New Delhi:
In a fiery address during the Parliament debate on the Union Budget 2025, Aam Aadmi Party MP Raghav Chadha lambasted the Indian government for its alleged neglect of the middle class. Chadha’s critique centered on the notion that while the poor and the rich receive substantial benefits, the middle class is left to bear the brunt of economic policies without any significant relief.
Chadha’s argument was clear: the middle class, despite being the largest taxpayer, is treated as a perpetual source of revenue without any reciprocal benefits. He likened the middle class to a “hen that lays golden eggs,” which is constantly squeezed without any consideration for its well-being. This analogy underscored his point that the government’s policies have led to a decline in the spending capacity and consumption of the middle class, contrary to the Finance Minister’s claims that tax exemptions would boost consumption.
During his speech, Chadha highlighted that only 6.68% of India’s 1.4 billion population benefits from the new tax exemptions. Out of 80 million income tax filers, a staggering 49 million report zero income, leaving only 31 million taxpayers to shoulder the bulk of the tax burden. This, he argued, demonstrates that the true weight of taxation falls squarely on the middle class. Chadha emphasized that the middle class pays taxes on almost every essential item, including milk, vegetables, and medicines, which further depletes their already strained finances.
Chadha pointed out the stark disparities in government policies, where the poor are provided with subsidies and the rich have their debts forgiven, while the middle class is left with no subsidies or tax relief. This, he claimed, results in stagnant salaries, minimal savings, and a constant struggle to keep up with inflation. For instance, when food inflation exceeds 8%, salary increments are often less than 3%, exacerbating the financial strain on middle-class families.
Middle-class families, according to Chadha, are frequently trapped in long-term debt to cover essential expenses such as housing, higher education, and emergency needs. He illustrated this point by noting that even after a lifetime of work, many middle-class individuals have to sink into 20-25 years of debt to purchase a modest 2BHK house. The financial squeeze is further tightened by the need to pay rent on the 1st of the month while salaries are often received on the 7th.
Chadha cited the slow growth of Fast-Moving Consumer Goods (FMCG) companies like Nestle India as evidence that the middle class is no longer spending as it once did. He argued that consumption will not increase until Goods and Services Tax (GST) rates are reduced, as GST affects everyone, not just income taxpayers. The current high GST rates on everyday items like milk, vegetables, and medicines leave the common man with less disposable income, thereby reducing overall consumption.
The debate, which took place during the budget session in Parliament, highlighted the ongoing discussion on the Union Budget 2025 and the need for more inclusive economic policies that address the struggles of the middle class.
