Record Returns, Shrinking Revenue
By Shivaji Sarkar
It has been a week of pure hungama in Parliament. Rarely has the Lok Sabha appeared so charged, so combative and so visibly tilted against the government. The Opposition seized the initiative early and never let go. Tempers flared, slogans echoed, and adjournments became routine. Yet beneath the noise lay something more telling: the government seemed unable either to assuage its critics or to convincingly defend itself. None comes out with the gory stats.
Most striking of all was the absence of a reply from Prime Minister Narendra Modi to the Motion of Thanks. Traditionally, the Prime Minister answers the debate, sets the tone, and closes ranks. This time, that moment never came. The silence was political as much as procedural. It conveyed hesitation where authority was expected. Instead, the Leader of the Opposition dominated the narrative, repeatedly stretching the patience of Speaker Om Birla, whose attempts to rein in the exchanges only intensified the confrontation. Matters escalated to the point where a notice of no-confidence against the Speaker himself was moved — an extraordinary development that underlined how frayed the House had become.
The debate itself followed predictable lines. Treasury benches showered praise on the Budget, attributing every positive indicator to the Prime Minister’s leadership. They framed it as bold, reformist and pro-poor. On the other side, the Opposition tore into it with visible energy. Leader of Opposition in the Lok Sabha Rahul Gandhi, whether admired or criticised, stood at centre stage. His speeches were sharp, direct and emotive, less dependent on spreadsheets and more on the everyday anxieties of citizens. He attacked the Budget as disconnected from jobs, wages and household distress.
If Rahul brought rhetoric, Congress’ P. Chidambaram brought numbers. Soft-spoken but incisive, the former finance minister dissected the arithmetic of the Budget, highlighting gaps between claims and allocations. Others joined the charge: Abhishek Banerjee, Kalyan Banerjee, Tiruchi Siva, and Akhilesh Yadav, among others. For a brief moment, the House recalled an older parliamentary tradition when debate, not decibel levels, drove the day. Yet beyond the political theatre lay a question few addressed fully: who actually pays for this Budget?
The numbers are stark. In a country of over 140 crore people, fewer than 10 crore file income tax returns. Even among these, more than 60 per cent pay no tax at all because of exemptions and low incomes. In FY 2024–25, 9.19 crore returns were filed and 8.64 crore verified, but 4.19 crore belonged to individuals earning under Rs5 lakh. Only about 3.24 lakh people reported incomes above Rs1 crore.
The system, therefore, rests on a narrow base. The top 1per cent of filers contribute nearly half of total personal income tax. The top 9 per cent pay close to 87 per cent. A tiny minority funds the exchequer.
At the same time, the salaried middle class faces rising pressure. The highest slab effectively exceeds 34 per cent after cess. Add GST, fuel taxes, tolls, service charges and countless indirect levies, and the burden grows heavier still. Every citizen pays these indirect taxes — whether travelling by bus, buying groceries or paying school fees. Even the poorest cannot escape them. Yet the discourse treats only income-tax payers as “contributors,” ignoring the silent taxation embedded in daily life.
Contrast this with corporate taxation. Corporate tax rates hover around 22 per cent, even as profits surge. India Inc.’s profit-to-GDP ratio has reached multi-year highs. Net profits have more than doubled since the pandemic. Yet corporate tax collections remain lower than or comparable to personal income tax collections. For many, the contrast appears inequitable: individuals with modest salaries shoulder heavier proportional burdens than large companies with expanding profits.
This imbalance is compounded by enforcement practices that often feel adversarial. Frequent rule changes, complex forms and prolonged assessments breed frustration. Appeals frequently overturn aggressive demands. Small disputes drag on for years, leaving taxpayers exhausted. Instead of encouraging voluntary compliance, the system risks alienating those it depends on most.
There is also a deeper economic cost. Heavy direct and indirect taxes squeeze disposable income. Lower purchasing power depresses consumption. Weak consumption slows production. Sluggish production dampens employment and investment. The cycle feeds on itself. A tax regime designed to raise revenue ends up constricting growth.
If the government genuinely seeks to boost manufacturing and demand, it must rethink this architecture. Leaving more money in citizens’ hands could stimulate spending, production and jobs. A broader base with moderate rates is often more sustainable than punishing a narrow segment.
Official growth figures sound optimistic, but institutions such as the International Monetary Fund and the World Bank remain cautious, flagging weak consumption and inequality. Multiple free trade agreements risk increasing imports faster than domestic output, potentially undercutting local manufacturing and eroding revenues further. Without stronger domestic demand, headline growth numbers may remain more symbolic than substantive.
This is why the Budget debate matters beyond politics. It is not merely about allocations or applause lines. It is about fairness, sustainability and trust. Who bears the burden? Who benefits? And does the system encourage growth or choke it?
Parliament’s chaotic week exposed these unresolved tensions. The Opposition sensed vulnerability and pressed hard. The government retreated into silence. But the larger questions remain unanswered. Until they are confronted honestly — until accountability replaces optics and reform replaces rhetoric — the disruptions will continue.
What made the week more unsettling was not merely the disorder, but the erosion of convention. Parliamentary democracy runs as much on unwritten norms as on rules. When the Prime Minister avoids replying, when the Speaker appears defensive rather than detached, and when debates end without closure, the institution itself weakens. Citizens begin to see Parliament less as a forum of accountability and more as a stage for spectacle. That perception is dangerous.
A democracy cannot thrive on optics alone; it survives on trust that those in power will answer hard questions. Without that assurance, budgets become announcements, debates become rituals, and governance slips into monologue. Noise may dominate headlines for a day, but credibility — once lost — takes far longer to restore.
Ultimately, the health of Parliament mirrors the health of the republic. When scrutiny weakens and accountability thins, policy suffers and public faith erodes. Restoring seriousness to debate, transparency to numbers, and responsibility to leadership is not optional — it is essential to keeping democracy credible and alive.— INFA
