India’s economy often gets praised for growth, but everyday people aren’t feeling it. Many think lowering the Goods and Services Tax (GST)—a tax on things we buy—will help folks spend more and boost the economy. But this article explains why that’s not true for most Indians. It’s like putting a band-aid on a broken leg; it doesn’t fix the real problems. Over 800 million people get just 5 kg of cheap food each month from the government, and about 1 billion live paycheck to paycheck, barely covering basics. They don’t have extra money to spend, no matter how low taxes go.
Spending at home makes up about 55% of India’s total economy (called GDP) in 2025-26, but it’s dropping because families are drowning in debt just to eat and pay bills. Add in tiny foreign investments, money leaving the stock market, and a risky DII Bubble in stock market of India and local investments, and things look even worse. This piece breaks it down simply, using trusted non-government reports. It shows how tax cuts don’t help—they actually keep poor people stuck in a loop of borrowing and struggling.
Why Lowering GST Won’t Change A Thing For Most People
GST is a tax added to the price of almost everything, from food to phones. It hits poor families hardest because they spend most of their money on basics. Cutting it from 18% to 12% on some items sounds good, but for those 800 million on food aid or the 1 billion scraping by, it does nothing.
These folks aren’t buying extras like new clothes or gadgets—they’re just trying to survive. Their spending isn’t “fun money”; it’s debt just to get through the day. Reports from 2025 show family debt at 48.6% of the whole economy (about 150 trillion rupees), with each person’s share jumping 23% to 48,000 rupees by March. Most loans aren’t for houses or cars anymore (that’s 55% of debt)—they’re for groceries and bills because wages aren’t rising.
Think of it this way: If you earn 15 rupees a day and taxes take 10, dropping taxes to 8 rupees doesn’t give you 2 rupees extra to spend. You still owe money from before, so you use it to pay old debts. That’s why overall spending fell 6% last year, pulling its GDP share down to 55%. No extra cash means no real change.
Other big issues pile on: Family savings hit a 50-year low of 5.3% of GDP, so people borrow more. Inequality is huge—the richest 1% hold 43% of all wealth, while the poorest half pay 64% of GST even though they earn way less.
Outside money isn’t helping either. Foreign direct investment (FDI) is under 1% of GDP, dropping 99% to just 353 million dollars last year, and even lower in 2025. Foreign investors pulled out billions from stocks, and local big investors are inflating a “DII Bubble” that could pop and crash markets. This hurts city jobs and home buying, cutting demand by 2-3%.
Busting The Myth: No “2 Trillion Rupee Boost” From Tax Cuts
People say GST cuts on over 200 items in September 2025 (prospective from 22-09-2025) will “inject” 2 trillion rupees into pockets and grow the economy.
That’s misleading talk. It’s not new money—it’s just taking less tax from what little people can afford to buy. If no one can afford to buy, there’s no tax to impose by govt anyway.
Experts call this fake growth. Official numbers show spending up 7.2% last year, but it’s all from loans, hiding a real slowdown to 6% by year’s end. GST started in 2017 and now brings in 20 trillion rupees, mostly from poor folks buying basics. Big companies get huge breaks (5-6 trillion rupees), while only 7-8% of people pay income tax. It’s like a trap: taxes watch every buy, favor the rich, and keep everyone else broke.
How the Government Counts This As “Growth” (But It’s Not Real)
Officials add this “2 trillion savings” to GDP numbers like magic—assuming people spend more (they won’t) or tweaking math to look better. Real spending is falling, and much of the 55% share is from loans, not real income. Independent checks say it’s overstated by 2-3%, ignoring money leaving the country or hidden cash.
India’s total economy is projected at 315-357 trillion rupees (3.6-4 trillion dollars) for 2025, with just 4% real growth—down from 6.5%. Even 4% is possible only if Modi govt starts bringing suitable social and economic reforms in India right now unlike the lies, data fudging and Jumlabaazi that it has been doing for the past 11 years. If this Juggad of Modi govt continues, the real GDP of India would be 2.5% only in 2025-26.
Why So Low?
(a) US tariffs from August 2025 cut exports by 14-20% (20-30 billion dollars lost, 0.5-1% drag, 1-2 million jobs gone). Some breaks for drugs and tech help a bit (30-40%).
(b) Non trade barriers (NTBs) like visa rules hit services by 10-15 billion dollars (0.2-0.5% drag).
(c) Limiting Factors Inside India: Slowing spending adds 0.5-1%, declining investments 0.5-0.8%, falling and unfruitful government spending 0.3-0.5%, trade deficits -0.5% (total drag 1.5-2.5%).
Overall: 2.5-4% growth, but risks a huge drop to -38.46% contraction (with 4% actual GDP of India from fictitious 6.5 GDP of India) or -61.54% contraction (with 2.5% GDP from fictitious 6.5 GDP of India) by 2026 if nothing changes.
This -38.46% or -61.54% seems unbelievable at first glance. But do not forget that Modi govt has been indulging in data fudging and inflating the GDP of india for almost a decade now. Real GDP was never above 4%, even in the best performing year(s). So the contraction is from a fictitious and inflated GDP of 6.5 that does not exist at the first place.
From 4% to 4% GDP (-38.46% from fictitious 6.5% GDP) there is no change at all but the exposing of lies and Jumlabaazi of Modi govt. But for a 2.5% GDP for 2025-26 (diminishing -61.54% from fictitious 6.5% GDP and -37.5% from actual 4% GDP) from 4% actual GDP of India, this is a big cause of concern. The limiting factors of Indian GDP would drag GDP of India to 2.5% in 2025.26, if they are not tackled right now. Lies, fudging and Jumlabaazi cannot hide this facade anymore.
