Like Tamil Nadu, which we often mocked for the culture of freebies – wife tells me no one has ever given her a mixer grinder for her vote – it seems a lot of public revenues, bolstered by a largely out of control fiscal deficit, have been poured into subsidies / transfers / giveaways to the poor, predominantly in rural areas, which is where many more of them live. 2. How well and how long the politics of this strategy will hold up, one cannot say. But it is taking the economy to the cleaners. Even the five hundred chips being sent to families of farmers – not even a pittance – shows that man does not live by toilets alone. How do farm incomes double in five years if the annual rate of increase is 1 – 2 % ? All the high frequency indicators are more compatible with Dr A S’s calculation which recalibrates growth to 2.5% lower. That includes the government’s tax revenues which have completely run out of Viagra. India’s middle class was its pride. If religious prejudice sates their aspirations, for themselves and their children, all one can say is Hey Ram …

  39. Of course, middle class has been the target for all govts since transfer of power. Middle class, which I’m also part of, has been, apart from paying taxes at source, also were contributing large to savings. But since liberalisation and reforms lead to unlocking of opportunities to educated and technologically endowed people seek jobs with minimum five figure salary. Apart from the salary, they were also paid various perks which were taking care of their expenses/loans etc. At the same time every budget was giving relief to suchpeople. There are also large amount of undeclared and unearned incomes which professionals of all hues and merchants, shopkeepers, etc. However, this class has been contributing to revenue side more than the Corporate houses when you consider their equations.
    Yes the middle class feel good and satisfied when money given by way of tax is being used for the good and upliftment of need poor, without much leakages. Here the PM did his job excellently by serving needy with neceesii for their lives. We are happy and will continue to support such a leader, whoever he is.

  40. The blogger seems to confuse intentionally who comes under middle class? Does someone who gets Rs 10 lakhs as Dividend Income alone belongs to Middle Income Class? If Dividend Income alone is Rs 10 lakhs then the value of securities will be conservatively Rs 2 Crores. Top it with other assets. The guy certainly does not belong to Middle Class. Taxing Dividend Income over Rs 10 lakhs is sensible and will not impact middle income group even in Metros.

  41. Mr.Shekhar Gupta, i request you to avoid comments such as “the middle classes don’t like Muslims”, which you make without any evidence and are in poor taste. Maybe you could do a survey comparing the views of different classes of Indians , if you really want to make such remarks.

    In any case, i am happy if as you say, we have to credit Modi for the money is reaching the poor without any leakges and without Lalu prasad type fodder scams.

  42. Work hard. Join a premier institute, rise up the economic ladder on your own merit. Always earn within the super rich bracket. Get (increasingly) fleeced by the government on every purchase and transaction. Don’t disrupt the status quo, don’t question the outcomes of where your tax is going nor the policies, never question the stinking rich (they have foreign passports anyway), take your position on the left or right as middle path means issues need to be addressed, look the other way when social justice becomes a rare commodity in a democracy.
    Well played, Mr Politician. You have kept the middle class in check and they will be forever stupidly loyal. They have Netflix, Hindi vs India debates, surgical strikes and Vijay Mallya for entertainment. The show will go on for another 5 seasons.

  43. “Many of them may still find lynchings abhorrent, but they are quite happy to see Muslims completely out of the power structure:” – Remarkable. By extension, Muslims are not in India’s middle class! Perhaps the worst piece Shekhar has written in his career.

  44. Shekhar Gupta has a knack of removing the cover and showing the reality. He is right when he says that Modi is gaming middle class. But it is not Modi alone , it was true for Bajpeyi as well. May be its in the gene of RSS that, the leader expects its followers to make sacrifice. However India is not RSS shakha. Sooner or later the middleclass , which is the first to rise to protest, will do it again unless Modi shifts its vision from future to the present. He may be seeing India as super power in 2030. But today there is deep trench infront of him and he is not seeing it. For example, the sales of automobile are in negative. This sector provides large employment. Government has solicited investment from global car manufacturers who have come to India ! And look what Modi is doing … ! Encouraging electric vehicles, ( which is strong point of China ) when oil prices are coming down world over, he is increasing them to depress demand for automobiles. Some time hubris does what an enemy cannot do !

    • Middle class are the ones who save a lot. If governments do not give the flexibikity to save and push the middle class towards more intetest payments savings are not going to increase and the famous “virtuous cycle” will never kick in. Modi and his finance minister ought to realize this.

  45. Shekhar Gupta is frothing with rage — coz’ his income is going to be taxed heavily (yes, he is in the “super-rich” category — reportedly when he was editor of Indian Express he took home a tidy Rs 10 crore a year, and when asked about his income tried to laugh it off –“an editor should be constipated?”).

    Of course the rich and wealthy have reason to be disappointed — and some anger — that they have to part more of their more than ample earnings — and like all bania Guptajis SG loves his money too much (if you can generalise so flippantly about the middle class and their alleged bias…so can others about you and your caste brethren).

