Budgets, reforms and the Middle India

Middle-class Indians will be looking at Budget 2005-06 for more savings and less tax, writes Saubhik Chakrabarti.

The good thing about 15 years of reform budgets is that they shored up a process that changed middle-class India. The great thing is that in some ways the middle class hasn’t changed.

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The middle class is bigger, younger, richer and a big spender, with consumption patterns shifting from essentials to indulgences. The spending matters hugely. By expenditure patterns, private consumption accounts for 60 per cent of India’s GDP.

What hasn’t changed matters hugely, too. The middle class has continued saving. Savings represent investible surplus. Every East Asian success story is built around high savings rates.

Change and continuity determine what middle India expects of P Chidambaram on February 28.

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