The Budget and its politics: Middle class, Bihar, farmers

This income group has long been seen as a preserve of the BJP. However, lately, there is a perception that competitive sops for the poor have begun to dominate political discourse across parties, with the middle classes not getting commensurate benefits for the taxes they pay, nor getting their woes heard.

Sitharaman’s Budget breaks with the past to provide significant tax relief to the salaried middle classes. The zero income tax slab up to an income of Rs 12 lakh per annum covers the widest section of the salaried middle class in the country.

While tax slabs have been revised to provide for zero tax up to Rs 4 lakh, 5% from Rs 4 lakh to Rs 8 lakh, and 10% from Rs 8 lakh to Rs 12 lakh, the government has provided a rebate to ensure that those earning up to Rs 12 lakh, unless capital gains tax is chargeable from them, would pay no income tax.

Explaining the provisions, such as “a taxpayer in the new regime with an income of Rs 12 lakh will get a benefit of Rs 80,000 in tax (which is 100% of tax payable as per existing rates)”, the Finance Minister specifically spoke about the middle class seven times, and acknowledged their contribution as “an engine of the economy”. “The middle class provides strength for India’s growth. This government under the leadership of Prime Minister Modi has always believed in the admirable energy and ability of the middle class in nation building,” Sitharaman said.

This is a day after the President, in her joint address to Parliament, laying out the policies of the government, mentioned the middle class eight times.

And this comes amidst the campaigning in Delhi becoming a tussle for the middle class vote, with the Aam Aadmi Party issuing a “middle class manifesto” and talking about how its schemes also benefit this income group, and the BJP also reaching out to them, including via Prime Minister Narendra Modi’s speeches.

In his remarks Friday, ahead of the Budget Session, Modi hinted that the Budget will have benefits for the poor and the middle class. He said: “Ahead of the Budget Session, I bow down to Maa Lakshmi, the Goddess of wealth and prosperity. I pray that Maa Lakshmi continues to bless the poor and the middle class of our country.”

Noting that governments usually present such a Budget in an election year, senior BJP leader Sanjay Jaiswal said: “When there is talk that those who earn Rs 1 lakh per month are ‘lakhpatis’, tax exemption for those earning up to Rs 12 lakh a year is a major step. With this, people will have money to spend in different sectors. Today’s Budget takes care of both the low income group and the middle class.”

BJP leader and former Union minister Rajeev Chandrasekhar said: “This Budget is focused on Prime Minister Modiji’s trust and belief in the enterprise of individual citizens, ranging from the poor to the farmers to the middle class. It also represents his focus on multi-year reforms and transformation as a method to deliver benefits to the people.”

Apart from the middle class, Sitharaman said the Budget proposals were focused on the poor, youth, farmers and women – the four sections whom Modi has identified as pillars of his Viksit Bharat programme.

The Bihar outreach

With Bihar going to polls later this year, and with state-based parties Janata Dal (United) and LJP (Ram Vilas) among crucial NDA allies, Sitharaman mentioned Bihar six times in her speech, apart from separate mentions of Mithilanchal (north Bihar) and of destinations associated with the Buddha, which fall largely in Bihar and eastern UP areas neighbouring the state.

The promises made for the state in the Budget include setting up of a National Institute of Food Technology, Entrepreneurship and Management in Bihar as part of ‘Purvodaya’ (rise of eastern India), to provide a fillip to food processing activities, enhance income of farmers, and skill youth. Other promises are a Makhana Board for Bihar, greenfield airports in the state, and expansion of the Patna airport.

The Budget also promises assistance for the Western Kosi Canal Project in Mithilanchal, and augmentation of infrastructure at IIT Patna.

Jaiswal, who is an MP from Pashchim Champaran in Bihar, called it “a special Budget” for Bihar, interpreting the individual upshot of some of these measures – such as the western Kosi project that will help farmers as well as tackle the river waters. Kosi is called the sorrow of Bihar because of its annual flood menace.

The Makhana Board is also of appeal to the state as it accounts for around 85% of the makhana production in India, spread across Madhubani, Darbhanga, Sitamarhi, Saharsa, Katihar, Purnea, Supaul, Kishanganj and Araria. The Board is expected to help boost production, processing, value addition, as also help in marketing the produce.

The airport pitch and the expansion of IIT Patna are aimed at the small aspirational Bihari middle class, which has comprised migrant achievers and has been a committed vote bank of the BJP.

The Congress sought to play up on the absence of Andhra Pradesh in the Budget – given that the ruling TDP in the state is a key ally of the BJP. Jairam Ramesh wondered, “Bihar appears to have got a bonanza of announcements. It is natural since elections are due there later in the year. But why has the other pillar of the NDA, namely Andhra Pradesh, been so cruelly ignored?”

Congress leader Manish Tewari posted, “Was it a budget of the Government of Bihar? OR a budget of the Government of India! Did you hear the name of any other state in the Finance Minister’s speech?”

The farmer outreach

The Budget addressed farmers, but with a focus on hundred districts with low productivity, moderate crop intensity and below-average credit parameters, and with the aim of encouraging crop diversification, post-harvest storage, credit provision and irrigation. The Budget said that this scheme – named Prime Minister Dhan-Dhaanya Krishi Yojana – would help 1.7-crore farmers.

Sitharaman also announced an increase in subsidised Kisan Credit Card (KCC) loan limit to Rs 7 lakh from Rs 5 lakh, a ‘Rural Prosperity and Resilience’ programme to address rural unemployment, and promotion of research for developing high-yield, pest-resistant, and climate-resilient seeds.