The middle class has emerged as a focal point of political discourse leading up to the Budget Session of Parliament, set to commence on February 1, 2025, just days before the Delhi Assembly elections on February 5. President Droupadi Murmu, who noted the significance of the middle class's aspirations for India’s economic narrative, referred to this demographic eight times during her recent address. Prime Minister Narendra Modi followed suit, offering prayers for blessings upon the middle class and poor, acknowledging their importance to the economic framework of the nation.
This political awakening is crystallized within the ruling Aam Aadmi Party (AAP), which released what it termed a "middle-class manifesto." This document lists demands aimed at the central government, including increased allocations for education and health, alongside calls to raise the tax exemption limit. This maneuver demonstrates the AAP's attempt to recapture support from the middle-class segment, which had previously bolstered its rise post-India Against Corruption.
Interestingly, the middle class is often seen as aligning more closely with the opposition BJP, particularly following recent electoral analyses from the Lokniti-CSDS study, which indicate a narrowing of support for the AAP among lower-income voters. Herein lies the challenge: defining the middle class itself, as there remains no uniformity across various studies. The diversity of measurements—ranging from income brackets to consumption expenses—adds to the complexity of addressing this group's needs.
For example, the People Research on India’s Consumer Economy (PRICE) defined the Indian middle class as households earning between ₹5 lakh and ₹30 lakh annually, and individuals earning ₹1.09 lakh to ₹6.46 lakh. Contrastingly, the National Council of Applied Economic Research considers households with incomes ranging from ₹2 lakh to ₹10 lakh as part of the middle class. Meanwhile, Nobel laureates Abhijit Banerjee and Esther Duflo aimed to quantify middle-class populations based on daily expenditures, illustrating the vast differences across the spectrum.
Continuing this trend, PRICE reported last year 31% of India's population falls under the middle-class label—approximately 43.2 crore people—while the capital, Delhi, recorded about 67.16% middle-class families, the highest among the country's states. The sheer volume of self-identifying middle-class individuals reflects on survey statistics, which vary regionally; Delhi citizens claim to be middle class at 64%, compared to 49% nationally.
These differing perceptions matter increasingly as political representatives attempt to tap this key demographic. The Modi government has strategically launched tax cuts to appeal more directly to middle-class voters, emphasizing relief measures such as eliminating income tax for those earning up to ₹12 lakh. With around 80% of tax-filers sitting within this bracket, the government’s mandate signals its commitment to embedding middle-class welfare within its fiscal strategies.
This budgeting approach responds directly to previous criticisms from this demographic of feeling underrepresented as politicians tended to favor poorer constituencies with welfare schemes. Speaking to this matter, Modi proclaimed, "We care for you and you now have more money to spend." The tangible effects of the new tax structure could inject around ₹1 lakh crore back to the public for spending, reshaping consumer capacity and potentially igniting economic growth.
Nevertheless, observers express caution against expecting transformative economic reforms stemming from this budget. While there is evident intent to adjust policy toward consumer-driven growth, anticipated structural changes akin to major shifts during 1991 have yet to materialize under Modi’s government, with political advisers indicating a wait-and-see approach amid global economic challenges.
This cautious conservativism is manifested through investments limited to ₹11.2 lakh crore and maintaining fiscal deficit targets at approximately 4.4% for FY26—a prudent choice perhaps, yet stoking questions about overall economic momentum. Leaders within India’s business sector are voicing dissatisfaction with the budget’s lack of aggressive reforms, yet the immediate political gain from middle-class support could be worth the gamble, especially with the backdrop of high-stakes elections.
Political analysts suggest the combination of middle-class outreach and forthcoming financial injections could define the Modi administration’s path leading to the next election. They theorize this demographic's voting behavior is significantly influenced by larger economic realities—a sentiment echoed by middle-class households across the nation as they anticipate more favorable conditions post-budget.
To summarize, as the political spotlight turns toward the middle class, it unveils both economic strategies and the inherent challenges defining and engaging this diverse group. Budget 2025 sets the stage for testing the waters of middle-class sentiment leading up to the elections, with the ultimate question remaining: Will these measures translate effectively at the ballot box?