How India’s Poor Are Paying the Price: Post-2014 Tax Burdens and the Rise of Crony Capitalism

The Great Indian Tax Shift: How Post-2014 Policies Make the Poor Pay More

Introduction: A Tax Regime Turned Upside Down

Since 2014, India’s economic policies have systematically shifted the nation’s tax burden onto those least able to bear it. A web of indirect taxes – from Goods and Services Tax (GST) to steep fuel excises and special cesses – now skims a disproportionate share of income from the poor and middle class. Meanwhile, tax cuts and loopholes have lightened the load for corporations and the wealthy. The result is a shocking inversion of the ideal progressive tax structure: India’s poor pay a larger chunk of their earnings in taxes than the rich, fueling a surge in inequality. Official statistics and independent analyses paint a stark picture of an economy where the bottom 50% are taxed into hardship, even as billionaires’ fortunes hit record highs. This exposé examines how post-2014 policies engineered this imbalance, compares it with earlier regimes, and explores how India’s model contrasts with pro-poor taxation elsewhere.

Indirect Taxes Soar – and the Bottom 50% Foot the Bill

A centerpiece of this shift is the rise of indirect taxes – those applied uniformly on goods and services regardless of one’s income. The introduction of GST in 2017, hailed as a “one nation, one tax” reform, and repeated hikes in fuel taxes have dramatically increased the share of government revenue coming from everyday consumption. Crucially, such taxes are regressive: a poor household spends a much larger fraction of its income on taxed essentials than a rich household doe. Over the last decade, India’s tax regime has tilted toward indirect taxes and corporate-friendly measures. Corporate tax rates were slashed from 30% to 22% (and to 15% for new factories) in 2019, causing collections to fall from 3.5% to just 2.8% of GDP.To plug the revenue gap, the government leaned on GST and excise duties – with GST revenues surging five-fold from ₹4.4 lakh crore in 2017–18 to over ₹22 lakh crore by 2022.

This strategy has meant that common citizens pay more, while corporations pay relatively less. In fact, for the first time in independent India personal income tax from individuals (mostly salaried middle-class people) now contributes more to the exchequer than corporate income tax from companies. Opposition leaders have described this as “tax terrorism” – a provocative term underscoring the growing reliance on squeezing the middle class for revenue. At the same time, indirect levies have become ubiquitous: a single nationwide GST on most goods (including a high 18% standard rate) and hefty central taxes on fuel that keep petrol/diesel prices artificially high. Between 2014 and 2021, the excise duty on petrol jumped by 348%, from ₹9.5 per litre to ₹32.9. The excise on diesel ballooned similarly (from ₹3.5 to ₹31.8 per litre), helping the Union government’s tax haul from petrol and diesel to nearly quadruple – from ₹74,000 crore in 2014–15 to almost ₹2.95 lakh crore by 2020–21. By 2020, taxes (central excise/VAT) made up over 60% of the retail price of fuel in India – a burden that indirectly hits everything from transport costs to food prices.

Such indirect taxation disproportionately harms the poor. Essential goods and fuel make up a bigger share of expenditure for lower-income families, so these taxes eat up a higher percentage of their earnings. According to Oxfam, the poorest half of Indians pay six times more of their income in indirect taxes compared to the top 10%. In fact, the bottom 50% of the population accounts for nearly two-thirds of GST collections, while the richest 10% contribute only around 3–4%. A recent analysis by the National Institute of Public Finance and Policy (NIPFP) likewise found that the bottom half of consumers bears essentially the same total GST burden as the middle 30% – despite having far lower incomes. Figure 1 illustrates this stark imbalance in the GST’s impact.

 Figure 1: Share of GST Tax Burden by Income Group in India. The poorest 50% of Indians shoulder roughly two-thirds of GST collections, while the richest 10% contribute only a few percent. Such indirect taxes are regressive, costing the poor a far higher portion of their income.

