The Middle-Class Squeeze

India’s middle class has always been called the backbone of the country’s economy. But the reality is harsh for people earning between ?10 lakhs and ?25 lakhs a year. They are stuck in a difficult situation - earning too much to get government help but not enough to escape the heavy burden of taxes and rising costs. It’s time to stop ignoring their struggles.

The Tax Burden

For this income group, taxes take a huge chunk of their earnings, yet they get almost nothing in return. The number of taxpayers in this bracket has increased by 291% between 2013-14 and 2021-22, showing how this group is growing and contributing more than ever. Despite this, government policies continue to focus on helping the poor and the rich, leaving the middle class to fend for themselves.

Taxpayers in this bracket contribute over 12% of the total income reported, making them one of the biggest contributors to the nation’s economy. Yet, they’re left with outdated and inadequate tax breaks. Deductions under Section 80C (?1.5 lakh limit), Section 80D (health insurance), and home loan interest (?2 lakh limit) under the old tax regime are too small to keep up with inflation and rising costs of living. It’s like giving a drop of water to someone in a desert. Under the new tax regime, they can't claim 70 tax deductions and exemptions available under the old regime like Section 80C, Section 80D, HRA exemption, etc.

Lack of Subsidies and Welfare Schemes

The government’s welfare schemes are mostly designed for people earning less than ?10 lakhs a year. For those in the ?10-25 lakh range, the story is bleak:

• Housing Subsidies: Under the Pradhan Mantri Awas Yojana (PMAY), middle-income earners can get an interest subsidy of 3% on loans up to ?12 lakhs. But the strict rules and small subsidies mean many don’t qualify, and even those who do find the benefit too small to make a difference.
• Education and Healthcare: Free or subsidized education and healthcare initiatives overwhelmingly target the economically weaker sections. Middle-class families pay sky-high fees for private schools and colleges, along with hefty medical bills.
• Pension and Security: Schemes like the Atal Pension Yojana are aimed at lower-income groups, leaving middle-income earners to fend for themselves in building retirement savings.

Rising Costs, Shrinking Relief

The cost of living for the middle class is skyrocketing. School fees, medical expenses, home loans, and daily essentials eat up most of their income. Meanwhile, there are no GST exemptions or lower rates on goods and services that this group regularly uses. They are constantly under financial pressure, even though their earnings seem high on paper.

Middle Class Deserves Better

The government needs to stop ignoring the middle class. People earning ?10-25 lakhs are the professionals, entrepreneurs, and salaried workers who drive the country forward. Yet, their aspirations are crushed under the weight of taxes and costs with no meaningful support.

What Needs to Change:

1. Fairer Tax Slabs: Introduce more practical tax brackets to ease the pressure on middle-income earners.
2. Expand Subsidies: Extend benefits like housing and education subsidies to include the middle class, who also need support.
3. Affordable Healthcare: Launch health insurance schemes that cater specifically to this group.
4. GST Reforms: Reduce GST rates on essential goods and services for middle-class families.

Time to Act

India’s middle class stands at a critical crossroads. They contribute significantly to the nation’s progress but find themselves increasingly alienated from its benefits. It is time for policymakers to recognize this group’s pivotal role and address their concerns with actionable reforms. Only then can India truly claim to be a nation that leaves no one behind.