In contradiction to the recent statement by U.S. President Donald Trump that the Indian economy is “dead,” recent economic figures from New Delhi paint a drastically different picture. India saw Rs 1.96 lakh crore in Goods and Services Tax (GST) collections in July 2025, one of the biggest single-month collections since GST came into being in 2017. This is a 7.5 percent year-on-year increase and Rs 11,000 crore over June collections, pointing towards robust domestic consumption, growing compliance, and sustained economic formalisation. Although the rate of growth eased from earlier months, this is still the seventh month in succession when GST collections have been above Rs 1.8 lakh crore, highlighting sustained economic activity.
The data released by the Ministry of Finance on Friday further reveals that between April and July, gross GST revenue stood at Rs. 8.18 lakh crore, a 10.7 percent jump from Rs. 7.39 lakh crore during the same period in 2024. After accounting for refunds, which surged 66.8 percent to Rs. 27,147 crore in July, the net GST revenue for the month was Rs. 1.68 lakh crore, only slightly up (1.7 percent) from Rs. 1.65 lakh crore last year.
Regional trends reveal strong growth in many areas. Madhya Pradesh saw an 18 percent rise, Bihar 16 percent, Andhra Pradesh 14 percent, and Punjab and Haryana recorded 12 percent improvements each. Maharashtra, the largest contributor, collected Rs. 30,590 crore, a 6 percent year-on-year improvement. Among smaller states, Tripura improved the most at 41 percent, followed by Meghalaya (26 percent), Sikkim (23 percent), and Nagaland (22 percent).
Even though it fell marginally from the Q1 FY26 average of Rs. 2.1 lakh crore, the July figure is not weak, particularly when combined with good performance by the manufacturing sector. India’s Manufacturing Purchasing Managers’ Index (PMI) rose to 59.1 in July, a 16-month high, showing healthy factory output and continuing industrial growth.
Along with record GST collections, India has surpassed Japan to become the fourth-largest economy, with Morgan Stanley, IMF, and Forbes projections confirming that India will move into third place in the world in 2028. With FDI inflows exceeding $ 81 billion, industrial production and infrastructure growing, and digital payments crossing Rs 25 lakh crore a month, the Indian economy today is not merely alive, but also thriving, and the lead accelerator of the economic rise of the global South.
Consistent Growth in GST Collections
July GST collection is one of the highest monthly figures since the inception of the tax in 2017. With this, India sustains a positive revenue growth pattern that started more than two years ago. As per the government’s answer in Lok Sabha Question No. 1725, gross GST revenue during FY 2024-25 (up to February) was Rs 20.12 lakh crore, already close to the full-year collection of Rs 20.18 lakh crore in FY 2023-24.
This continued uptick has served to negate fears of any short-term downturn. To illustrate, GST collections in June 2025 were seen as fairly modest at Rs. 1.85 lakh crore. However, in a written answer to Lok Sabha Question No. 1263, the Finance Ministry made it clear that data for a quarter provides a more accurate representation. In Q1 FY 2025-26, net GST collections were Rs 5.42 lakh crore, 10.7 percent higher than Rs 4.90 lakh crore in Q1 last year. This comes after a 9.9 percent growth in Q1 collections of FY 2023-24 as compared to the corresponding period of the previous year.
Technological Backbone and Policy Reforms
The rise in GST revenue is being spurred by a mix of digital enforcement, enhanced data analytics, and improved compliance mechanisms. The Ministry of Finance and Goods and Services Tax Network (GSTN) have made major reforms to enhance transparency and close leakages.
One of the most effective reforms is the implementation of mandatory e-invoicing, which enables the government to monitor transactions in real-time. This has facilitated better invoice matching and enabled detection of under-reporting. Likewise, the linking of e-way bills with FASTag systems has facilitated better monitoring of goods movement throughout the nation, limiting the scope for evasion.
Machine learning and Artificial Intelligence (AI) now identify high-risk filings and false registrations. Such system-generated “red flags” are communicated to both central and state GST authorities for further action. As per the Finance Ministry, such targeted enforcement has considerably enhanced compliance.
In addition, Aadhaar authentication has become mandatory for GST registration to avoid spurious or duplicate registrations. Greater use of biometric authentication makes sure that only real businesses join the GST environment.
GST Council and Policy Direction
The GST Council, a constitutional entity consisting of Union and State finance ministers, is at the center of policy development. A Group of Ministers (GoM) has been assigned the task of scrutinising sector-wise trends in revenue and suggesting specific interventions.
