Budget, Middle Class anger and 2019 – Should Modi be worried?

The 2018 budget speech was sailing along smoothly, with most ‘bhakts’ tweeting happily about the various budget announcements and singing praises of schemes like the National Health Protection Scheme. But then the moment Jaitley’s tax proposals were announced – all hell broke loose.

Supporters of the Government started showering abuses on the government for not doing anything for the middle class. This was not limited to Twitter, but seen on various social media sites including Facebook and WhatsApp. Many of these who were strong supporters of Modi were suddenly talking about using NOTA in 2019.

So why is the middle class angry? Didn’t they get an extra deduction of Rs 5,800? (40000 standard deduction minus 34200 deduction for transport and medical which was done away with) Did  the increase in cess by 1%, make an impact? Why are people so angry that they are even talking about a Modi defeat in 2019?

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The answer lies in the attitude of this government. The budget had something for everyone – farmers, BPL, women, senior citizens; except the middle class which has been the backbone of this government. There were high expectations before the budget of IT exemption being raised to 5 lakhs, with Jaitley’s bête-noire, the maverick Dr. Swamy even demanding abolition of IT.

With such expectations, it was clear that people were upset when Jaitley didn’t deliver. But what would hurt the middle class more is the Long Term Capital Gains tax. With small savings schemes of the government not fetching sufficient returns, many flocked to the stock markets to buy shares or invest in SIPs of mutual fund. The 10% tax now will hurt their savings kitty.

The middle class strongly stood with Modi during demonetization only because they trusted his intentions, They surrendered their LPG subsidies happily for the greater cause. But then petrol prices started moving skywards, interest rates from savings were cut (even Modi’s pet Sukanya Samriddhi scheme was not spared). And to add insult to injury, salaries of judges, governors have been raised. All this has made the middle class see red and believe Modi-Shah used them to win elections and have now abandoned them.

Will this anger of the middle class hurt the government in any way? I believe the answer is yes.

2004 had a similar situation – a popular, much loved PM, booming economy and yet there was a shock of an election defeat – one reason being Yashwant and Jaswant had hit middle class hard by bringing down interest rates on savings and the Congress capitalised on this with a powerful question –‘Aam aadmi ko kya mila?’.

Can 2019 become another 2004? YES – it can.

While people love the PM, they will not vote blindly. Gujarat was almost lost, it was the middle class which helped BJP sweep urban seats, even as the party took a battering in the rural areas. Modi-Shah duo’s calculations of winning rural votes through schemes in the budget may not work so easily as it would take at least a year for the budget benefits to trickle down. Also, perceived inaction on corruption and black money is making even the strongest supporters of this government squirm.

Shah is one of the cleverest politicians in Indian history, surely he will realise that you cannot desert your core voter in anticipation of new vote bases. The Rajasthan by-poll result has delivered a shock to the BJP. In 2014, BJP won 135/145 seats in UP, Chattisgarh, Rajasthan and MP, this is their peak and they can only come down from here, winning 80-90 may not be so easy. Add to this, the Sena break-up in Maharashtra, anti-incumbency for TDP and AIADMK, we may very well end up with a situation where Modi has to become PM in 2019, with support of Pawar and Stalin, which would make him a lame duck PM.

There is still time for Modi-Shah to work on this, hope that they assuage the hurt feelings of the middle class, by making some corrections/rollbacks. Even an assurance from the PM about how he would protect the interests of the salaried-middle class, would go a long way in calming down frayed tempers. Here’s hoping that as the budget session proceeds, the government, would see sense and respond to public sentiment.

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