As the Budget looms near, I bet all the clamour will be for tax cuts for businesses and petrol subsidy for the middle classes. Of course, the middle classes believe they are aam aadmi/aam aurat. They shout the loudest and frequently get their way. But the consumption standards of the entire middle class are way above what most people in India enjoy. Just think that by the World Bank standards of $1 a day there are 40 per cent plus poor and at $2 a day around 80 per cent are poor. India has just reached a per capita level of $1,000 per year or just under $3 a day. This may not sound like much but if 80 per cent are below $2 and the average is $3, the remaining 20 per cent who are non-poor get almost $ 0 or Rs 400 a day.

The question for Pranab Mukherjee and Manmohan Singh is that what does the Budget do for the 80 per cent who don’t drive cars, don’t have refrigerators or tapped water? If some group wishes for a tax cut or subsidy can they show where the money will come from? In the UK, we have regularly calculated the distributive impact of each Budget so you know how the bottom 10 per cent fared relative to the top 10 per cent and everyone in between the two ends. Why can’t India do that?

If we had a calculation like this, it would show that the poor pay the bulk of taxation. The many indirect taxes fall on the poor as much as the rich, but they fall disproportionately on the former. For all the rhetoric about Gandhiji and antyodaya, the last sixty years have put the poor the last among the claimants of development. Some things have been achieved and the head count of poverty has fallen especially since 1991. Yet, the smugness of the elite is shaming. India still has 60 per cent plus mired in the rural economy where they produce little and starve silently. Industrialisation has not benefited them but only the highly skilled.

... contd.