India’s monthly GST collection has been rising steadily by 7–8% year-on-year, creating the perception of a booming economy. However, when juxtaposed with corporate earnings reports showing only 0–2% volume growth, a concerning picture emerges. The increase in tax revenue seems to be driven more by price inflation than by actual increases in demand or consumption. This suggests that indians are not buying more goods—they're simply paying more for the same things. If this trend continues in an economy plagued by job losses and stagnant wages, the long-term sustainability of this apparent growth will come under serious question.

A significant factor behind the rising GST numbers is the increasing digitalization of transactions, primarily through UPI. While this shift has brought more transparency and has helped convert black money into white, it also inflates the tax base artificially, giving the illusion of economic health. In reality, many sectors—especially MSMEs and unorganized trade—are witnessing lower real sales volumes. The boost in tax collection may look impressive on paper, but it masks the ground reality of an economy that is failing to create jobs or stimulate demand. The foundation of growth—real income and consumption—remains fragile, and wallet PLATFORM' target='_blank' title='digital-Latest Updates, Photos, Videos are a click away, CLICK NOW'>digital compliance cannot compensate for structural economic weakness.

Despite earlier warnings, policy decisions like repo rate cuts and income tax relief up to ₹12 lakh have proven ineffective. These measures assume disposable income and demand exist, but without real income growth or employment, such stimulus falls flat. The bigger problem, however, lies in the apparent disconnect between government leadership and economic fundamentals. When the focus shifts from nurturing productivity and job creation to milking taxes from a digitally traceable economy, the long-term result is stagnation. Harsh as it may sound, if things continue this way, India’s tax system itself may end up throttling the very economy it aims to fuel—no external shock like a "Trump moment" will be needed.
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SIBY JEYYA

04/08/2025 09:33 AM