Union Budget 2018: Positive impact on Indian Middle-Class

With Indian Union Budget being published amid great expectations and some controversy, the salaried middle-class appears to have been given a raw deal after the Union Budget 2018 was announced. With following policies, middle-class have immediately raised their flags to share their concerns with the support and incentives that they are receiving from the governmental policies:

1. 1% increase in Education Cess
2. No change in income-tax slabs
3. No changes in Sec 80C exemptions
4. Marginal increase (INR 5,800) in Deductions
5. Re-introduction of Long-Term Capital Gains Tax @ 10%

So, is there anything positive to talk about?

The answer is, Yes.

This article is not a consolation piece to pacify the salaried individuals or some optimistic assessment to try to convince them that the Budget, in fact, is great for them! because it isn’t actually. However, it is possible to identify opportunities within those provisions, and more attention should be paid on those.

The reality is that this demographic has been the largest contributor to tax collections since the beginning of time and that’s not going to change in the not-so-near future. So, apart from hope and optimism, that the current & future govts., are & will be taking measures to improve this situation, what else can be done?

Better Financial Management and Improved Financial Habits”

The Salaried class must take responsibility and stand-up to the opportunity by taking more control of their finances, whether it’s expenses, savings or investments. With India’s Investment-Saving Index gradually swinging more in favor of the investments. We still have a long with to go, when compared with other developing nations.

India is changing. Fast. Piggybacking on digital disruption, we’ve witnessed a paradigm shift in industries such as telecom (Jio), transportation (Ola, Uber), commerce (Flipkart, Amazon), media (Facebook, Youtube) and many others. Hence, it is no wonder that the Fintech landscape is also on the cusp of a boom, with e-wallets, UPI etc., already driving change in current consumer behavior.

Various initiatives taken by the govt. under PMJDY (Pradhan Mantri Jan Dhan Yojana) to promote financial inclusion have seen phenomenal success with USD 12 Billion worth of deposits being made across 310 Million Aadhaar-linked Bank Accounts since 2014, linking saving deposits, credit, insurance, remittances etc. in an affordable manner for it’s citizens. The next break-through in our lives will be defined by change we bring in towards how we manage our finances in a better way.

With increased push from the govt., on investments rather than savings (reduced interest rates on fixed deposits, provident funds and other fixed savings schemes), it is time for the tax-paying, salaried, ‘Managers’ to start managing their own wealth and allowing the economy to feel the benefits of the investment trend in the near future.

Rebates and tax-slabs may make you ‘feel good’ in the short term, but sound financial management will drive your wealth and the economy towards an interesting and promising development.

Ankit Varliani

Délber Lage