Union budget: Making mincemeat of the middle class

Researched by: Aarthi Ramnath, Anannya Parekh, Aakriti Anand & Raghav Bikhchandani

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Union budget: Making mincemeat of the middle class

Editor’s note: We use ‘middle class’ as a term of self-identification—not actual income. The real middle class in India is people who make between Rs 1.09 lakh and Rs 6.46 lakh a year.

Nirmala Sitharaman presented the Union Budget yesterday and immediately earned herself the ill-will of white collar, big city Indians—who have been the government’s biggest cheerleaders (See: sample tweet). Here’s why:

Stock market thappad: The market crashed in the middle of Nirmala-ji’s speech—when she laid out hikes to the capital gains taxes. This is the tax you pay on the profit you make when you sell your shares. The tax on short-term gains—on investments held for a year or less—jumped from 15% to 20%. Long-term gains—on investments held for over a year—will be taxed at 12.5%—up from 10%.

The Finance Minister says the changes will “simplify” the taxation system. But that was poor consolation to the retail investor—who pins their dreams of upward mobility to mutual funds. They felt simply screwed, so to speak. Cue the Mukesh-bhai mithai meme:

The real estate dhamaka: The government has taken away something called the indexation benefit. That’s when the taxman factors in inflation when deciding how much tax you should pay—when you sell your property. Until now, the difference between buying and selling price was adjusted for inflation—which really matters if you bought something in, say, 2004—and sold it in 2024.

Under the new tax regime, inflation ki aisi taisi—OTOH the long-term capital gains tax on property sale has come down from 20% to 12.5%. This can mean lower taxes in some cases—but not for most. Here’s a popular example shared by the Kerala Congress:

Suppose you bought an apartment in January 2009 for Rs 50 lakhs. Fifteen years later, you sold it today for Rs 1.5 crore. With indexation, the Rs 50 lakhs you paid 15 years ago is considered to be worth Rs 1.32 crore today. So, the net profit or capital gain is only Rs 17.5 lakhs, and you'd pay only Rs 3.5 lakhs as Capital Gains Tax at the rate of 20%.

But without indexation, your capital gain now is Rs 1 crore, and at 12.5%, you'd end up paying Rs 12.5 lakhs in tax. Essentially, the government takes Rs 9 lakhs more than the old method.

Reminder: property—especially homes that are inherited—is the other source of wealth for middle class Indians.

As for income tax: Not many on X were particularly impressed by the cut of Rs 17,500 a year. But it adds up to an extra Rs 1,458 a month for those earning up to Rs 12 lakh a year—which isn’t small change to them. Standard deductions for salaried taxpayers and pensioners were also raised—by Rs 25,000 and Rs 10,000, respectively. OTOH, it doesn’t make much difference for property-owning, stock market investing Indians.

Coalition laddus: The government valiantly resisted giving in to demands for ‘special status’ for Bihar and Andhra Pradesh—which would send lots more union government paisa their way. But JD(U) and TDP got their coalition bonus in the budget. Example: Bihar got a Rs 260 billion (26,000 crore) bonanza just for road projects—while Andhra’s big plans for a new capital in Amravati got a Rs 150 billion (15,000 crore) boost.

Extra reading: The Hindu offers a good overview of the budget highlights. Indian Express has more on the government’s “new realities.” This pre-budget BBC News piece on the jobs crisis—outlines the most important challenge facing the government. The Telegraph has more on how the budget tries to tackle it. Unfortunately, the rest of the analysis is paywalled.

US election update: Is Kamala inevitable?

The US system requires party delegates from each state to vote for their candidate of choice. According to an Associated Press survey of Democratic delegates, Kamala has sewn up the nomination. According to the New York Times survey, the real sticking point is likely to be her running mate:

16% of respondents said it should be Josh Shapiro, the governor of Pennsylvania, and 11% said Mark Kelly, the senator from Arizona. About 28% of respondents said they did not know whom the selection should be, or they did not respond to the question.

Memeification of Kamala: The most notable success is the memeification of Kamala. Unflattering sound bytes weaponized by Republicans have been turned into tributes to her endearing goofiness:

When Harris said, in a May 2023 speech, “You think you just fell out of a coconut tree?,” a Republican YouTube channel snipped the clip from its context and tossed it to commentators, who used it to compare Harris to a daffy talk show host or to joke that she sounded high. Videos of Harris dancing at campaign events were labeled “cringe.”