Policy choices since 2014 have amplified this trend. When a 2019 corporate tax cut for big companies blew a ₹1.84 lakh crore hole in revenues, the government quickly hiked GST rates and fuel excises to compensate. The burden of filling the coffers thus shifted onto millions of consumers. Economists warn that over-reliance on consumption taxes worsens inequality, since “governments must resort to taxing the rest of society more” when rich taxpayers are let off the hook. Even the Reserve Bank of India noted the troubling effect: household savings have fallen to about 18% of GDP (from over 20% a few years ago) as families struggle under higher living costs and taxes, and household debt has surged to ~42% of GDP – much of it borrowing just to meet daily needs like groceries and fuel. In short, indirect tax policy is squeezing the average Indian’s wallet tighter each year.

The Poor Pay More (and the Rich Pay Less)

Not only do India’s poor and middle classes pay heavily through GST and fuel taxes, they are also bearing more of the direct tax load relative to the rich. Over the past decade, there has been a marked shift in the tax mix away from progressive taxation of corporate profits and wealth toward greater extraction from individuals’ incomes and consumption. Personal income tax (which primarily hits salaried workers, since India’s poor mostly earn too little to pay income tax) has grown much faster than corporate tax receipts In 2023–24, individual taxpayers contributed more in direct taxes than corporations did – a historic first that signals a long-term structural change. Middle-income earners are effectively plugging the holes left by generous tax cuts for businesses and the wealthy. While corporate profits and billionaire wealth have climbed to record highs, their tax outgo remains modest thanks to lower rates, exemptions and incentives. Corporate tax rates were not only cut sharply in 2019, but various incentives mean many large firms enjoy effective tax rates far below the statutory 22%. The government admitted to foregoing nearly ₹99,000 crore in corporate tax revenue in 2023–24 alone due to such incentives. In fact, in each of the last three years, ₹88,000–99,000 crore per year in potential corporate taxes was waived or written off by the state.

By contrast, ordinary Indians have no escape from GST on essentials or TDS (tax deducted at source) on their salaried income. India’s tax system now mimics those of rich countries in form, but without the redistributive bite of true progressivity. As one analysis put it, the structure “lacks the redistributive structure of progressive nations”. For example, many advanced economies do collect a larger share of taxes from individuals than corporations, but they counterbalance this with steep taxes on the wealthy (like inheritance or wealth taxes), and by ploughing tax revenues into robust social safety nets. India, however, has copied the wrong parts of the Western model: it extracts more from those with less (via indirect taxes and rising personal tax contribution) while giving the rich a relative free pass, and without providing adequate welfare support in return. The outcome is plain to see in the data: as of 2020, the bottom 50% of Indians earned just 13% of national income, while the top 10% took home over 57%. The World Bank’s latest equity briefing confirms that Indian income inequality has worsened even as extreme poverty (by their definition) fell – the country’s income Gini coefficient jumped from an already-high 52 to about 62 in recent years. The top 10% now earns roughly 13 times what the bottom 10% does. In other words, whatever growth India achieves is skewed heavily toward the top. The tax regime is a key culprit: when the rich pay proportionately less, they capture more of the gains, leaving the majority scrambling for crumbs.

Crony Capitalism: From UPA-Era Inequity to BJP’s Oligarchy

Inequality in India is not new – even previous governments often favored business elites under the guise of socialism – but observers note that crony capitalism has been turbocharged under the BJP regime since 2014. During the Congress-led UPA era (2004–2014), India saw rapid growth that certainly created millionaires and billionaires, even as hundreds of millions remained in poverty. Scandals like the 2G spectrum and coal allocation scams revealed how political power could be leveraged to benefit select tycoons during the “socialist” UPA rule. However, those episodes pale in comparison to the brazen concentration of wealth and influence witnessed in the past decade. According to The Economist’s crony-capitalism index, the share of India’s GDP derived from industries dominated by politically connected billionaires shot up from 5% to nearly 8% of GDP under Prime Minister Modi’s tenure. India now ranks among the top ten countries most afflicted by crony capitalism.