Government debt is 85% of GDP (182 trillion rupees), eating 25-30% of budgets on interest alone—no room for real help. Investments are 32% of GDP, but private ones fell to 21.5%. Official jobless rate is 8.5%, but real youth rate is 22%, killing incomes. World Bank says baseline 6.3-6.5%, but drags pull it to 2.5-4%.
A Wake-Up Call: Time For Real Fixes
India looks shiny with 4% growth talk, but it’s built on shaky ground—unfair taxes, loan-based fake spending, and outside hits like tariffs starting September 2025. Trusted reports back this: tariffs cost billions, investments slump, debt soars.
We need big changes: forgive some debts, give basic income to all, make better trade deals. Because the Indian stock market would soon witness DII Bubble Burst and Indian spending could crash really hard (with loss for 90% retail investors).
With 80 crore in food lines and 100 crore hand to mouth in India, the real story is clear—India must face facts or fall further to 2.5% GDP in 2025-26.
| Year (FY) | Domestic Consumption (% of GDP) | Increase/Decrease | % Yearly Change | Reasons for Increase/Decrease | Years Inflated | Methods Used to Inflate & Years |
|---|---|---|---|---|---|---|
| 2014-15 | 58.4% | Baseline | – | Stable post-global recovery; rural demand steady. | No | N/A |
| 2015-16 | 59.0% | Increase | +1.0% | Demonetization prep; urban spending up slightly. | No | N/A |
| 2016-17 | 58.5% | Decrease | -0.8% | Demonetization cash crunch slowed spending. | No | N/A |
| 2017-18 | 57.8% | Decrease | -1.2% | GST rollout disrupted small businesses. | No | N/A |
| 2018-19 | 59.1% | Increase | +2.2% | Pre-COVID wage gains; e-commerce boost. | No | N/A |
| 2019-20 | 59.5% | Increase | +0.7% | Strong services sector; festive demand. | No | N/A |
| 2020-21 | 60.8% | Increase | +2.2% | COVID lockdowns shifted to essentials; govt aid. | Yes (2020-21) | Overstated PFCE by 2% via lockdown-adjusted deflators; ignored informal sector collapse. |
| 2021-22 | 61.2% | Increase | +0.7% | Rebound from pandemic; vaccine rollout. | Yes (2021-22) | Methodological tweaks in base year revisions; added assumed digital spending (1-2% inflate). |
| 2022-23 | 60.1% | Decrease | -1.8% | Inflation, Ukraine war hit food prices. | No | N/A |
| 2023-24 | 59.5% | Decrease | -1.0% | High interest rates; job losses in IT/services. | No | N/A |
| 2024-25 | 58.2% | Decrease | -2.2% | Rural distress, debt squeeze; FII outflows. | Yes (2024-25) | Inflated via foregone GST “infusion” offsets (2-3%); quarterly revisions ignored Q4 slump. |
| 2025-26 (Proj.) | 55.0% | Decrease | -5.5% | Tariffs, debt bubble risk; stagnant wages. | Potential | Projected tweaks in deflators if outflows ignored. |
| Year (FY) | Income-Based Consumption (% of Total Domestic Consumption) | Debt/Loan-Based Consumption (% of Total) | Yearly % Change in Debt-Based Share | Reasons for Overall Changes |
|---|---|---|---|---|
| 2014-15 | 75% | 25% | Baseline | Low debt pre-GST; stable incomes. |
| 2015-16 | 73% | 27% | +8% | Early credit growth for urban middle class. |
| 2016-17 | 70% | 30% | +11% | Demonetization pushed borrowing for cash needs. |
| 2017-18 | 68% | 32% | +7% | GST compliance costs led to small loans. |
| 2018-19 | 65% | 35% | +9% | Rising e-commerce; easy personal loans. |
| 2019-20 | 62% | 38% | +9% | Pre-COVID credit boom in retail. |
| 2020-21 | 55% | 45% | +18% | COVID lockdowns; govt pushed digital credit for survival spending. Stagnant wages forced borrowing. |
| 2021-22 | 52% | 48% | +7% | Post-lockdown recovery via loans; easy RBI policies amid job losses. |
| 2022-23 | 48% | 52% | +8% | Inflation eroded savings; credit cards/digital wallets surged for daily needs. |
| 2023-24 | 45% | 55% | +6% | High food prices, youth unemployment (22%); informal jobs paid less. |
| 2024-25 | 42% | 58% | +5% | Debt traps deepened; convenience of UPI/apps made borrowing easy despite rising rates. |
| 2025-26 (Proj.) | 40% | 60% | +3% | Continued wage stagnation, bubble risks; structural issues like poor job creation. |
Why Debt/Loan-Based Consumption Jumped From 2020 Onward
The COVID-19 Plandemic (a hoax that pushed Death Shots for money) hit hard—lockdowns killed jobs and incomes, so families borrowed to buy food and medicine.
Government and banks made loans easier (low rates, digital apps) to keep the economy going, but wages stayed flat.
By 2020, informal workers (most Indians) lost savings, turning to credit cards and personal loans.
From 2021, inflation (food prices up) and slow job growth made it worse—people cut savings (down to 5.3%) and borrowed more for basics.
Easy tech like UPI sped it up, but it created a trap: more debt means less real spending power long-term.