The Council is also set to revisit the GST rate structure, which presently has several slabs. Rationalisation, such as potential consolidation of tax slabs and rate cuts on basic commodities, could be a major agenda in the future meetings. The government has already rationalised a number of exemptions and rectified inverted duty structures over the past few years, which has helped in better collections.
India’s Broader Economic Outlook Strengthens
The GST performance is consistent with other prime indicators that cumulatively indicate that the Indian economy is expanding on multiple fronts.
Foreign Direct Investment (FDI) in India increased to USD 81.04 billion during FY 2024-25, up 14 percent from the last financial year, based on data provided by the Ministry of Commerce and ascertained by the Reserve Bank of India. This increase reflects continuing investor faith in the economic stability and policy regime of India.
The Manufacturing Purchasing Managers Index (PMI), a prime gauge of industrial health, stood at 58.4 in June and climbed further to 59.1 in July 2025, respectively, as per HSBC and S&P Global. These levels indicate strong factory activity, good new order inflows, and better job generation.
The Index of Eight Core Industries (ICI) which has major infrastructure industries like coal, steel, cement, electricity, and fertilisers recorded a 1.7 percent year-on-year increase in June 2025. Although moderate, this indicates expansion in physical infrastructure and industrial production on a steady basis.
Another major contributor to formalisation is India’s digital economy. In July 2025, transactions on Unified Payments Interface (UPI) crossed Rs 25.1 lakh crore, growing 22 percent in value and 35 percent in volume year on year. The size of digital transactions alone is taking more and more businesses into formal networks, indirectly enhancing GST compliance and revenue.
GST Collections as a Reflection of Economic Transformation
Experts view the collections of GST not just as a tax indicator but as an indicator of India’s continuing evolution into a digitally empowered, formalised, and consumption-oriented economy. The rise in the number of registered taxpayers, the growth in voluntary compliance, and the decreasing gap between estimated and actual tax liability all indicate a maturing tax system.
Top Finance Ministry officials have said that Rs 2 lakh crore of GST collections every month can be the new norm in the next quarters, especially if reforms persist and consumption continues at the current rate.
This is important not just for the center’s revenue but also for states, where most of GST revenue is transferred to state governments. It helps finance infrastructure construction, social welfare programs, and rural investments, creating a self-reinforcing cycle of public spending and economic growth.
India to Become World’s Third-Largest Economy by 2028
India is soon going to hit a historic economic milestone. As per estimates by international financial institutions such as Morgan Stanley, Forbes, and the IMF, India is set to surpass Japan and Germany to become the third-largest economy of the world by 2028. India’s GDP will touch $10.6 trillion by 2035, almost doubling the current size of $4.18 trillion, on the back of a 10-year thrust in the sectors of infrastructure, digitalisation, and manufacturing growth.
In May 2025, NITI Aayog established India surpassed Japan to rank as the fourth-largest economy, with the IMF setting India’s GDP at $4.187 trillion, just a tick above Japan. The IMF has projected additional growth to $5.58 trillion through 2028, displacing India into third rank worldwide.
A primary driver of this path is India’s model of state-led economy. Morgan Stanley names states such as Maharashtra, Tamil Nadu, Gujarat, Uttar Pradesh, and Karnataka as the trillion-dollar economies of the future. Competitive federalism, where states compete for business-friendliness and investments, is transforming India’s development.
Forbes estimates India’s economy may surpass $30 trillion by 2047 on the strength of demographics, policy changes, and a consumption-driven model of growth. With the fastest-growing large economy in the world, India is not only ascendant, it is remaking the global economic order.
The “Decade of India” has commenced
While India has set its sights on becoming the world’s third-largest economy by 2028, strong and stable GST revenues provide a solid cornerstone. The government’s focus on digital infrastructure, tax compliance, and industrial competitiveness is slowly transforming the economic landscape.
The Rs. 1.96 lakh crore gathered in July is not merely a revenue statistic; it is a portent. It is a sign of rising consumption, enhanced transparency, wider compliance, and strong governance. It is indicative of faith, both by domestic consumers and international investors, in India’s capacity to grow, evolve, and lead.
As the GST Council gears up for its next meeting, and as macroeconomic indicators press on with their positive momentum, India’s fiscal and developmental agenda seems more solid than ever before. With consistent reforms and sound fundamentals, the economy is not only moving towards recovery, but it is progressing strongly into a new era of long-term growth.
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