This trend is exemplified by the meteoric rise of a few billionaire magnates with known proximity to the ruling establishment. Gautam Adani, to cite the most prominent example, was scarcely known outside industrial circles a decade ago; yet by 2022 he briefly became the world’s third-richest person. His group’s staggering expansion – from ports and coal mines to airports, energy, and even media – was fueled by a stream of government contracts and policy favors in the Modi era. In fact, Modi’s very first day as PM-elect in 2014 saw him fly to Delhi on Adani’s private jet, symbolizing the tight nexus between the new government and big business. Since then, Adani’s companies were handed control of a string of lucrative public assets (for instance, a surprise decision allowed six major airports to be privatized in 2019, with the little-experienced Adani Group winning all six bid. The monopolistic empire he built – spanning ports, power, cement, agribusiness, and more – “was made possible by contracts given by the Modi government or BJP-run states,” as The Guardian reports, and has led to widespread allegations of favoritism and crony capitalism. Those who attempt to investigate or criticize these dealings risk persecution: journalists probing Adani’s dealings have found themselves harassed with lawsuits and charges, and opposition leaders raising the issue (such as labeling the Modi-Adani relationship a “textbook case of crony capitalism”) are shouted down or even expelled from Parliament for their outspokenness.

Under the garb of nationalism and development, the current regime has fostered an environment where a handful of ultra-rich insiders thrive spectacularly while the average citizen struggles. It’s a continuation of the pro-corporate tilt seen in the liberalization era, but taken to unprecedented levels of oligarchy. During UPA rule, India’s richest 1% already were seizing over half of new national wealth. Now that figure is even higher, and the government openly shrinks taxes for the wealthy (e.g. abolishing the wealth tax in 2015, cutting top corporate taxes) even as it relies on indirect taxes that hit the masses. The outcome: the wealth of India’s billionaires has increased tenfold in a decade, and the top 1% now control about 40% of total wealth in the country. By 2022, India had 166 billionaires – up from just 9 at the turn of the millennium – even as the country still harbors the world’s largest population of poor people. This explosion of elite wealth amid persistent mass poverty speaks to a form of capitalism that is “crony” at its core – where success is determined by connections and collusion rather than a level playing field.

Suppressing Data, Spinning Narratives

To sustain this economic agenda, the government has also been accused of suppressing inconvenient data and silencing critics by branding them as unpatriotic. Maintaining a tight grip over official statistics has become “a hallmark of the authoritarian project,” notes economist Jayati Ghosh, who observed that Modi’s government systematically undermined India’s statistical institutions to control the public narrative. Indeed, when key economic data have painted a bleak picture, the response has often been to bury or discredit the numbers rather than address the underlying issues.

A notorious example was the leaked 2017–18 National Sample Survey on employment, which showed unemployment hitting a 45-year high of 6.1%. The government withheld the report and questioned its methodology, leading the acting chief of the National Statistical Commission to resign in protest. The data, eventually released after the 2019 election, confirmed the alarming joblessness. Similarly, a consumer expenditure survey in 2017 that reportedly showed a decline in average consumption (a sign of rising poverty) was simply jettisoned – not released at all, on grounds of “data quality issues”. By choking off the flow of reliable data on poverty, employment, and consumption, the government effectively avoids accountability for the economic distress of the bottom half. Meanwhile, it touts selective metrics (like the number of new tax filers or India’s improved ease-of-doing-business rank) to claim success, and dismisses critical analysis as “misleading” or motivated by anti-India sentiment.

