Impact of the Budget on the Middle Class in India

1. Introduction:

The Union Budget of India plays a significant role in shaping economic policies that directly and indirectly affect the middle class. As a crucial demographic, the middle class is impacted by fiscal measures, tax policies, and public spending outlined in the budget.

2. Taxation Policies:

Income Tax Slabs: Changes in income tax slabs and tax rates directly affect the disposable income of the middle class. For instance, in the Union Budget 2023, Finance Minister Nirmala Sitharaman announced revisions to tax slabs under the new tax regime, aiming to provide relief to middle-income earners by reducing tax rates.

Deductions and Exemptions: Adjustments to deductions and exemptions under sections such as 80C (for investments) and 24(b) (for home loan interest) impact the middle class. The Union Budget 2024 proposed increasing the limit for deductions on interest paid on home loans, which benefits the middle class, particularly first-time homebuyers.

3. Subsidies and Welfare Programs:

Subsidy Allocation: The budget determines the allocation for subsidy programs like food and fuel subsidies, which can indirectly impact the cost of living for the middle class. For example, the Pradhan Mantri Ujjwala Yojana provides subsidized LPG connections, benefiting middle-class families by reducing household fuel costs.

Welfare Schemes: Investments in welfare schemes such as health insurance and education subsidies can enhance the quality of services available to the middle class. The Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), launched in previous budgets, provides health coverage that can ease the financial burden of medical expenses for the middle class.

4. Public Sector Investments:

Infrastructure Development: Increased spending on infrastructure projects like roads, public transport, and urban development can improve living conditions and create job opportunities for the middle class. For instance, the Union Budget 2024 proposed significant investments in urban infrastructure, aiming to enhance housing and transport facilities.

Education and Skill Development: Investments in education and skill development programs affect the middle class by improving access to quality education and vocational training. The budget often allocates funds to upgrade educational institutions and skill development centers, which can benefit middle-class students and professionals.

5. Recent Examples:

Union Budget 2023: This budget introduced measures such as reducing the tax burden under the new tax regime and enhancing the standard deduction limit. These changes aimed to increase disposable income for the middle class, providing some financial relief.

Union Budget 2024: The allocation for healthcare was increased, with an emphasis on expanding the coverage of the AB-PMJAY scheme and enhancing the quality of public health services. This is expected to benefit middle-class families by reducing out-of-pocket healthcare expenses.

Impact of COVID-19: The pandemic led to specific budgetary provisions such as emergency credit lines and support for small businesses, which indirectly benefited the middle class by preserving jobs and income sources.

6. Conclusion:

The Union Budget significantly influences the middle class through its policies on taxation, subsidies, welfare programs, and public sector investments. While the budget aims to provide economic relief and improve living standards, the actual impact on the middle class depends on the effectiveness of these measures and their implementation. Continuous monitoring and adjustment are crucial to addressing the evolving needs of this vital demographic.