It is well understood now that India’s middle class is suffering (see, for example, our blog: https://marcellus.in/blogs/why-is-the-indian-middle-class-suffering/). As columnist and best-selling author says in this piece in the New Indian Express: “The middle class is stranded in a political muddle between oligarchs extracting rent and parties wrenching rent for votes.”
However, an even more interesting point that Shankkar makes in his piece is that the middle class might have only itself to blame for the predicament it finds itself in. How so? Shankkar writes: “Polymath and philosopher Aristotle, in his opus Politics, contended “the political community administered by the middle class is the best”. He observed that by “throwing in its weight [it] sways the balance” and prevents extreme outcomes. “
If you buy Shankkar’s point of view that the middle class sways outcomes, it follows that the middle class needs to consider carefully to throw its weight. The present situation in India presents a choice. On the right corner is fiscal conservatism which might result in lower cost of capital for Indian businesses: “What is also critical for growth is the level of deficit that defines borrowing costs and the debt-to-GDP ratio.
Aspiring for an upgrade in India’s sovereign ratings, the government is targeting a fiscal deficit of around 4.5 percent of GDP. Much depends on the room for expenditure.”
On the left corner is more pro-poor government spending which might allow consumption to recover from the funk it finds itself in: “State governments are spending over Rs 4.7 lakh crore on subsidies—including Rs 2+ lakh crore just on cash transfers to women.”
Unfortunately, for the Indian middle class, it is neither in the right corner nor in the left corner. It has its own demand which is highly unlikely to be met given that at the ballot box, the middle class is rarely able to make its muscle felt: “The expectation is simple. The taxpaying middle class believes it deserves a share of the taxes collected; call it a rebate on the taxes that fund the schemes that propel parties to power.”
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