Critics who highlight rising inequality or question official claims often face intimidation. They are slurred as “anti-national” or part of a conspiracy to defame India. For instance, when international indices on hunger, press freedom or inequality rank India poorly, officials respond by attacking the indices themselves or alleging a Western bias, rather than introspectin. Independent journalists and think-tanks that publish uncomfortable findings risk raids and legal harassment. The Adani saga again illustrates this: after a U.S. report in 2023 accused the Adani Group of massive fraud, opposition voices amplified the issue, only to be met with parliamentary stonewalling and nationalist rhetoric claiming that tarnishing Adani’s image was equivalent to tarnishing India. The subtext is clear – any critique of the economic elite favored by the regime is painted as a smear against the nation itself. This atmosphere stifles democratic debate on economic policy, making it easier for the government to continue regressive taxation and pro-corporate moves without facing the scrutiny such decisions would normally invite.

Illusion of Prosperity: Incomes vs. Inflation

On the surface, many low-income Indians have seen nominal incomes rise in recent years – wages have increased in rupee terms and government handout schemes (from cash transfers to subsidized housing) have provided some extra cash. This has fostered an illusion of progress, encouraging beliefs that living standards are improving. But the reality is that inflation has galloped ahead of incomes, eroding purchasing power and leaving the poor worse off in real terms. Prices of essential commodities – food grains, vegetables, cooking oil, fuel – have climbed steeply throughout the 2010s and 2020s. In particular, the past few years have delivered high inflation in basic necessities. In late 2022, India’s consumer price index was running ~7.5% higher than a year before – and food prices for many staples had roughly doubled compared to the year prior. Rural households have been hit even harder: rural inflation consistently outpaced urban inflation (7.6% vs 7.3% in Sept 2022), largely because food carries double the weight in the rural consumption basket and food costs have spiked.

Crucially, wages at the bottom of the pyramid have stagnated when adjusted for inflation. Oxfam notes a “stagnation of wages at the bottom of the income hierarchy”, which, coupled with the rising cost of living, is forcing poor families to cut back on consumption just to cope. In many sectors, real wages (wages minus inflation) for workers have barely grown or even declined over the past 5–6 years. For example, one study found that real wages for a majority of salaried workers were flat or falling in the late 2010. The COVID-19 pandemic dealt a further blow, with informal workers seeing incomes crash; though there has been some recovery, high inflation means many households are still below their pre-pandemic buying power.

The net effect is that many poor Indians who feel “richer” in terms of nominal income are actually poorer in terms of what their income can buy. A daily wage laborer who earned ₹300 a day in 2015 might earn ₹400 now, for instance, but if her monthly expenses for food, fuel and medicines have jumped even more, she ends up more financially strained. Indeed, there is evidence that poor and middle-class families are dipping into savings or taking on debt to meet routine expenses – a red flag for financial distress. The Reserve Bank reported household debt levels at multi-decade highs, much of it to finance consumption rather than investment. All of this undercuts the triumphalist narrative that India’s masses are prospering. Whatever modest income gains trickle to the bottom are being clawed back by inflation, which itself has been exacerbated by some government policies (like tax-driven fuel price hikes and higher GST on items like milk products and clothing). The promise of “acche din” (good days) thus rings hollow in the kitchens of struggling families, even if GDP growth and stock market indices hit new peaks.

Inequality Unbound: Billionaire Boom vs. Common Man’s Bust

Perhaps the most damning indictment of current policies is the explosion in wealth at the very top even as everyday people battle economic stress. Over the past five years, India’s richest have enjoyed an almost unprecedented boom. The number of Indian billionaires jumped from 102 in 2020 to 166 by 2022, and their combined wealth reached ₹54.12 lakh crore (≈$660 billion) – more than the entire Union Government budget for 2022. The fortunes of the top 10 richest Indians rose by over 32% in just one year (2021 to 2022). By Oxfam’s calculations, 73% of all wealth generated in 2017 went to the richest 1% – leaving only a pathetic 1% increase in wealth for the bottom 50%. Today, the top 1% of Indians own about 40% of the nation’s wealth, and the top 10% hold over 72%. In stark contrast, the bottom half of the population has to make do with around 3% of national wealth.

