Eighty-seven minutes is all it took for the Narendra Modi government to negate the gains, if any, made by Congress through Rahul Gandhi’s Bharat Jodo Yatra over the past four months or so. Exactly 80 minutes into her Budget speech in the Lok Sabha on Wednesday, Finance Minister Nirmala Sitharaman dashed all hopes of the Opposition of putting up a potent challenge to Prime Minister Narendra Modi in 2024.
Presenting the Union Budget 2023-24, the FM announced that people earning up to Rs 7 lakh annually will be exempt from paying any income tax under the new tax regime, besides introducing a standard deduction of Rs 50,000 and raising the basic income tax exemption limit to Rs 3 lakh — all under the new tax regime.
The Budget Impact
In one fell swoop, the Modi government may have decisively managed to impress a large section of the young middle class that constitutes a significant chunk of voters. The youth played a decisive role in Modi’s victory in 2014 and 2019. The government wants to ensure the coming elections are no different.
If it is any indication, official data released in 2020 shows that as much as 73 per cent of tax-filing Indians earn less than Rs 5 lakh a year. As many as 45 million new voters were added to the electoral rolls between 2014 and 2018.
Data from the People Research on India’s Consumer Economy estimates the Indian middle-class population (annual income between Rs 5 lakh and Rs 30 lakh) at around 432 million as of 2021.
The government estimates that at least 1 crore individuals in the Rs 5-7 lakh income bracket are likely to gain from the government’s decision to increase the rebate level to Rs 7 lakh under the new tax regime. And it isn’t just the young salaried class that the government has wooed by offering tax concessions.
Measures have been announced that impact women, a larger number of whom are today stepping out to vote in elections than ever before. The middle class and women are two significant voting blocs that have backed BJP over the past few years.
Middle class: The icing on the cake
There are nine poll stops on the road to Lok Sabha elections in 2024 — Meghalaya, Nagaland and Tripura in March; Karnataka in May; Rajasthan, Chhattisgarh, Madhya Pradesh, and Meghalaya in December. Every year, the middle class looked up to the Budget hoping to find some relief for them, but in vain.
However, the tax concessions offered by the government this year may have brought a dynamic shift in that perception. This change is what the government will hope to cash on. The BJP has seen the impact that the perception created by the middle class can have on electoral outcomes — remember the Anna movement and the Nirbhaya protests?
India is a country that is perpetually contesting elections, an art that the Bharatiya Janata Party under the leadership of Prime Minister Narendra Modi has mastered. The BJP has seen the success that initiatives such as PM KISAN and PM Gareeb Kalyan Anna Yojana have had in forming a positive perception in favour of the government, helped gain popularity among farmers; even creating a separate ‘Labharthi’ vote bloc that stood solidly behind the BJP.
However, the middle class, despite backing the BJP, has largely remained untouched by a majority of such people-centric schemes announced by the government in the past years.
By doubling the outlay for PM Awas Yojana – Rural to Rs 54,487 crore, and farm credit to Rs 20 lakh crore, Modi has ensured that he keeps his rural vote bloc intact. The tax concessions, on the other hand are aimed at ensuring that the middle class acts as the icing on the cake to create the same electoral impact as the Labharthi bloc, not just in 2024 but also in the nine state stops along the way.