Poll Budget targets women, middle class.

Bumper Budget for middle class, women ahead of general elections in 2024

Tax rebate offers some relief to middle class that's been hit by rising living costs

Prashun Bhaumik | New Delhi | 1 February, 2023 | 07:00 PM

Finance Minister Nirmala Sitharaman used the last full-year budget before the ballot to raise the rebate threshold in the new personal income tax structure.

Prime Minister Narendra Modi wooed hundreds of millions of middle class voters and women with incentives such as tax rebates and savings plans to ensure their backing in national elections next year.

These two groups have emerged as key voting blocs that have supported Prime Minister Modi in past elections and he will need their support as he seeks a third term in office.

Finance Minister Nirmala Sitharaman on Wednesday used the last full-year budget before the ballot to raise the rebate threshold in the new personal income tax structure.

This offers some relief to the middle class that’s been hit by rising living costs.

“These primarily benefit our hard-working middle class,” Ms Sitharaman said in her speech to parliament. She has often said she hails from a middle class family and understands high living costs pressures that this segment of India’s 1.4 billion population faces.

India’s middle class is estimated to be about 432 million-strong, according to data from People Research on India’s Consumer Economy. The think tank has categorized households with an annual income ranging between ? 500,000 ($6,098) to 3 million rupees in 2020-2021 as middle class.

While India’s political parties have traditionally competed to attract rural voters, in recent years they have turned their attention to the urban, middle class citizens who were previously seen as less politically invested. The segment is expanding and is watching government policies closely as they strive for a better quality of life.

Prime Minister Modi and the Bharatiya Janata Party swept to power in the 2014 election in part because middle class voters rejected the Congress-led coalition amid a spate of corruption allegations, price rises and poor governance. The BJP held onto this voting bloc in 2019 polls.

Sitharaman also unveiled policies that will help female entrepreneurs, particularly those in rural areas, procure raw materials and get better branding of their products.

There are also plans to impose a fixed interest rate for savings plans for young women and girls. In recent elections the number of women stepping out to vote has increased, as has their support for the BJP. More women have come out to vote and support the BJP compared to the men in all all four states that the party won in March last year, according to a joint study conducted by the New Delhi-based Centre for Policy Research and the university of Oslo.

Courtesy Bloomberg