I'm sick of hearing outrage from people in Mumbai who earn at least 5-10 lakh rupees (US$12,500-25,000 @ Rs40=US$1) a year, which is considered a decent income here depending on your housing situation. At any rate, it's the upper end of the Indian income spectrum, and the highest income tax bracket. These people are outraged that the 2008 Budget proposes to waive Rs60,000 crore (US$15 billion) worth of loans to poor farmers. Now, there are problems with the Budget proposal in terms of implementation -- how to reach the farmers who need the loan waiver the most. But resentment on account of it being a populist move in an election year, and on account of it being too huge a sum to give away, is yet another reflection (as if we need one) of the mean-spiritedness of the Indian middle class.
Here's an excerpt from the editorial in the Economic and Political Weekly, March 1, 2008, pp. 5-6:
If there is a group that the union finance minister has always been to keen to please, it is the increasingly vocal urban middle and upper-income classes. They were showered with benefits in the so-called “dream budget” of 1997-98 and this has been repeated in 2008-09. It is incredible that Budget 2008 has made such a major change in the effective tax rates that the individual annual tax savings will range from Rs 4,100 to as much as Rs 50,000 a year for the 32 million income tax assessees. This will certainly further boost consumption demand (and growth), but there was little justification for such a restructuring of income tax slabs. On a conservative estimate, this must surely mean an annual giveaway of Rs 30,000 crore of revenue (at an average of Rs 10,000 for the 32 million assessees) that is far larger than the one-time Rs 60,000 crore farm loan waiver. Only the finance ministry knows how the budget can yet project a 22 per cent growth in income tax collections in 2008-09.
The aggressive urban middle/upper-income classes have been an important force in the Indian growth story and are increasingly strident in their demands and protests. They should be celebrating Budget 2008. No wonder the headline in one major newspaper the morning after screamed: “A second car, or a holiday abroad...What’ll you take?”.