The middle class, which has been the backbone of the BJP for decades, hoped that it would be offered more in the Budget. File
| Photo Credit: Reuters

The middle class seems upset with the Union Budget, presented on July 23. Many said that the government did not provide them any relief. The middle class constitutes nearly 31% of India’s population. Not many Budgets paid a great deal of attention to the demands and needs of the middle class either. But given the shift of the middle class away from the Bharatiya Janata Party (BJP) in the 2024 Lok Sabha elections, this section, which has been the backbone of the BJP for decades, perhaps hoped that it would be offered more in the Budget.

The Finance Minister acknowledged the challenges of the middle class and emphasised the government’s efforts to provide relief through tax adjustments despite limitations. Tax is a major concern for the middle class; most taxpayers belong to the middle class.

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Budgetary provisions

The proposed increase in Long Term Capital Gains (LTCG) tax from 10% to 12.5% and Short Term Capital Gains (STCG) tax from 15% to 20% affects those who invest in mutual funds and shares. This means that a large number of people belonging to the middle class, who invest in these financial instruments, may see a higher tax burden on their returns. This makes investments less attractive and reduces their potential gains.

The removal of indexation benefits, which adjust for inflation, for individuals selling properties is also going to hurt the middle class to a great extent. This change will result in higher taxable gains on the sale of properties, thereby increasing the tax liability for middle-class individuals. This could significantly impact those who rely on property sales for financial gains or retirement planning.

The deduction limit under Section 80D in the Income Tax Act has remained static for nearly a decade. Middle-class families, who often rely on tax deductions to manage their finances, face higher out-of-pocket healthcare expenses as the benefits of this deduction have not kept pace with rising medical costs. This stagnation reduces the real value of the deduction over time, placing a greater financial burden on the middle class. Collectively, these budgetary provisions are likely to contribute to a sense of dissatisfaction and impose a financial strain on the middle class, who feel that their significant contributions have not been acknowledged and challenges not adequately addressed.

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The BJP’s losses and gains

The BJP has suffered losses in the 2024 Lok Sabha elections compared to the 2019 elections. The unhappiness of the middle class was one of the many reasons for its losses. Data from the post-poll survey by Lokniti-Centre for the Study of Developing Societies (CSDS) confirm that there was a shift among middle and upper middle classes voters away from the BJP.

Table 1 shows that there was a 3% point shift among middle class voters away from the BJP — from 38% in 2019 to 35% in 2024.

Table 1 | The shift among middle class voters in Lok Sabha elections (2014-2024)

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Though the Congress did not gain from middle class voters, the INDIA bloc, of which it is a part, secured a 3-point increase in vote share from middle class voters in 2024 compared to 2019.

The BJP also lost votes from upper middle class voters. During 2019, 44% of the upper middle class voters chose the BJP; this declined to 41% in 2024. This reduced share also affected the vote share of the National Democratic Alliance (NDA), of which the BJP is a part, in 2024.

On the other hand, there was a 2-point gain in vote share for the Congress from upper middle class voters in 2024. The party’s allies gained much more from upper middle class voters. Among the upper middle class voters, 27% voted for the United Progressive Alliance (UPA)/INDIA bloc in 2019 and 32% voted in 2024 (Table 2).

Table 2 | The upper middle class vote in Lok Sabha elections (2014-2024)

The BJP held on to its support from the lower income groups. In 2019, 35% of the voters from lower income groups chose the BJP. This was the case in 2024 too.

The INDIA bloc managed to secure a 7-point increase from voters belonging to lower income groups compared to 2019. While in 2019, 28% of the lower income voters chose the UPA; this increased to 35% for the INDIA bloc in 2024 (Table 3).

Table 3| The lower income group vote: Lok Sabha elections (2014-2024)

Voters belonging to the lowest income groups voted for the Congress and INDIA bloc in a substantial way (21% for the Congress and 34% for the INDIA bloc) in 2024. It is important to note that the BJP’s support base increased marginally among the voters from the lowest income groups. During 2019, 36% of the voters from the lowest income groups voted for the BJP. This increased to 37% in 2024. (Table 4)

Table 4| The table shows the lowest income group vote in Lok Sabha elections (2014-2024)

The pattern seems to be clear. The higher the income category, the higher the losses for the BJP in 2024 compared to 2019. The BJP lost popularity among the middle and upper middle classes, maintained its support base among the lower income class, and marginally got more support from among the poorer classes.

The BJP’s increased popularity among the lowest category of voters can be attributed to the free rations that the government distributes to a large section of voters who mostly belong to these income categories; and various other welfare schemes. But the decline in the BJP’s support base among the middle and the upper middle classes is clear. It is time for the BJP to re-think how it is going to appease both the poor and the middle cases at the same time. Can it afford to ignore the middle class at the cost of appeasing the poor?

Sanjay Kumar is Professor and Co-director Lokniti-CSDS

Source: National Election Study 2014-2024 conducted by Lokniti-CSDS

Also read: CSDS-Lokniti post-poll survey: Personal financial conditions played key role in voting choice