The burgeoning middle class in the country, which is estimated to have voted for the Modi government in the general elections in large numbers, will now expect favourable decisions from the government in the Union Budget.
The middle class, that is said to constitute nearly 20 percent of the population (India's middle class will hit 250 million or 20 per cent of the country's population in 2015, according to McKinsey and Company, Daily Mail had reported) is currently facing issues like rising prices, high inflation and slow economic growth, and is looking to the new government for some respite.
We list a few expectations here:
- Income tax relief – The salaried class in the country is burdened with high inflation and low salary hikes. They will look for respite through increase in tax exemption limits, which will also lead to investment in long-term savings such as life-insurance.
The middle class hopes the exemption limit will be raised by at least ₹ 1lakh, to take the ceiling from the current ₹2 lakh to ₹3 lakh. The middle class will also hope for revision of tax slabs, which indicate how much percentage different income groups are taxed.
There are also expectations that the government will raise tax exemption limits on bank fixed deposits, insurance premium and mutual funds from ₹ 1 lakh to ₹ 2 lakh a year under Section 80C.
- Increase in allowances – The salaried class wants an increase in its medical allowances, conveyance and child education allowance. It definitely needs more than the ₹15,000 medical reimbursement available at present.
- Affordable housing – The middle class is hoping that its dreams of buying a home is facilitated by the government by raising the interest deduction limit on home loans from the current ₹1.5 lakh to at least ₹3 lakh.
- Lower Food prices - Food inflation shot up to 9.5 percent in May, bringing the WPI inflation to 6.01 percent in the same month. Prices of vegetables such as potatoes and onions have been recklessly rising, even as the government blames it on hoarding. The middle class that is already bogged down by high inflation will want a much-needed relief from shooting food prices.
- Infrastructure growth – From a macro-economic perspective, the salaried class, which has been paying its taxes without getting adequate facilities in return, will sincerely hope for infrastructure growth through relevant policies by the Modi government in its Budget.