While the middle-income class is heaped together, it is actually made up of many sub-classes. There are those who ride motorcycles out of necessity and consider omelettes a luxury. And then there are the MBAs, CAs and shop owners, who though not wealthy, can still afford an annual trip to the Northern Areas without worrying about meeting next month’s bills.
The latter category, most likely reading these words, carries the brunt of the taxation. Affluent enough to sleep in air conditioning but not rich enough to afford high-end imported brands, the middle-income group drives consumption of domestic brands.
Even accounting for the lockdown effect, the pre- and post-pandemic numbers of AC and fridge manufacturing indicate the erosion of purchasing power of the socio-income group most likely to promote domestic production.
Those driving a Hilux or Fortuner most likely have a Daikin AC, which they can control from their iPhone 14, not a Dawlance appliance. But when taxes and inflation bite into middle-income wallets, they suspend consumption of domestic goods and funnel money into immigrating to Canada instead.
Published in Dawn, The Business and Finance Weekly, January 23rd, 2023
