Saffron ecosystem is desperate to project Narendra Modi’s 2025-26 budget as a significant effort to conjure the middle class to make a strong comeback in the politics of the country and give an exuberant push to the economy. Regrettably this is not even the half-truth. An insight into the ecstasy would expose its true nature and real intent of the government.
Many political experts are of the view that Modi’s finance minister Nirmala Sitharaman has provided a huge tax relief to the middle class only for countering the appeal of the Aam Aadmi Party, retrieve its lost ground and win the assembly elections in Delhi and Bihar. This is also again much far from the truth. Modi and Nirmala had not undertaken this gigantic exercise to appease the middle class. This is a misnomer; a simplistic explanation for the budget.
As of 2021, the middle class in India is made up 31% of the population. This is a significant increase from 2005, just after Dr Manmohan Singh took over in 2004 when the middle class made up only 14% of the population. To say that the entire middle class stand like rock behind Modi will simply be an exercise to fool . The middle-class people are spread over to other parties. Even Congress has its share of middle class. BJP in the 2024 Lok Sabha election had got merely 37 per cent. Usually this class do not turn up at polling booths to exercise their voting rights and elect their representatives in favour of one party.. Obviously the total per cent of middle class fetched by Modi does not matter. It is also not the barometer of their anger.
Offering this huge tax relief is purely a façade to conceal the true intentions of Modi. Big industries are facing slowdown. Only recently Pankaj Murarka, CIO, Renaissance Investment, had said that India lacked enough drivers for growth, leading to a slowdown in the economy to about 6.5% this year, down from 8.2% in FY24. He also forecast that a significant increase in growth next year seems unlikely. What has caused alarm in the big industries and corporate houses is triggering market pullback and capital withdrawal by foreign investors.
It is not a political statement; the visceral truth is Modi government has virtually forced the non-big Indian industries to the point of illness, in its quest to help a couple of corporate houses and big industries.
The decline in MSME sector has badly hurt job creation and economic growth; particularly prevalent in sectors like toys, electronics, textiles, and furniture. While China still continues to financially help its industries by offering subsidies and economies of scale, Modi is not at all bothered of them. Smaller Indian businesses are particularly vulnerable to Chinese competition as they lack the capacity to produce goods at lower cost, leading to closure or reduced production.
According to recent reports, several Indian industries are currently experiencing a “profit slump” with some companies like Vodafone Idea and Indian Oil posting significant losses, indicating that a portion of the Indian industrial sector is currently facing losses. Weak consumption, government spending, and global economic fluctuations are cited as potential reasons for these losses.
Some experts also nurse the view that the old days of red tape when the bureaucrats and politicians used to dictate the industries and their needs have come back. Some industrialists close to Modi, senior IAS babus, and some friendly media persons have been dictating the industries. An industrialist says; “the list does not include policy experts outside of government, a common and universal practice in mature democracies.” It would not be an exaggeration to say that industrial scenario does not appear to be bright. Big industries and even some corporates are feeling helpless.
It is worth recalling that in the 2014 election, key focus of Modi’s campaign was offering jobs and ending corruption, which caught the imagination of the middle-class voters. Yet another factor that forced him to neglect this section was his impression that they do not have other alternative, but to rally behind him. His task was made easy by his slogan of Hindutva and practicing politics of hate. He made the middle class believe that their economic interest faced major threat from the bourgeoning Muslims and they ought to fight them; obstruct their growth and empowerment. It worked. Since his politics of hate was yielding the desired result, he did not bother to look for the welfare of the middle-class people, who mainly are Hindus.
India which has been attractive target for international expansion is losing that charm and appeal in recent years. It is certainly bad for India, a country which was predicted to become the third largest economy globally by 2030, behind China and the US, overtaking Germany and Japan, has lost its appeal. Foreign investors are withdrawing their money from Indian market. The main factor that has given rise to the crisis of fund, is the investors losing their trust in the Indian political leadership.
The earlier UPA regime’s efforts to reform the economy is being wasted and key elements of the country’s legal and regulatory system have become bogged down in bureaucracy. It is not the business or economic interest that guides the fiscal policies. Sitharaman slashed personal tax rates with the aim to collect fund domestically by encouraging the middle class to spend and invest in the local product and industries. How much of these released Rs. one lakh crore of income tax relief will go for consumption, is a big question.
Modi took to this step with the aim “to spur consumer demand and savings by the middle class that has faced challenges from elevated inflation and lower income growth”. It would fulfil the fiscal need of the industry and corporate sector. Sitharaman announcing several measures for agriculture and allied activities must be seen in the same backdrop. More than helping the farmers and consumers it aims to benefit corporates. Pumping some extra money does not simply lead to increasing the national GDP.
The money spent under the programme, “Prime Minister Dhan-Dhanya Krishi Yojana” will seek a convergence of existing schemes and other specialised measures in 100 districts with low productivity. The idea is to increase productivity in these districts. Big corporate houses are already in the business of purchasing products at lower price and storing them. So far this has remained the unexplored zone. These corporates have already constructed cold storages in rural areas.
This is a strategic move of Modi government to finish the “Adhatiyas”, local name for middlemen who purchase products directly from farmers and even make available loans to poor farmers to meet their needs. Farmers sell their produce at government-regulated agricultural produce market committees (APMCs), where Arhtiyas operate as key intermediaries. It is worth recalling that farmers have been against this move of Modi and their charter of demands also included protection to them. To meet the requirements of the corporate houses, Modi government will launch a national mission to push high-yielding crops, with a special focus on pulses and cotton production. They are his real friends and this BJP led government is working for them, even through 2025-26 budget proposals. (IPA Service)
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