Wednesday, February 28, 2024
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Mint Primer: Are you middle class? A housing scheme may hold clues

Finance minister Nirmala Sitharaman has announced a housing scheme for the middle class as part of a ‘housing for all’ policy. This has sparked off a hunt for counting the middle class. Mint explains what this announcement means and who the middle class are in India:

What is this middle class housing scheme?

After enabling access to affordable housing for low- and moderate-income Indians under the Pradhan Mantri Awas Yojana (PMAY), the budget for FY25 proposed housing for the middle class. The government will launch a scheme to help deserving sections of the middle class “living in rented houses, or slums, or chawls and unauthorized colonies” to buy or build their own homes. While this is a part of the ‘housing for all’ policy, it is not an extension of PMAY. It’s a new scheme, for which the government will specify the income levels, location and types of accommodation to identify beneficiaries.

Who are the middle class in India?

In the West the term denotes the well-heeled. But there’s no Indian definition. Several surveys have tried to identify the income levels to define this group. According to a 2022 report by People Research on India’s Consumer Economy (Price), households earning between 5-30 lakh annually are middle class. Analysis based on a decade-old data shows many who loosely describe themselves as middle-class may actually fall in the top 1-5% of the population, meaning that households truly in the “middle” have meagre earnings. The extent can only be known once updated consumer expenditure and Census data is in.

How to define the middle class?

Scholars globally have tried to identify the middle class in different ways but nothing universal has emerged yet. A Brookings report says the basis of the definition falls into one of three broad categories: cash, which relates to income; credentials, which include educational achievements and qualifications; and culture, which includes attitudes and mindsets.

Does tax returns data throw some light?

In recent years, income tax collections have improved, with more people filing returns. According to data released last year, the highest number of tax returns were filed in the income range of 5.5-9 lakh a year. Until 2018-19, 33% of income tax filers were in up to 5 lakh bracket, 29% in the 5-10 lakh bracket, and 38% above 10 lakh. According to a 2023 SBI study, the weighted mean income among tax filers has increased from 2.3 lakh in assessment year 2011-12 to 13 lakh now.

How will the scheme help?

While the results of the new consumer expenditure survey and the Census are unlikely soon, beneficiaries of the scheme based on income levels, location and accommodation can form the basis for categorizing the middle class in the meantime. are unlikely for a couple of more years, beneficiaries of the scheme based on income levels, location and accommodation can form the basis for categorizing the middle class in the meantime.

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