A Thank You Note and an Act of Faith

The economic survey released a day before the Union Budget was presented noted that 2024 was the year of elections in populous countries like India, the United States and Indonesia. In the India, the national election was followed by state polls in Haryana, Maharashtra and Jharkhand. In all of these, the middle class voter reposed faith in Bharatiya Janata Party and Prime Minister Narendra Modi. Barring states where BJP has a thin presence, the middle class and urban voters had a key role in ensuring Modi 3.0 took office despite reduced numbers.

BJP’s bounce back in Maharashtra and Haryana thereafter saw the middle class rallying again behind the party while rural voters also set aside grouses that surfaced in the Lok Sabha poll. The run up to the Budget saw several commentators argue the middle classes need a break from paying a high proportion of taxes while also footing the bill for rising costs of health care and education. The tax relief announced by fiancé minister Nirmala Sitharaman is PM Modi’s way of saying that he recognises the work ethic, thrift and innovativeness of the middle class that provides energy and resources for nation building.

Summing up the Budget, Modi said “Usually Budget are about how to fill the treasury. This time it is about filling the pockets of people and making them partners in development.”

The thank you to the middle class is also an act of faith that goes beyond gratitude. On the one hand it signals that honest tax payers will be recognised and rewarded for their contributions. On the other the Budget reposes faith in this growing section of India’s population – Dr Rajesh Shukla of People Research on India’s Consumer Economy studies indicate the middle class represents 31 percent of the population and is expected to be 38 percent by 2031 and 60 percent in 2047. The Modi government is counting on the middle class to power its plans for economic growth and participate in the construction of Viksit Bharat (developed India) that Modi has placed at the centre of his agenda.

No Budget fails to outline proposals for farmers and rural India and the Modi government has meshed its vision for the farm sector with reforms and growth. The plan to converge existing schemes and develop specialized measures for 100 districts with low productivity, moderate crop intensity and below-average credit parameters flows from the government’s experience in developing “aspirational districts” and gains delivered to deprived populations through better governance. If the disadvantaged districts can do better the effects of improved water, power, banking and civic infrastructure will become more permanent.

Good politics and economics similarly come together in the plans to promote cultivation of vegetables, fruits and shree-anna by providing the missing links to markets and resources that holds back farmers. The finance minister acknowledges the role of the states in any effort create the linkages that increase the value of such crops and said “A comprehensive programme to promote production, efficient supplies, processing, and remunerative prices for farmers will be launched in partnership with states.”

Kisan Credit Cards (KCC) estimates to cover 7.7 crore farmers, fishermen, and dairy farmers will see the loan limit under the modified interest subvention scheme being enhanced from ₹3 lakh to 5 lakh.

Importantly, the Budget announced a new scheme for 5 lakh women, Scheduled Castes and Scheduled Tribes first-time entrepreneurs. “This will provide term loans up to ₹2 crore during the next 5 years,”

the finance minister said. This combines the Modi government’s focus on Dalits and Tribals, constituencies that have moved towards BJP, but need more evidence of the party’s outreach. This will be particularly helpful for SC and Adivasi women and their households in developing enterprises like bee keeping, pisciculture, livestock and dairy farming that are a part of rural economies.

 

consumptionFinance Minister Nirmala SitharamanGDP growthIndian middle classKisan Credit CardsNarendra Moditax reliefUnion Budget 2025