Most countrymen feel that none of the Indian government to date has done enough for the middle class. As understood, the government has always been found to favour the poor and rich over the middle class. Most Indian governments have shown a tendency to drain the wealth from the middle class and distribute it to the poor. For instance, vehicle owning middle class was gifted with increment in taxes on Diesel and petrol prices to make up for the reduced crude prices. The Indian Governments have always shown a tendency to forget the promises made to the middle class in the run-up to the elections. Now there’s an important question that comes to the mind: is it because the Indian middle class plays a relatively insignificant role in Vote Bank politics?
1) Make Savings for Retirement Easier, Cheaper and Secure
As per the survey, 60% of Indian middle-class retirees will outlive their retirement savings. As a matter of fact, most Indians don’t have the savings to maintain their current living standards post-retirement. It’s essential to rework on the quality of the available retirement plans. There’s a Pension plan for Government employees and there is an Employee Provident Fund scheme for employees working in private firms wherein the Government contributes up to a specific percentage. But the problem lies with the fact that the Employee Provident Fund Scheme still covers only a very small percentage of the private sector workforce.
The government should come forward with some voluntary pension plans for the employees of the small scale enterprises. These kinds of government initiatives can surely convert the middle class of India from a “pension-less” to a “well-pensioned” society.
2) Lower Housing Costs
One of the biggest challenges of a middle-class family is managing rent expenses for a standard home. With ever-increasing housing expenses, this is coming out as one of the most stressful decisions for a middle-income group family. This problem of housing for middle-class families is more severe in metro cities where real estate costs have skyrocketed owing to lesser spaces and higher demands.
The Indian government has rolled out Pradhan Mantri Awas Yojna (PMAY) for housing for middle-income group families. As per the figures, only 27,000 families enrolled for PMAY between January – March 2017 which was just slightly more than half of the government’s actual target of 50,000 families. Hence, it can be termed as a total failure because of several factors coming into the play.
3. Paid Sick leaves must become mandatory
India is one of the developing countries on Earth that doesn’t guarantee paid sick leaves to all its workers. For your information, more than 80 percent of India’s middle-class staffers do not have access to paid sick leaves. And as a result, many of them have to make a difficult choice between work and family. Mandatory paid leaves are an important policy for a middle-income group person. Many middle-income group staffers have to bear the brunt of pay cuts in order to care for a sick child or aged parents. The government should come up with some policies that would ensure paid leave protection for the middle-income group for one’s own illness, for a family member’s illness, for a child’s birth, etc.
23% of adults reported losing a job for taking time off for a family member falling sick. Not just that, adults with no paid sick leaves have more chances of being ill and going to the office rather than staying at home. If these workers carry some contagious infection then the entire working population becomes vulnerable. This cost of “Being present in the office while being sick” is higher compared to the cost when the worker is there on a paid sick leave.
4. Work Schedule to maintain work-life balance
Hour-based jobs coupled with lower salary scales have become an extremely normal thing nowadays. Add to that ever-changing work schedules and what you get is a haywire work-life balance. This kind of dynamic work schedules make middle-class workers uncertain about their monthly income and turn family care into a daunting task. The Government can come up with some acts like – Changing of Work Schedules require prior notification. This would be highly helpful to the employees in managing their non-office-work schedules. This would provide them with protection against cancelled or shortened work hours.
5. Invest in affordable Medical Care
Do you know? – Unpaid medical bills have gone on to become one of the major reasons of bankruptcy. The middle class income group in India has been longing for ever for affordable yet quality medical care. Due to the poor quality, mismanagement and substandard ambience of government managed hospitals, most middle class income group are bound to choose highly expensive private hospitals over the government hospitals. Unaffordable private medical facilities are one of the biggest issues faced by the middle class Indians. Normal middle income group families drain more than 50% of their savings in case a serious medical situation arises in the family. The Government should invest in quality medical facilities and proper management in Government ran health care institutions so that the quality healthcare can be provided at affordable costs.
Good government health care facilities at affordable rates will be the biggest boon for middle class Indians who are forced to choose private medical facilities over the government ones owing to the poor quality of the latter ones. Not just that, the Government should also provide some basic form of medical insurance to all the middle class taxpayers group. This will act as a huge protection against any kind of major illnesses or injuries.
6. Invest in quality primary education at affordable rates
Just like the healthcare sector, an average middle class Indian is bound to choose expensive private educational institutions over the poorly managed government educational institutions. The high fee structure of an average private school forms a major dent in a middle class person’s pocket.
