Not going into the detailed definition of middle class so as to avoid any dilution of the importance of the subject, it is enough to state that middle class mainly comprises of people who are dependent on salary and their tax is deducted at source. .
The middle class grew in size to approx 350 million and in purchasing power post economic reforms in 90s launched by Narsimha Rao’s Govt in 90s. Some claim that the middle-class makes up 28 per cent of the total population and 79 per cent of the total taxpayer base. As its purchasing power grew, India’s economy also grew in size. India’s influence in global arena has enhanced because of the immense contribution of the middle class . India’s middle class has played an important role in the unprecedented growth of India’s IT Sector. Most of the CEOs of top MNCs today, Engineers and Management experts, technocrats, artisans, sales persons, Accounting experts working in Service sector, Retail show rooms, Banking sector, Scientists of ISRO have come from India’s middle class.
It would not be wrong to state that India’s middle class is an engine of India’s growth. They are also associated with social progress—freedom of press, education and gender equality. The middle class, particularly post economic reforms is a causal factor behind India’s improved economic and social outcomes.
Besides the above, it is this class which pays maximum tax to the Government; direct or indirect. It is this class that toils hard and pays its hard earned money through GST and other taxes when it buys - Petrol/Diesel, Cars/motorcycles, consumer items, TV sets, computers, laptops, travels in planes/ trains, takes his family out for a dinner and so on.
However unfortunately it gets nothing in return from the Govt despite Govt making huge profits from him. Millions of Indians who form the backbone of the country’s middle class are being literally squeezed of their earnings without getting anything in return.
Govt Squeezes Every Penny He Earns.
The Govt instead charges Toll tax from him when he uses highways, uses his hard earned money that he has paid as tax to give doles and freebies like Ayushman Bharat, Free electricity, free rations etc to those who are deliberately kept poor inorder to acquire power , not only that it pays salary to his ministers and subsised food in their canteen at Loksabha.
Instead of nurturing this vital sector back to life, India's Govt –has chosen a path of maximum political expediency, and is actually hurting the middle class.
The State has just got its hands off from every responsibility. For education the state conveniently presumes that we would be sending our children to private schools and private colleges as it has failed to run its educational institutions, for electricity it expects us to buy a generator or an invertor as the State run Electricity Boards can not provide power 24 hours. For health care its now an unwritten code please visit private nursing homes as Govt Hospitals can not be trusted. Even the poor avoid them. For water every citizen is expected to get a bore well dug in the back yard of the house and buy a water purifier as the State can not provide safe drinking water .
Corona has hit hard on middle class because they are the ones whose jobs have gone, they are the ones who can not sell vegetables and pakodas on pavements, they are the ones whose salaries have stagnated, most of them haven’t had an increment for last two years and they are paying Rs 110 for a liter to fill the tanks of their two wheelers/ 4 wheelers and they are the ones who have spent almost 3-4 lacs for the treatment of their dear ones in private hospitals for corona infection as the situation in Government hospitals was frightening.
Sadly when the salaried class was bearing the burden of paying for the treatment in Private Hospitals the ministers who were infected by Corona virus got themselves treated in Private Hospitals at the cost of Tax payers' money.
The irony is that despite all this his Savings are taxed many a times. Let me explain how ?
For instance ; Suraj's carry home salary is Rs X lacs after deduction of TDS, PF , gratuity etc. i.e he earns approx Y/- month. . He has two kids whose monthly school fees is approx Rs 2000/- - 5000/- . He cannot compromise on the children’s education. Surveys have shown that almost 7% of expenses are on children’s education and Approx 40% of expenditure is incurred on food. This is the average expenditure of an Indian on Food, this includes ; cooking gas, cooking oil, fruits, vegetables, milk etc. Thereafter, he has to pay for his rent which would depending on the city will vary. Surveys show approx 7-8% of expenditure is on rent, then he has to pay for electricity, water, society charges, maid servant etc. he has to even pay for the premium for medical insurance and life insurance. His office is almost 10- 20 kms away so he has to pay for the fuel , which would be again around 7-8% of his total expenditure . In addition, He has also to pay the EMI of his car/ mobike.
So one finds that Suraj has hardly anything left as savings after incurring approx 90-95% of his income on above expenditures, that too after sacrificing many necessary things for health and entertainment etc. This is the meager amount he saves for the future after paying all the taxes. As he is working in a Private sector, he knows that he will not be earning any pension when he grows old . He also has to soon build his house.
Imagine even this meager Saving that he has made over the years for his old age is being taxed.
So as a matter of fact Suraj's income is being taxed many a times.
