For 30 years, the middle class of India voiced its complaints, mostly addressed to itself, its role as the country's easiest to pay tax on and the least consulted citizen. They were paid for the state, and they took on the burden of increased school fees and medical expenses without any subsidy or even discussion; they saw the debates on policy focused on the poor and the corporate sector and the talk in the middle of the address as an afterthought. The grievance isn't going away, but over the last two years, the economic framework surrounding it has changed more prominently than at any time since liberalisation began, and the change is now being felt in economic facts and figures.

First, the income tax reform which is the most noticeable reforms for households. The tax-free limit for income has been pushed from approximately two lakh rupees in 2014 to twelve lakh rupees now, and after taking into account the standard deduction, it will be close to 12.75 lakh. The government estimates that the overall savings through this year's income tax relief and the rationalisation of the Goods and Services Tax rates is worth more than 2.5 lakh crore rupees that will be channelled into the hands of households, enough to shift consumption trends, not just individual saving plans. This rewrite of the Income Tax Act, which entered into force this April, was not billed as a tax cut but rather as a plumbing job: fewer provisos, fewer controversies, a filing process without a chartered accountant's expertise for an ordinary salary return.

The GST recalibration, which began this September, has a similar purpose. The Prime Minister made the announcement that this was the most significant indirect tax reform since the roll-out of GST in 2017 by collapsing the older four-slab structure into essentially two main slab rates and eliminating duty on essential medicines and life-saving drugs. On the other hand, independent estimates indicate that items on a basket of everyday goods have been reduced by high-single digit to low double-digit percentage from previous levels and early trade data suggest a rise in categories such as appliances, small cars and two-wheelers as retailers pass on lower rates in advance of festive season. But the more intriguing one is whether that pass-through persists after the initial marketing frenzy has passed; even pro-economists are waiting for a full quarter of sales figures to draw a final conclusion.

All these things occur without regard to the digital-public-infrastructure story, which is arguably the more structurally significant piece. A number of UPI transactions have increased from 92 crore in 2017-18 to more than 18,500 crore in the past full fiscal year, while the value of UPI transactions has increased from Rs 1.1 lakh crore to Rs 261 lakh crore in the same period. It's not just a payments convenience, it's the plumbing that enabled a vegan to get access to credit history, enabled a gig worker to create a formal income pipeline, and enabled tax authorities to have a much bigger net of visibility without adding a single inspector on the ground. Add these to the mix: DigiLocker, FASTag, Aadhaar-linked direct benefit transfers, RERA's active monitoring of stalled housing projects and the SWAMIH fund's emergency lifeline to delayed apartment blocks, Mudra loans for small enterprise, and the production-linked incentive schemes that enticed manufacturing investment into electronics and specialty chemicals, and what you have is less a single headline reform, more a decade-long re-programming of the middle-class relationship with the state: less waiting, less discretion, more automation.

The macro picture has been working out well for now. Growth in gross domestic product (GDP) did not miss its 7.8 percent floor in the March quarter, driven by private consumption, which rose nearly 8.7 percent. Manufacturing activity has remained in expansionary territory throughout this year despite the new round of import friction from Washington and foreign exchange reserves have reached a satisfying high level of cover, well into more than eleven months of imports. The government's Economic Survey confirms India is still the fastest-growing major economy for the fourth consecutive year, although outside analysts are more cautious, predicting growth will slow down this year as the base effect of the tax and rate reduction fades.

The counter-argument should be given equal consideration as it is not a fringe argument. The opposition, which has questioned the GST changes as a cosmetic tweak instead of a structural overhaul, has noted that real wage growth for the salaried class has been below consumption inflation over the past decade, that unemployment in urban areas for graduates is still very high and that a tax exemption is only as useful as the employment it creates to exempt. While RERA has brought transparency in transactions, the supply-side pressures like land cost, approval delays, construction finance have arguably got worse since the launch of the regulatory reform that focuses on buyer protection and not on increasing stock. At the same time, there is a grimmer fear among tax experts that a more streamlined, more digitised tax net, while it purports to ease the burden of compliance, may make it more apparent on the same class of taxpayers the salaried class who are not effectively linked to the formal audit trail of UPI.

But it is indisputable that the policy discussion has shifted. The budgets open now with a clear view to the middle classes' spending power, instead of assuming that the middle classes are a mere left-over from growth elsewhere. It will be determined by whether the next two years of GDP data shows consumption growth is distributed across all deciles of the city income distribution, or limited to the topmost decile, where the bulk of the disposable income was already. The reforms are real. The score has yet to be settled on whether their benefits are distributed fairly or not.