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IN THE last five years the middle-class population has been badly hit by the reforms and the effect of the globalisation on the economy. Traditionally, the middle-class has depended mainly on the white-collar jobs offered by various government departments, public sector units, and government undertakings and small and medium enterprises, and expenditure management both by remaining frugal and resorting to the various savings options available.

The revenue options are largely reduced by virtual freezing of this employment sources. With public sector banks stopping recruitment and government departments not generating new jobs, there may not be enough employment and hence revenue generation for the middle-class from these sectors. Why, with most banks, insurance companies and PSUs offering VRS, the so called security of employment is all but gone.

The clear indication is that the future employment can be only in the private sector. However, in the private sector too, most small and medium enterprises are already suffering heavy losses and facing closure owing to myriad reasons including unbridled globalisation and reduction of import duties. What adds to this gloomy situation is the escalating education cost, with no employment guarantee for even the well educated.

And all the touting of the strength of our macro-economic indicators, there are no signs of large-scale employment generation in the near future, in the absence of fresh thinking on revival of the manufacturing sector and, generating greenfield investments.

The drastic reduction in interest rates to almost half compared to six years ago has trimmed the revenue flows of the retirees, dependent on their fixed capital for their living. If the Kelkar Committee report recommendations are implemented, that would take away the incentive of saving for tax exemption altogether. While this will not eliminate all household savings, it will definitely change the composition of savings from financial assets to unproductive non-financial assets such as gold.

Apologists for the government harp on the `all- time low' inflation. While this may be true at the wholesale price levels, the realities are just the opposite at the ground level. It is the middle-income segment, used to some level of security and comfort, that is worst affected by all this.

The middle-class segment in India is estimated to be around 300 million and equals the population of the US or the combined population of the European Union. Anything that threatens this segment's survival would have a negative impact on the economy as a whole.

The Government must, in the coming Budget put in place policies that would re-vitalise the manufacturing sector and create more jobs. This alone would ensure creation of more jobs, which would mean more funds for spending, which is nothing but demand for industry. Else, there may be no consumers, forget the preachings of globalisation proponents that liberalisation would make consumers the `king'.

K. Ramesh

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