Almost 90% of the government institutions have a poor ambience and a very low key infrastructure. Leaving these apart, most government institutions do not have up to the mark facilities and there is no scope for extra curricular development. On the other hand, most private institutions charge an exorbitant amount of fees in comparison to the government-run educational institutions. Hence, quality yet affordable government primary schools will serve as a big boon to the middle income group Indians.
7. Cut down inflation
Inflation is one of the biggest issues hampering the growth of the middle class income group in India. An extremely higher rate of inflation has been there for already some years now and it has created a major impact on the lifestyle patterns of the middle class Indians. Due to the increased inflation rates, an average middle Indian is spending 54% of it’s income on food and about 7% on other necessary commodities like housing, clothing, education, health, transport and other miscellaneous items. The percentage of savings of a middle income group individual has subsequently dried up. As a result of which these middle class Indians have had to largely compromise with the quality of products they use.
Let’s take a live example of one Mr. Mukherjee whose a part of an average middle income group Indian family. Increased inflation rates have forced her to cut back on healthy foods like eggs. She’s had to switch to a low quality rice that is bad for health but costs less. She’s had to stop spending on basic body care cosmetic products as they seem to burn a hole in her pocket. And most importantly, even after so much, she’s unable to manage a decent savings.
As a matter of fact, only 8% of middle class Indians are adequately placed to meet their family’s basic expenses. Though 87% of middle class Indians have a bank account, yet only 13% have borrowed any kind of loans. Besides, they have limited access to basic lifestyle needs such as toilets, electricity, water, healthcare, clean tap water etc.
Hence, the government needs to keep the inflation rates in check in order to positively impact the growth rate of an average Indian middle class household.
8) Promote entrepreneurship among middle class
India is generally a middle income group driven country. Most of the middle income group enroll themselves for education loans for higher studies. Hence, they have to get all their loans cleared before they can risk starting a business. The government should come up with initiatives like state based loans for small businesses started by middle income group individuals. Adequate financial support must be ensured by way of unsecured loans or loans against minimum security. The rate of interest of loans for small scale businesses should also be minimized. Besides, the government needs to come up with entrepreneurship friendly tax policies.
Not only that, effective affordable marketing by way of organising government fairs at subsidized rates will also act as an efficient way of bridging the gap between middle class entrepreneurs and target consumers. Lack of basic infrastructure like electricity, supply of water etc. in suburban and rural areas must be improved so as to provide a business friendly environment for small scale middle income group entrepreneurs. The government can also do its bit by organising technological, managerial, financial and marketing training programs at affordable rates for upcoming middle income group entrepreneurs.
9) Reduction of Taxes for middle income group
Out of all the income groups in India, the maximum tax burden is borne by middle class Indians. It’s time to reduce the tax burdens on the middle class so that they can turn themselves into the achievers of society. The government should stop burdening the middle class with the burdens of the poor class society. A cut in the personal tax is what is being expected by the middle income taxpayers. There is a huge disparity among the income tax levels for middle income group and higher income group taxpayers. The varied levels of income tax for middle class people who earn through their work are fixed at 5%, 10% and 20%. On the other hand, higher income group people who generate income by buying and selling equities and properties have to pay much lower taxes.
In reality, how much tax you pay in India does not really depend upon how much you earn. It majorly depends on how much you can hide. Hence, the middle income salaried group is the most disadvantaged group since their 100% of the taxes are already deducted before their salary reaches them. As per the data, a certain percentage of salaried middle income taxpayers pays almost the same amount of tax as some of the higher income group individuals. Different governments and their respective finance ministers have failed to rectify this taxation system which penalises the middle income taxpayers.
Huge Tax Burden on Middle Income Group Tax Payers
10) Address joblessness
The government should address joblessness at the earliest. As per figures, at least a minimum of 17.8 million white collared workers (a major portion of which constitutes the middle class) have been laid off in the year 2019-20. Plus middle class businessmen have also been suffering huge losses in their respective businesses at the hands of the industry biggies which have entered in almost all the sectors. Increased employment is going to bring much needed financial stability for the middle class section.
Add to that the companies continuously coming up with artificial intelligence techniques to automate machineries which are heavily replacing human interference from process based jobs. And most of the middle income section of people are involved in such kind of rule based jobs. As per the data, automation is going to kill 52% of jobs. The employment situation of middle class Indians have never looked so bleak ever in the history of independent India. The business firms that have been employing the middle class are battling depts like never before. From manufacturing to IT firms, firings of employees have been taking place at a much higher rate than before. The government needs to address the unemployment challenge in order to improve the situation of the middle class Indians