    Hope the middle class does not take the bait — as noted by SG the transfer of much needed resources to the poor by current govt was very “efficient” with “minimum leakages (the poor in India compared to poor in other countries in Asia are desperately poor and deprived.)

    Shekhar Gupta your attempt to goad the middle class against the current govt will fail.

    It is a transparent attempt to save your super earnings from a justfied tax for super rich.

  46. The conclusion is preposterous and is not supported by data – or supported by clever use of data. Well even if the conclusion is correct, the purpose of so called ” soaking of middle class” is noteworthy and let us learn to appreciate it instead of intellectual m….n!

  47. Govt needs money. Where will the money come from? In rich countries it comes from rich people. But we are a poor country. We don’t have many rich people. So money must come from the middle class. So both Congress and BJP will tax the middle class. The difference is: Congress will put that money into their own pockets – but BJP is spending it on the poor.
    You have said this yourself: “That it was done with *minimal leakage* has been acknowledged.”

  48. Shekhar’s concluding observation about ‘Modi’s muslims’ is totally unwarranted and shows his pseudo secular, left liberal (and Tudke Tudke gang) bend of mind. There is no need to bring in religion in fiscal matters! Tax on fuel is an undiluted way of getting revenue at source without any leakage. Though it appears high, we have to understand that in its absence, we will have to replace it with something like environment tax to prevent unbridled use of fuel. Further, it is paid by everybody, not only by middle class but by poor and rich, directly or indirectly. Also, poor and middle class far outnumber rich but one can’t just decry that middle classes are being fooled!
    But overall, on direct taxes side, there are indeed a few serious issue with Modi 2.0, some of which are as follows:
    (A). FM should have increased exemption limit in one go to say 12 lacs, added tax slabs for income between 12 to 25, 25 to 50, 50 to 1 crore etc and progressively take the tax rate to max of 35% or 40%. Today, an income of 1 lac per month is just being really little above poor or lower middle class!
    (B) It is time to tax agriculture income from non farmer (fake!) agriculturists, say above threshold of 10 lacs and from (genuine) farmers above the threshold of say, 25 lacs.
    (C) We should have wealth tax for our assets valued above, say 10 crores. Every property should be linked through Aadhar and valued at government stamp duty rates. Shares and debt, MF and other financial savings data is already available with the government. IT department can calculate the wealth tax and send notice for its payment. A wealth tax on the valuation of assets at the rate of even 1% would generate lot of resources, tax the rich and be not difficult to administer. This will give a feeling to middle class and poor of being treated fairly and super rich will have a pleasure of contributing to the social service and FM can then profusely thanks them for that!
    (D) TDS on cash withdrwals can be made more revenue generating by asking banks to deduct it on monthly basis on cash withdrawal of say above 50,000 by individuals and above 10 lacs otherwise. Further, all the notes above 500 should be withdrawn and notes should have an expiry date of say 2 years from the issue. If higher denomination notes are required, then they should be issued with an expiry date up to 1 year to ensure that there is automatic demonitization, encouragement to digital transaction etc.
    The budget has really no negatives as such but Modi 2.0 has missed a great opportunity to go big bang with structural changes in its first year when political capital is very high. It is good to garner all possible resources and distribute them to poor through government schemes without corruption and even efficiently. But structural changes in the economy are long term; they clear the mess and inefficiencies accumulated over the years and change the dynamic of the economy and society.
    Similarly, Modi 2,0 should have announced plan to get out of PSBs by 2024 and just regulate financial sector rather than be a owner in it. Similarly, many reforms in agriculture (such as contract farming, land leasing and pooling, land ownership record digitization, free movement of produce within and out of India, freedom to sell to anyone anywhere, direct cash transfer of subsidies like for urea etc.) are long pending. We should look to change the structure of agriculture and get our small and even medium farmers out of this business but support them with leasing rights, minimum income, health and education etc. This will make agriculture more technology intensive, increase capital invested, increase output, release land for industry, free people from attachment to land without losing their ownership rights.
    Along with house, gas, electricity and water, Modi 2.0 should also come out with ‘Annapurna Bhojanalay’ (like Amma Cantten in Tamil Nadu) and crèches in all villages to free women from cooking at home and giving them opportunity to work full time. This can be done in PPP mode with NGOs and corporates. This will be a great vote catching measure in 2024 for Modi! Besides, it should help popularize good nutritious food (away from over dependence wheat and rice).
    Modi 2.0 should rationalize and combine various social schemes and move towards DBT. In fact, it could lay down a benchmark of, say 50% of tax revenues getting out through DBT as social and family support and withdrawal of vast bureaucracy associated with implementation of schemes. This will also help him achieve minimum government maximum governance.
    Just as Modi thought out of box on demonitization, he should take up these reforms whole heartedly. Voters will thank him and he can come back in 2029 as well, if he is willing!

  49. If it’s the truth than any government should be worried because middle class comprises of educated people and would prefer their welfare. But if INDIA improves than their taxes would help them as well. So what’s the truth

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