Budget 2014: Will a better off neo middle class in smart cities wipe off urban poverty?

From the start, the Narendra Modi stamp on Arun Jaitley's Budget was evident on Thursday. The highlight of this was the frequent use of the term 'neo middle class', which many saw as the BJP's target audience, much like the Congress' 'aam aadmi'.

What exactly is the neo-middle class?

According to The Indian Express, the neo-middle class is "defined by the BJP as those who have risen from the category of the poor but are yet to stabilise in the middle class"."

 Budget 2014: Will a better off neo middle class in smart cities wipe off urban poverty?

Making cities a better place to live. AFP

The term was first coined by Prime Minister Narendra Modi himself during his campaign as Gujarat chief minister when he prepared for the Assembly polls in 2012. A Mint story published on 31 December 2012 said: "In the run-up to the state elections in Gujarat, chief minister Narendra Modi hit upon a novel strategy to woo his urban constituents, cutting across caste lines. Modi listed special measures for the lower middle class in his manifesto, calling them the ‘neo middle class’—recent beneficiaries of economic growth who are moving into an urban life and rising up the income ladder—and rode on their support to a thumping victory in the state elections."

Neo-middle class and Budget 2014

During an interview on CNN-IBN on Friday, Godrej Group, chairman, Adi Godrej observed that the Budget has unequivocally targetted the middle class.

"This is certainly a budget which is particularly directed towards economic growth and increased investment. This will benefit the middle class in the long run. BJP's budget caters to the neo middle class which is 60-65 percent of the population and also forms the largest part of the electorate," Godrej said.

There is no doubt that the Union Budget is attempting to alleviate urban poverty by focusing on developing urban centres. Brookings Institution, fellow, Shamika Ravi felt that only improving infrastructure won't help reduce poverty.

"There has to be a combination of growth and increase in social spending. The rest of the economy will then automatically respond to this urbanistaion and help weed out poverty gradually. Only growth did not help remove poverty as we saw after India was made an open economy in 1991," Ravi said during a CNN-IBN panel discussion.

Former Ficci general secretary and senior fellow at CPR, Rajiv Kumar did not agree that the focus of the Budget was only to attract investment.

"Jaitley has tried to lay down a better basis for growth. He has tried to maintain the fiscal consolidation and is not depending only on FDI and PPP alone for fund generation. The focus is certainly on the middle class as well. The government has invested a lot on highways and the PMGSY. The middle class is the largest part of the country. We must understand that the midddle class aspirations probably pervade as the voice of the country," Kumar said.

Will smart cities help fight urban poverty?

Budetary allocation for infrastructure and good health in urban areas has been substantial this time. The Centre has laid "a major focus of providing good infrastructure, including public transport, solid waste disposal, sewerage treatment and drinking water in the urban areas. The Budgetary provision for the Pooled Municipal Debt Obligation Facility has been enhanced from Rs 5000 crores to Rs 50,000 crores with extension of the facility by five years to March 31, 2019". On Thursday, Jaitley said the Centre seeks to build at least 500 such habitations.

The globe has come to such a stage that the concept on urbanisation cannot be ignored anymore. In that context, the idea of developing smart cities sounds timely. Announcing in his maiden Budget Speech in the Parliament, Jaitley said that the prime minister has a vision of developing one hundred 'Smart cities' as satellite towns of larger cities and by modernising the existing mid-sized cities for which Rs 7,060 crore in the current financial year. Jaitley envisaged that with development reaching an increasingly large number of people, the pace of migration from the rural areas to the cities increasing, the new cities are a necessity to accommodate the burgeoning number of people. Otherwise, the existing cities would soon be rendred unlivable.

However, pouring money to build smart cities is not the solution alone.

Urban Planner Sudeshna Chatterjee said, "Cities that actually nurture quality of living are missing. There is a need for integrated urban thinking. The idea of Smart cities is definitely a good thinking as a beginning. After the 2008 tipping point, the world is going towards urbanisation. It also has to be seen what incentives will the private sector have if they build smart cities."

The Godrej Group chairman felt that the government is on the right path.

"The NDA has rightly targetted urbanisation. This will develop the country immensely in the next five years," Godrej said.

Neo middle class and political questions

Former Planning Commission member and Congress MP Bhalchandra Mungekar differed that neo middle class covers everyone in the country who cannot boast of a high income.

"The Budget does not cater to agricultural labourers or people in below poverty line. It has a scattered vision and caters to the rich neo-middle class alone. Where is the land for affordable housing and smart cities? There is a whole nexus going on between politicians, traders and builders. Your existing cities are collapsing and you need to save them first," Mungekar said.

BJP spokesperson Shaina NC was quick to rebut.

"People have cherry-picked. It is a comprehensive budget which takes care of every section of the society. It is not a budget of freebies," Shaina said.

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Updated Date: Jul 12, 2014 23:03:10 IST