In our country, the most effective and large class which gives a fast pace to the economy is the middle class.

In our country, the most effective and large class which gives a fast pace to the economy is the middle class.

In our country, the most effective and large class which gives a fast pace to the economy is the middle class.

Rohit Kumar, Editor: There is a large middle class in our country, the majority of which is inhabited by cities. This is the class on which the government has to spend comparatively less than other sections on its own behalf. From a political point of view, this class has always achieved less than its capacity. A large section of the country also believes that the middle class is becoming irrelevant in the political plot.

In fact, our policymaking seems to be dominated by the tickle-down theory and is centered around the misconception that inequality is a by-product of rapid growth. It is a misleading fact in itself that the benefit of those at the top will gradually go to the bottom. This is stated as the tickle-down principle. But currently it needs to be reversed. The reason for this is that the rising tide is not able to lift all the boats.

This is the time when policy makers have to understand that there is in fact an alternative theory of economic development. For decades policy makers have focused on two social groups, resulting in the neglect of the social and economic role of the middle and middle class in high and low income groups and economic development. While the middle class not only plays an important role in the economic development of the country, but also indirectly carries the weight of many other classes.

The power of votes near the poor: It is not very difficult to understand the disappointment of the middle and the salaried class. Not only are they neglected, they are also deprived of the benefits of altruism of the government. For those who understand the tax exemption for marginal and middle-income farmers, it becomes difficult to understand why the rich and affluent are allowed to escape the tax net. This is a completely wrong system.

In fact, our middle class invests in the economy as a consumer and thus contributes to the public exchequer. He bears the burden of not only the poor, but also those who do not contribute to the government exchequer. In parallel, the government’s dependence on indirect taxes has increased. The share of indirect taxes is now about half of the gross tax revenue. It was less than 40 percent nearly a decade ago. This is not the right situation for the economy. It has also been seen that indirectly more income is received from the poor and middle class people as a proportion of their income.

The middle class is like a large constituency whose scope is wide. About 40 percent of the countrymen will be included in the scale of their spending capacity (ranging from Rs 90 thousand to Rs 3.5 lakh annually). After food, shelter and other basics, they spend about one-third of their income in consumer goods, health care and investment in housing, etc. The lower middle classes spend, on an average, Rs 1.25 lakh annually. Most of them are involved in various types of organized business, from plumber, carpenter, electrician. A large part is also of outsiders, which is the indispensable workforce of the country. Many move easily within this group and are similarly entering the middle class.

Continuous expansion of the middle class: It is noteworthy that in the context of the Indian economy, many works have been done. The rapid development of the last three decades has brought many people out of the purview of poverty. Change and dynamics are easy due to development and demographics. Even if half of the poor live in middle-income, we will be able to see a middle class of about 70 crore population in the next five years. A recent study in this regard has revealed that this expansion in the middle class will accelerate household consumption in general and increase discretionary spending, which is an important aspect for the economy. By 2030, one billion consumers in the world will join the middle class and every fourth middle class consumer will reside in India.

The consumption pattern of about 20 percent of the middle class (aspirant) is different. They are young and live in most of these metros. They are more likely to spend on entertainment, health, luxury, durables and mobility. Purchasing power conformity strengthens their income and as their income level approaches around a third of their American partner’s income in a similar lifestyle, such families are able to afford the vehicle and their household expenses. This is expected to accelerate consumption of discretionary items ranging from food, housing and clothes. Similarly, the increase in the number of earning members in each family increases the overall utilization (consumption) which gives a big boost to the economy.

Discretionary spending is a powerful multiplier: in a consumption-driven economy, the pattern is as important as the size of the consumption. This is more relevant in unequal economies like India, where one third of the people are only able to meet the basic needs. This should not happen anymore. A recent study focusing on the widening prevalence of middle class consumption and diversity of income groups in 16 states shows that mere size is not sufficient to understand complex mechanisms of development in general and economic development in particular. The study also highlights a lack of understanding among policy makers on the relation between consumption and development.

Entrepreneurship and invention lie in the middle class, especially for the better. Lackless life allows them to invest, explore, invent and innovate. They have a high social level of enthusiasm. They will succeed by creating customized enabling ecosystems and promoting start-up capital. There are many other characteristics of middle-income-based development as compared to rich-class-based development. In fact, the strong middle class is an integral support, which provides a safety net to our economy against recession. They are a source of faith and hardworking, which makes business transactions more efficient. They invest in education and health, advancing many other social parameters, including building human capital. The government should also pay more attention in this direction, because a weak middle class is harmful for governance. As the wealth of the country becomes concentrated with few people, they use disproportionate power, so social anomalies arise.

Prime Minister Narendra Modi truly appreciates that a stable and self-reliant democracy requires a strong middle class and relatively low levels of inequality. The problem of rising income inequality creates extreme inequality. In the long run, it can have many serious side effects. This is the reason why our middle class should also focus on our policy and not only on social policy. In such a situation, there is a need to recognize the contribution of the middle-income group. The prime goal of the Prime Minister is to provide a wide range of facilities to the people of this class and to lead them on the path of progress, so that the economy of the country can be accelerated.

Mithak related to personal income tax: A large proportion of middle-class people are employed, who are salaried and pay bulk of their personal income tax. There is a need to break this myth that the people at the bottom of the income tax payer pyramid contribute very little amount to the government fund. In this case, the figures tell different facts. In the tax assessment year 2019, this class paying tax of up to one and a half lakh rupees was about 66 thousand crore rupees compared to the total amount of 23.5 thousand crore rupees six years ago. Policymakers need to understand and accept that the government earns a significant portion of the income taxes paid by these small tax-paying individuals, those with incomes below Rs 1.5 lakh. Those who contribute to it only hope that a part of the contribution made by them should be returned to them in both grace and cash.

Development of an understanding of political power: As the rich get away from the middle class, their respective political power increases the possibility of distorting the structure of a democratic country. The top 10 percent of the wealthiest people in our country have more than 75 percent of the country’s wealth. So their political influence is bound to increase. This causes damage to the middle class of the country. Their fate is linked to the quality of governance on the one hand and development on the other. They naturally have a favorable interest in promoting visionary and fair policies compared to the rich.

However, a study conducted in the year 2019 among 35,000 voters indicates a disturbing phenomenon. When one expects the middle class to be more politically active, they speak of going in the opposite direction. They make very few voices and are often indifferent. They engage less with politically influential people and are less involved in the process, underestimating their political power. The political class has also started to understand these facts very well. They ignore their views and even ignore and reject their needs.

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