This wealth concentration is not just an abstract statistic – it has very real consequences. It means that a tiny elite can wield outsized influence on policy (often to further entrench their advantages), and it deprives the public coffers of potential revenues that ultra-wealthy individuals could easily afford to pay. Notably, India has no inheritance tax, no estate duty, and no net wealth tax on the rich – these were abolished or never implemented to begin with. By contrast, many countries tax large inheritances or net wealth to prevent oligarchic dynasties; India effectively gives the ultra-rich a free ride after they accumulate assets. Oxfam has pointed out that even a small wealth tax on India’s billionaires could raise huge sums to fund public services. For instance, a mere 2% tax on all Indian billionaires’ wealth would have yielded about ₹42,000 crore – enough to cover the nutrition budget for India’s malnourished population for 3 years. A 5% tax on just the top 10 billionaires would garner funds to cover the entire annual cost of tribal healthcare in India. These figures highlight how skewed the current system is: the richest are accumulating vast fortunes (often through industries nurtured by public resources and government patronage), yet the government is reluctant to substantially tax these gains to redistribute wealth or bolster social spending. Instead, it relies on taxing the consumption of the poor and middle class, as we have seen.

The outcome is a widening chasm between the “haves” and “have-nots.” Even the middle class is feeling the pinch, let alone the poor. Over 90% of India’s workforce toils in informal or precarious jobs with no social security; they pay indirect taxes every time they buy a commodity, but get little in return in terms of public services. Many essential services like healthcare and education have effectively been privatized by neglect – families have to pay out-of-pocket for decent services because public provision is underfunded. As a result, 63 million Indians are pushed into poverty each year due to healthcare costs alone, according to one estimate. Such distress would be markedly less if the wealthy paid more and funded a stronger safety net. Yet, under the current paradigm, the rich grow richer at lightning speed (India is minting a new millionaire nearly every day in recent years, while the poor face hunger, debt, and joblessness. India remains home to the largest number of poor people in the world, over 220 million, even as we boast some of the world’s richest individuals. The juxtaposition is striking and tragic: a top executive earns in one year what a rural minimum-wage laborer would need to work 941 years to earn. This is the human face of policy-driven inequality.

Global Contrast: Taxing for Equity vs. India’s Model

India’s trajectory of taxing the poor to pay for benefits to the rich stands in stark contrast to approaches taken by more pro-poor economies. Around the world, there are instructive examples of how taxation and economic policy can be geared toward reducing inequality rather than exacerbating it.

On one end of the spectrum are countries like Cuba and Vietnam, which have maintained strong socialist-oriented policies. Cuba, despite its economic struggles, has one of the lowest levels of income inequality in the world (historically a Gini around 0.25–0.30, compared to ~0.35–0.40 for India’s income Gini). The Cuban state heavily subsidizes food, housing, and utilities, and provides free education and healthcare for all. Its tax system explicitly aims to redistribute resources – for example, rationed basic goods are provided at near-zero prices to ensure even the poorest can meet their needs. High earners in Cuba do exist in emerging private sectors, but they are taxed and regulated to prevent excessive wealth accumulation. Vietnam, which has embraced market reforms, still retains a strongly progressive tax structure and a state role in key industries. It uses export revenues and state enterprise profits to fund rural development and poverty alleviation. The result: Vietnam’s poverty rate plummeted from over 70% in the 1980s to below 6% today, and its inequality has remained moderate (lower than India’s). Both these countries illustrate pro-poor fiscal policy – whether via direct provisioning (Cuba) or taxing and investing in human capital (Vietnam).