The individuals in corporate sector are under tremendous strain, as their salaries have stagnated and they are not likely to earn any pensions. Their job security in such an environment is also uncertain, which further enhances the stress level, not only of the individual but also of the whole family. Imagine, what would be the condition of many such people during lock down. And it is for this reason primarily that the current Govt must accept the blame for being irresponsible ; shortage of beds in hospital, shortage of Oxygen, Kumbh mela and surprising frenzy during elections in Bengal in the midst of pandemic.
Earning 25000/ month in private sector is not as easy as it is in Govt jobs, even a peon in Govt sector today takes home this much amount for just sitting on a stool in front of Babu’s office.
This is the greatest disservice that this Govt has done while announcing 7th pay commission without linking it with performance, content of job etc.
Double/Triple Taxation. Now even this meager amount which he has saved by sacrificing many things for his family is once again Taxed whether he invests in Mutual Funds, Equity or in FDs. The Govt is squeezing every little money that he saves. The Govt may say that only the interest earned is taxed, little realizing that it is the interest earned on that saving that takes care of the inflation. Some loyal Govt supporters may claim that income of 1.50lacs is not taxed under section 80cc, but the fact is , if this income is invested anywhere, even in FDs is again taxed. Imagine, after sacrificing every little pleasure and leading a frugal life, a middle class individual builds a house from his hard earned money which has already been taxed twice or thrice is again taxed when he purchases a house and pays Registration tax, Diversion tax, Town & country planning tax, tax for getting electric and water connection. So, a salaried man pays tax on his income and thereafter even on the meager savings he makes after making all the sacrifices, not once but many times. Some have to even pay taxes on Pension also. And above all, he has to still pay premium for his medical insurance.
The life of individuals earning less salary is much more agonizing and full of hardships.
It appears at times that this country is running from the sweat and blood squeezed out of the veins of the middle income group. The middle class, its high time finds its voice and compel the Govt to ease his life and reduce his burden.
Middle Class is Duped.
But it cannot happen, because middle class besides being the opinion maker, is very concerned about his identity and is hence a scared citizen. Some may find this odd, but it is a fact. The fear is induced ;
What if Jehadis take over ? What about your religious identity, if minorities/majority community comes to power? What if your daughters are taken away and converted? What will happen to your religion/ culture if other community comes to power? You have to be taxed because these fighter aircrafts and submarines are being bought for your security otherwise your enemies will eat you up?
and Surprisingly those who are inducing fear will not reform the Admnistration, Police and other law enfrcing agencies so that such incidents do not take place and on top of that the ministers of the same Govt who induce fear enjoy organizing meetings in Five star hotels, tourist destinations, earn money through every contract they sign - of roads, bridges and weapons. There will not be a single Union minister or MP or MLA who has not been to a foreign country on TAX PAYERS’ money, Most even take their family members on such tours.
The middle class was not gripped with fear as it is now even when entire NE states were facing seperatist movements, Punjab militancy and Kashmir militancy were at their peak, and India was a poor economy and Pakistan had his friend Uncle Sam asking us to compromise. It is astonishing that even after surmounting all those challenges successfuly, the salaried class is so scared and fearful when India is now amongst the Top Five economies and our own Engineers, artisans, technicians, Managers, scientists have earned us a place amongst the comity of nations that we truly deserve. .
Surprisingly, the salaried class is incessantly fooled and duped, rather many a times, he advertently or inadvertently participates in inducing fear amongst his own class of people by circulating messages on whats app and social media. He has no idea that he is being fooled.
So the scared middle class keeps behaving like a Zombie and the ruling class continues to milch him. The salaried class may crib, complain and at times moan but he goes on suffering without drawing any benefits from the state for all the sacrifices and the pains he and his family have undergone over the years. His agony, no one is interested to listen and so the financial stress takes a toll of many and has adversely impacted their health, but all this has made no difference to the Government.
India might now be having a middle class that is proportionately as large as that of the US and comprises 79 per cent of the total taxpayer base, cannot be expected to bear the entire consequences of mis governance by the Political masters. At the same time, no one can be against Social justice in the form of subsidies and doles for poor but it can not be unrestricted and unlimited and only done for the sake of wining elections and to compensate misgovernance. Such unlimited and unrestricted doles will only make the recepient lazy.
The Head of the Govt should not dish out doles and freebies as if he is giving those out of his own pocket ; free power, free rations, free gas cylinder, free medical treatment, free lap tops, free bicycles. It is high time that the Hon’ble SC takes up this matter of dishing out doles suo moto and compels the Political masters to lay down some limits.