Disconcerting notes in Nirmala Sitharaman’s middle-class budget

Finance Minister Nirmala Sitharaman indicated in the budget document on Saturday that boosting consumption expenditure and bolstering private sector investment with fiscal prudence is her prime focus.

She is aware of the New Deal policy and the Keynesian prescription that resuscitated the American economy from the quagmire of depression in the 1930s by boosting high consumption by the poor and the middle class, thereby triggering private sector investment.

She is also aware that India’s poor have already received several large benefits from the government. Around 810 million people receive 5 kilos of free grain with a budgetary allocation of Rs 2 lakh crores annually through the programme. The Pradhan Mantri Kisan scheme, meanwhile, benefits nearly 110 million farmers, costing the exchequer around Rs 1.22 lakh crores.

The budget has now turned its attention to the middle class.

The reduction in tax rates announced on Saturday will benefit approximately 400 million people – nearly 31% of India’s population considered middle class by the People’s Research on India’s Consumer Economy Economy non-profit group. Pensioners will benefit from the higher relief on interest income of Rs 1 lakh.

While the government will forego around Rs 1 lakh crore revenue in the process, there is a sense of elation in middle-class India, a sentiment rarely noticed…

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