It’s the economy, stupid! The alienation of the middle class

The Congress had its Eureka moment at Jaipur on Friday. It recognised that the Congress-led UPA had alienated the middle class. Congress President Sonia Gandhi warned the party that “we cannot allow our growing, educated middle classes to be disillusioned and alienated”. It was more importantly a signal to the UPA government, led by Manmohan Singh, that the prairie fire of outrage in large cities could well spread to the smaller ones.

The nervousness of depleting votebanks, in the run-up to the 2014 polls, is not surprising. The Congress-led UPA returned to power in 2009 winning middle class votes in urban constituencies (barring those in Gujarat and Karnataka) across India. In the wake of the results, Congress pundits went rah-rah over the victory in 13 constituencies in Delhi and Mumbai and claimed that the UPA “wave” had swept over 100 of the 200 urban and peri-urban constituencies. What is surprising is that it took the Congress four years into the second term to recognise this even as every opinion poll conducted since 2010 has indicated this loss of faith.

The alienation and anger are a simple consequence of failed expectations—failing rule of law, poor governance, corruption, inflation, gross mismanagement of the economy. It is the threat to personal and income security, though, that has hurt the most. This, from a prime minister the middle class had hoisted as one of its own. Worsening the alienation is the politically cynical approach. The UPA has preferred to manage the optics of outrage rather than address the outcomes these issues demand.

Politicians frequently bluster that middle class anger rarely translates into electoral debacle as often the middle class doesn’t vote. But this is a banal posit, even if a comforting refuge. Democracy is not a one-vote stand. Every taxpayer deserves a return. Today, the tax-paying middle class —and mind you, this definition includes all those who pay levies on services and goods, and not just income tax—is a critical mass and not voiceless. Ergo, they are at the forefront of outrage questioning the efficiency of policy and the efficacy of political leadership.

The anger and outrage, if you assess, is co-terminus with the slowdown in the economy. For nearly 12 quarters now—that is, 36 months—the economy has been wracked by high inflation and low growth. It is not surprising, then, that the middle class has felt compelled to be heard. The middle class—dependent on fixed band of earnings—finds itself at the losing end of the deal in terms of income, savings and investments, thanks to the slowdown inflicted by politically inspired populism. Income security is threatened by lay-offs; fixed deposit rates are lower than inflation and returns on equity hurt by slowdown.

Splice the GDP into the three major segments—agriculture, industry and services—and it is services and industry which is slowing down the most. Such is the state that industry is growing slower than agriculture. And services growth depends on industrial growth for impetus. The consequence visits the middle class most visibly as incomes are squeezed and job growth falls. Fewer jobs mean lesser mobility in the job market and fewer opportunities for the middle class graduates fresh out of college. And there is no urban employment dole or MNREGA for them!

Worse, it has to bear the brunt of inflation fuelled by political profligacy. Consumer price inflation has been averaging double digits while salary hikes, if at all, are in single digits. Every time the government is confronted with the need to trim its expenditure, it chooses to target subsidies on consumption instead—specifically fuel subsidies. Faced with pathetic governance, the middle class has taken to outsourcing solutions—investing in personal transport on bad and lawless roads in the absence of mass transport, and installing back-ups for the failure of power supply. Having already paid a private price for public failure, the middle class is now confronted with higher operational costs triggered by fiscal profligacy.

The anger is not as much about loss of LPG cylinders as it is about the inequity. The middle class perceives that they are paying for the preservation of political power through pelf. The tussle in the tent is for equilibrium. The unstated question by the middle class is—is everyone paying their due? Not surprisingly, the loudest chorus in the clamour for action against scandalous allocations of spectrum or mines is from the middle class.

The problem is that the middle class is not in the entitlement club of the rural and the poor. Nor can it claim the insular power of those inching towards and those on the Forbes billionaires list. It does not figure as a constituency in the electoral sops list of political parties nor is it an imperative on the radar of government intervention in the 147 Centrally sponsored schemes. It really isn’t enough, any more, to incrementally shift the income tax slabs. The middle class no longer wishes to be squeezed between competing compulsions with the poor fuelling the electoral model and the super-rich financing the business models of politics.

 Sonia Gandhi’s chintan-check demands follow-up. The Congress may be comforted by its arithmetic of vote shares but it needs to visit history. Every debacle the Congress has suffered has been led by the middle class. If the Congress is sincere about its concern and in its quest for an inclusive democracy, it must heed the voice of the middle class. It might want to consult Aristotle who observed that equilibrium is best provided by the middle class. For those who possess the goods of fortune in moderation find it “easiest to obey the rule of reason”.

shankkar.aiyar@gmail.com

Shankkar Aiyar is the author of Accidental India: A History of the Nation’s Passage through Crisis and Change