Her campaign—with the help of Gen Z fans on TikTok—have reclaimed each of them. For example: her repeated use of the weird phrasing—“what can be, unburdened by what has been”—which has been turned into a supercut:

But here’s the really funny bit:

Now, in a bizarre reversal, right-wing influencers are trying to imbue Harris’s nonsense with meaning. One has floated the theory on X that the “unburdened” line is “a Marxist and Luciferian incantation, and that’s easily seen.”

Vox has an excellent piece on the memeification of Harris—and how it might win her the election.

The Supreme Court says: NEET is A-okay!

The context: The papers for this year’s common entrance exam for medical school—National Eligibility-cum-Entrance Test or NEET—were allegedly leaked. The number of top ranked students looks suspicious—as are some of the total marks received. A clutch of petitioners, most of whom are students from “humble backgrounds”, approached the Supreme Court with an Intervention Application, requesting a retest. We explain what’s up with NEET in this Big Story.

What happened now: On Tuesday, the Court ruled out cancelling the results—and/or holding it again. The bench acknowledged that papers were leaked in Patna and Hazaribagh—but said there isn’t enough evidence to suggest “a systemic breach to the sanctity of the examination.” And a re-do will hurt the 2.4 million students who took the exam, and disrupt the admissions process. Bar & Bench has details of the ruling, and statements from the hearings.

Devastating mudslides in Ethiopia

Two landslides in southern Ethiopia have killed 229 people and injured 10 people since Monday. They occurred in the mountainous Gofa Zone—about 320 km away from the capital. Many victims—and those who rushed to rescue them—are still missing. The trigger: extremely heavy rains. The ironic bit about this tragedy is that other parts of the country are facing severe drought. You can see the devastation below: (Al Jazeera)

War on Gaza: China plays peacemaker

In a surprising turn of events, Beijing has successfully intervened in the political wrangling over post-war Gaza. It has united 14 Palestinian groups—including Fatah (which rules West Bank) and Hamas:

The statement calls for the formation of a Palestinian unity government overseeing the West Bank, Jerusalem and the Gaza Strip and eventually holding elections, for which the leaders of the factions would meet and draw up a road map.

Why this matters: It lays the foundation for a free Palestine—which isn’t possible without a deal between Hamas and Fatah. Also this: “The Israeli government has rejected any proposal that gives a governing role to Hamas or the Fatah-controlled Palestinian Authority.” Bibi Netanyahu will not be pleased.

OTOH, previous such deals have fallen apart in the past. But what is significant is China’s show of diplomatic strength. Reminder: In March 2023, it brokered a peace deal between sworn enemies Iran and Saudi Arabia. So Washington won’t be happy either. (Washington Post, paywall, South China Morning Post)

Meanwhile, in Gaza: The IDF wreaked havoc in a humanitarian zone—after ordering an evacuation. The army sent tanks back into Khan Younis—killing at least 70 Palestinians, injuring 200, and forcing residents to flee under fire, either on foot, or on donkey carts. Palestinian officials said that around 400,000 people were living in the area—and not enough time was given to them to get out of harm’s way. Israel allegedly acted on intelligence that militants have been firing rockets from those areas. (Reuters)

HIV is spreading… but not where expected

First, the numbers: According to a new UN report, there were 1.3 million new HIV infections and 630,000 AIDS-related deaths in 2023—including 76,000 children. Infections spread mostly in marginalised communities, such as transgender women, gay men, and sex workers.

What’s surprising: The majority of new infections last year occurred outside sub-Saharan Africa—which is typically Ground Zero for HIV cases. The number was 56% lower than 2010. Also good news: HIV infections have fallen by 39%. (The Guardian)

Speaking of HIV: A new study shows that Lenacapavir—described as ”the closest we have ever been to an HIV vaccine”—could cost as little as $40 per year. The calculation was based on the costs of lenacapavir’s ingredients and manufacturing. The price charged by its manufacturer: $42,250 per year. (The Guardian)

Good news about India’s forest cover

We are #3 on a newly released UN list of the top 10 countries that have improved their forest cover between 2010 and 2020. We added 2,66,000 hectares (2,660 sq km) of forest cover gained per year—right behind China and Australia. This would be excellent news–if not for environmental worries about the new Forest Bill—The Forest (Conservation) Amendment Act (2023)—will dramatically reduce protection to India’s forests—perhaps irreversibly. See this Big Story for details. (The Hindu)

Cookies are here to stay

The context: Cookies allow advertisers to track users as they browse the internet—so they can send them targeted ads. In 2020, Google announced that it would get rid of third-party cookies from its Chrome browser by 2022. But since then, they have pushed their own deadline repeatedly, announcing in April this year that they would phase out cookies by 2025.

