Union Budget 2025
There seems to be a growing consensus that the Union Budget 2023-24 needs to proffer some relief for the middle class, which many argue has been dealt severe blows after whammies in the form of and not limited to inflation, unemployment and higher taxes.
Even many have gone on to argue that the buoyant direct tax collection gives the government ample legroom to steer the middle class out of its misery.
Pain points
The middle class seems caught in the vicious cycle of unemployment, taxes and inflation. The rising cost of education and health has outrun the growth in incomes. Moreover, as many of government money transfer schemes keep the middle class out of their ambit, the rising financial burden is pressing harder on the savings and social security cushion of the middle class.
Despite the wealth accumulation among the affluent and government subsidies afforded to the economically disadvantaged, the middle class finds itself in a financial bind due to high taxes, steep education costs, scarce employment opportunities, and the pervasive impact of inflation.
The ripple effects of this squeeze are already anchoring down the broader economy as growth has slowed and consumption remains anaemic. Corporate India is being weighed down by the demand slowdown.
Tax Relief
With direct tax collections reportedly healthy, many anticipate some form of tax relief aimed at stimulating consumption levels, which have generally been sluggish across the country. Tweaks to the personal income tax slabs are what many are expecting from the government as they see it as the most direct intervention to put more money in the hands of the middle class.
Moreover, there is optimism that the government will address the issue of double taxation through the Securities Transaction Tax (STT) and capital gains tax. While many want the STT to be abolished, there are expectations that the capital gains tax structure may see a rejig.
Focus on Health and Education
With rampant global uncertainties and domestic economic weaknesses, the upcoming budget is likely to focus on bolstering the health and education sectors. Amid stagnant consumption rates and persistent inflation, the government's approach is expected to be cautious, ensuring balanced growth without alienating sectors of society.
There is a widely held view that the cost of health insurance should be brought down through various measures to blunt the effect of rising medical costs.
Employment and skilling
Though the interim budget had announced employment-linked incentives and skilling initiatives, there is even more that needs to be done to get India's massive labour force employed. Even the budget could see spending to address infrastructure bottlenecks, especially in rural areas, which could facilitate employment generation.