Budget 2016: If the upper middle class wants to continue to enjoy the lifestyle they have got used to they need to make their money work harder. (Reuters)
Measures taken by the finance minister Arun Jaitley in Budget 2016-17 will encourage the middle class to save better. A case in point is the increase in deduction on health insurance policy from Rs 15,000 to Rs 25,000 per annum.
With medical inflation at an all-time peak, treatment costs and premiums increasing, this will help people go for better and higher medical cover. Other schemes directed at the aam aadmi (common man) are the Gold Monetisation Scheme and the Sovereign Gold Bonds. The aim is to help the common man earn returns on idle gold lying in lockers/vaults.
The Finance Minister is also trying to ensure a roof over the head for the lower middle class. With deductions on rent paid increased to Rs 60,000 per annum, additional exemption of Rs 50,000 for housing loans up to Rs 35 lakh (provided cost of house is not above Rs 50 lakh) and service tax exempted for housing construction of houses less than 60 sq m, this budget helps the common man meet their housing requirements.
While being main stream, the budget does hit some. A clear divide between the upper and lower middle class emerges. With all the cess imposed, surcharge on income has increased to 15 per cent, 0.5 per cent cess on taxable services makes all services – from mobile phone to dining out – costly and buying cars has become more expensive.
So, if the upper middle class wants to continue to enjoy the lifestyle they have got used to they need to make their money work harder. The message is pretty loud and clear that wise diversification and timely review of one’s portfolio would result in a better return over long term.
The author is founder & CEO of Faircent.com.