What happened now: On Monday, Google announced it is scrapping the plan to scrap cookies. It will now give the user the choice to opt-in—as in, you can agree to be tracked. The reason:

Putting a prompt in front of Chrome’s billions of users wouldn’t be as drastic as changing the default entirely, but it still might cut the number of users allowing third-party tracking significantly.

You think? FYI: A similar opt-in introduced by Apple in 2021 reportedly cost social media platforms nearly $10 billion.

Why this matters: Google’s third-party cookies are the lifeblood of the ad industry. Scrapping them would disrupt everyone’s business model—from publishers to advertisers. (The Verge)

Say hello to ‘dark’ oxygen!

Did you know that there is oxygen in the darkest depths of the oceans? Scientists have discovered that potato-sized metallic nodules—found on the seabed—produce oxygen. How? They act like “geo-batteries”:

Electric current, even from an AA battery, when placed into saltwater, can split the water into oxygen and hydrogen — a process known as seawater electrolysis… “It appears that we discovered a natural ‘geobattery’,’' said [co-author Franz] Geiger… “These geobatteries are the basis for a possible explanation of the ocean’s dark oxygen production.”

Why this matters: This discovery shows we do not know enough about the deep-sea ecosystem—or the role played by the nodules—which are being mined for rare metals used in solar panels, EVs, and other green tech. Quote to note: “However, this puts a major asterisk onto strategies for sea-floor mining as ocean-floor faunal diversity in nodule-rich areas is higher than in the most diverse tropical rainforests.” (CNN)

Time really does fly when we’re…

Busy! According to a new study on rats:

[B]rains perceive time based on the number of events or experiences that occur. In a way, it doesn’t even matter how long in real-time a series of events takes — if you speed them up or slow them down, our brains will still likely estimate that the same amount of time has passed.

What this means: “[T]he more that we do and the more that happens to us, the faster time goes.” Sorry, it doesn’t have much to do with having fun. New Atlas has more nerdy details.

what caught our eye

business & tech

Elon Musk claims Tesla will start using humanoid robots next year.
The security software company Wiz turned down Google’s $23 billion acquisition offer. It would have been the most expensive in Alphabet’s history.
According to the latest earnings reports, Amazon has lost over $25 billion on its voice assistant Alexa.
Apple is planning to cut back spending on its prestige entertainment shows.

sports & entertainment

Abhinav Bindra received the highest honour from the International Olympic Committee (IOC)—the prestigious Olympic Order. A related read: BBC News on why Paris may be the greenest Olympics to date.
Eminem’s “The Death of Slim Shady (Coup de Grâce)” ended Taylor Swift’s historic reign at No. 1 on the Billboard charts. No one can beat Gen X nostalgia!
Cricket USA is in trouble with the ICC again—this time for its arrangements for the T20 World Cup.

as for the rest

The Karnataka government will join Tamil Nadu’s campaign against NEET. It plans to introduce a state-run medical entrance exam
Secret Service Director Kimberly Cheatle has resigned—after a disastrous performance at the Congressional hearings into Trump’s shooting. She would have been fired.
Rosemary Fowler—a 98-year old physicist—has been “honoured” with a doctorate 75 years after her groundbreaking discovery. Though ‘honoured’ is not a word we would use for this travesty.
Scientists have found cocaine in 13 sharpnose sharks living off of the Brazilian coast.

Four things to see

One: Nike’s latest Olympics ad—titled “Winning isn’t for everyone”—isn’t for everyone. It shows an Asian athlete licking their table tennis paddle—for no effing reason anyone can fathom. It’s especially egregious since the other athletes in the ad—Serena Williams, LeBron James, Kylian Mbappe etc—do not taste their sports equipment. Chinese users on Weibo are very unhappy. South China Morning Post has that story. You can watch the ad, narrated by Willem Dafoe, below.

Two: Sticking with the Paris Olympics, athletes are testing out the “anti-sex beds” that are designed to discourage ‘fraternising’ at the Olympics Village. These were introduced in the 2021 Tokyo Games. Watch Australian tennis players Daria Saville and Ellen Perez demonstrate their delights. (NDTV)

Three: Mattel has launched its first-ever ‘Blind Barbie’ for kids who are visually impaired: “Her eyes will also look slightly up and out, to reflect some blind people's gaze.” Also, the name ‘Barbie’ will be written in braille on the box. The new range also has a doll with Down’s Syndrome. You can check out the visually impaired doll below. (BBC News)

Four: Australian racing driver Oscar Piastri claimed his first Formula 1 win on Sunday at the Hungarian Grand Prix. But before he got to the track, he was met by a desi fan who gave him a ‘shagun’ of €5—for good luck. Piastri did indeed win—though he seems less than grateful as you can see in this video.

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