Rajeev Shukla
Inflation is not just the increase in the prices of goods and services in the market. The deepest impact of inflation falls on those families whose income is limited, but needs are continuously increasing. The middle class in India has long been considered the biggest pillar of economic development. This class builds houses, educates children, saves, pays insurance and loan premiums and also has the largest consumer power in the market. But today a serious question is facing this middle class – is its real purchasing power decreasing despite the increase in income? On paper, there may be an increase in salary, a picture of new employment opportunities and economic development may also be put forward, but the actual budget of the family is not determined by any government report, but by kitchen, school fees, electricity bills, rent, fuel, treatment and everyday expenses.
When the pace of these expenses becomes faster than the increase in income, the person starts feeling that despite the increase in his income, his life has not become easy. The biggest problem of the middle class is that a large part of its income goes towards essential expenses. House rent or home loan installment, children's education, health insurance, transportation, electricity-water, mobile-internet, household items and social responsibilities—most of these expenses are such that cannot be easily reduced. Suppose the monthly income of a family increases by 8 to 10 percent, but in the same period the expenditure on education, health, housing and other essential services increases more than that.
Then in real life the financial condition of that family may come under more pressure instead of getting better. This is why mere increase in salary or per capita income cannot be considered as the ultimate proof of economic prosperity. The question should also be that after the increase in income, how many goods and services is the citizen able to buy and how much savings is left for the future. The real face of inflation is visible from the kitchen. Inflation figures are important in their place, but the common citizen feels inflation not in the figures but in the market.
The household budget made at the beginning of the month often gets spoiled by the end of the month. Fluctuations in the prices of vegetables, pulses, milk, fruits, edible oil, gas, transport and other essential commodities have a direct impact on the pockets of the family. The difficulty of the middle class is also that it is not a natural beneficiary of the many government assistance schemes available for the poor and on the other hand, its income is not high enough to easily afford the ever increasing prices of private services. He appears to be standing between two economic pressures.
The share of education and health in the budget of the middle class has become increasingly important. Parents want to provide better education to their children
Are. For this, a huge amount is spent on school fees, books, transportation, coaching and higher education. Similarly, increasing private expenditure in the health sector affects the savings of the family. Disease is not only a health crisis, but sometimes also becomes an economic crisis. This is why for the middle class, inflation does not only mean increase in the prices of food items. When education, health and housing become expensive, future security also becomes expensive.
Savings have been an important basis for the economic strength of the middle class in India. But when a large part of the income goes towards daily expenses, the amount available for savings starts decreasing. Less savings does not only mean less convenience today. It affects the future. Children's ability to cope with higher education, buying a home, retirement, unexpected health expenses or any financial crisis may be weakened.
If a family's income keeps increasing but its savings keep decreasing, then it is not a sign of economic strength, but a sign of caution. Loans have become a part of the financial life of the middle class today due to expensive houses, education, vehicles and other needs. Loan in itself is not wrong, but when a large part of the monthly income starts going towards EMIs, the financial freedom of the family starts reducing. For such families, changes in interest rates, job crisis or sudden medical expenses can become a big challenge. Therefore, along with the economic data, it is also important to see how much the debt dependence of families is increasing and how safe their savings are.
Is it enough to blame inflation alone?
Here there is an important challenge before the government and policy makers. Controlling inflation is not just a matter of keeping prices stable. Quality of employment, wage growth, productivity, tax system, cost of housing, access to health and education—all affect the economic status of the middle class.