THE MID­DLE CLASS TAKES POLE PO­SI­TION AHEAD OF 2019 POLL

Mint ST - - POLITICS -

Within the span of less than a week the rapidly bur­geon­ing mid­dle class was served a bo­nanza twice. First, the Union bud­get carved up an in­come tax ex­emp­tion for those at the bot­tom of the mid­dle class food chain. And then, last week the Re­serve Bank of In­dia (RBI) sprang a sur­prise by un­der­tak­ing an in­ter­est rate cut—which to the as­pi­ra­tional mid­dle class, pro­vided the banks read the sig­nals, would trans­late into lower EMIS, or equated monthly in­stal­ments, on out­stand­ing loans for houses, au­to­mo­biles and, in some in­stances, even white goods such as re­frig­er­a­tors and tele­vi­sions.

Pre­ced­ing this pre-elec­tion largesse were the var­i­ous rounds of cuts in goods and ser­vices tax (GST) rates. The big­gest was in the form of a New Year gift, which re­duced tax rates on 22 items, of which seven were from the high­est tax slab of 28%. It in­cluded mon­i­tors and TVS up to screen size of 32 inches, power banks, dig­i­tal cam­eras and video cam­era recorders, and video game con­soles.

Tak­ing all this to­gether, it is clear that the mid­dle class is emerg­ing as a key elec­toral con­stituency. Pre­vi­ously, like farm­ers, they were too dis­parate and, hence, rarely op­er­ated as a col­lec­tive. But just as an agrar­ian cri­sis, es­pe­cially the prob­lem of sur­pluses in farm out­put, united farm­ers, the cause of as­pi­ra­tions is find­ing sim­i­lar res­o­nance among the mid­dle class.

This is par­tic­u­larly true if one ex­pands the idea of this de­mo­graphic seg­ment to in­clude the neo mid­dle class—those who have been lifted out of poverty by nearly two decades of rapid eco­nomic growth and are now re­sid­ing ei­ther in ur­ban ar­eas or in peri-ur­ban pock­ets (of­fi­cially clas­si­fied as cen­sus towns) work­ing as de­liv­ery per­son­nel, Ola/uber driv­ers, beauty par­lours or se­cu­rity guards. This pop­u­la­tion seg­ment mim­ics mid­dle class con­sumer be­hav­iour that goes be­yond meet­ing their ba­sic ma­te­rial con­sump­tion needs to in­clude ed­u­ca­tion and en­ter­tain­ment; they are also deeply as­pi­ra­tional—which also makes them po­lit­i­cally po­tent.

In a piece pub­lished in Mint in 2016 (bit.ly/2dsn5jr), two ex­perts from the Bos­ton Con­sult­ing Group writ­ing on the neo mid­dle class had said as much: “Who they are, what they be­lieve, why they choose, where they shop and how they buy. Com­pa­nies and gov­ern­ments alike will need to fun­da­men­tally rein­vent them­selves and cre­ate new rules of en­gage­ment to truly win in this new re­al­ity.”

Politi­cians seem to be seized of this. Prime Min­is­ter Naren­dra Modi, in a state­ment is­sued im­me­di­ately af­ter the pre­sen­ta­tion of the bud­get, specif­i­cally al­luded to them: “Our neo mid­dle class is ris­ing and so are their dreams,” he said be­fore de­liv­er­ing his gov­ern­ment’s re-elec­tion pitch, “(the) in­terim bud­get (was) a trailer for what will take In­dia to­wards pros­per­ity af­ter Lok Sabha polls”.

In­ter­est­ingly, it was Modi who had first coined this term when he in­tro­duced it in the man­i­festo of the Bharatiya Janata Party (BJP) ahead of the elec­tion to the Gu­jarat state as­sem­bly in 2012. Then CM Modi was quick to re­alise that this neo mid­dle class, which pos­sessed deep as­pi­ra­tions, re­quired a dif­fer­ent kind of hand-hold­ing as com­pared to the poor, es­pe­cially since they were flock­ing to ur­ban set­tle­ments where life can be so much more un­for­giv­ing.

Clearly PM Modi, sens­ing a po­lit­i­cal op­por­tu­nity, seems to have ex­tended this strat­egy to the na­tional level. While we have no idea even­tu­ally how this seg­ment will vote, it is ob­vi­ous that the cen­tre piece of PM Modi’s agenda, anti-cor­rup­tion, will log­i­cally hold an ap­peal, as it seeks to level the play­ing field.

Re­gard­less of the out­come of the forth­com­ing gen­eral elec­tions, it is clear that the mid­dle class can no longer be taken for granted. Al­ready a third of In­dia lives in ur­ban ar­eas; the 2021 Cen­sus is likely to show us that this pro­por­tion would have grown even more, set­ting the stage for a rewrit­ing of the po­lit­i­cal rules.

Anil Pad­man­ab­han is man­ag­ing ed­i­tor of Mint and writes ev­ery week on the in­ter­sec­tion of pol­i­tics and eco­nom­ics. Com­ments are wel­come at [email protected]

PRADEEP GAUR/MINT

It is clear that the mid­dle class can no longer be taken for granted.

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