Then there are the Nordic countries – capitalist welfare states often held up as models of balancing growth with equity. Nations like Sweden, Denmark, Norway, and Finland combine high taxes with high social spending. Their tax-to-GDP ratios hover around 40–45%, among the highest in the world (India’s, by contrast, is roughly 16–18%. Crucially, Nordic tax systems are highly progressive: the wealthy are taxed at steep marginal rates (the top income tax bracket can exceed 50%), and wealth taxes or hefty property taxes ensure millionaires contribute significantly to the public purse. These revenues finance universal public services – world-class education, healthcare, childcare, unemployment insurance, pensions – that ease the burden on the less well-off. The outcome is that Nordic countries consistently rank among the most equal societies (with income Gini coefficients in the mid-20s after taxes and transfers, roughly half the inequality level of India). Importantly, their prosperity has not suffered for it; they are also among the world’s most competitive, innovative economies. In essence, they disprove the notion that high taxes and pro-poor policies hinder growth. Instead, these policies have created stable, healthy societies with broad-based development.

Even many Western capitalist countries, though more unequal than the Nordics, have measures India lacks. For instance, France taxes about 30–35% of GDP and provides extensive social security; Germany and Canada have universal health coverage and robust welfare. The United States and United Kingdom do exhibit high inequality (comparable to India’s pre-redistribution levels), but even the US taxes top incomes at ~37% federally (plus state taxes) and has programs like Social Security and Medicare funded by taxation. Where India’s model deviates is that it emulates the low-end of Western practice (minimal taxation of wealth, rising reliance on regressive taxes) without the compensating benefits of a developed welfare state. In fact, India’s current path more closely resembles certain Latin American or African countries that historically had high inequality and low social spending – a model widely regarded as a recipe for social tension and unsustainable development.

Finally, it’s worth noting that some countries have made conscious efforts to curb crony capitalism and ensure the rich pay their due. For example, South Korea in the late 20th century reined in its powerful conglomerates and instituted taxes to fund broad-based growth after a period of oligarchic dominance. Brazil in the 2000s used commodity boom revenues to expand welfare and lifted millions out of poverty, while modestly taxing higher earners. The lesson from abroad is clear: economic policy can choose to lift up the many or enrich the few. India’s post-2014 choices have overwhelmingly done the latter.

Conclusion: A Rigged System and the Way Forward

The evidence is overwhelming that India’s current economic and taxation policies are stacked against the poor and middle class. By design or by effect, the post-2014 regime has increased indirect taxes that hit the poor hardest, slashed taxes for corporations and the wealthy, and concentrated wealth into the hands of a few cronies – all while claiming to champion the common man. The government’s own data (when not hushed up) and independent reports by organizations like Oxfam, the IMF, and the World Bank show rising inequality, falling income shares for the bottom half, and a tax system that burdens those least able to pay. The richest 1% and big businesses have never had it so good: they enjoy unprecedented wealth, low tax rates, and friendly policies. Meanwhile, a laborer pays 18% GST on a pair of shoes; a family pays exorbitant fuel taxes just to cook and commute; a salaried employee shoulders a higher tax rate than many profitable companies. This is not an unfortunate side-effect – it is the direct outcome of policies that can only be described as regressive and favoring the rich.

The government’s response to criticism has been to distract and deny – suppressing data, spinning narratives of national pride, or pointing to welfare schemes as a panacea. But no amount of propaganda can erase the everyday reality of costlier essentials, job scarcity, and stagnant incomes that millions of Indians face. As India aspires to great-power status and touts its growing GDP, it cannot afford to ignore the fractures within: an economy where inequality is rising faster than ever, and faith in the system by ordinary citizens is eroding. The current trajectory risks creating an entrenched underclass and an unaccountable oligarchy – a socially explosive combination.

Reversing this course would require a bold reorientation: reintroducing true progressive taxation (on wealth, corporate profits, and high incomes), using those revenues to invest in public goods (health, education, nutrition, job programs), and reducing the reliance on taxing basic consumption. It would also mean ending the cozy patronage of select billionaires, enforcing anti-monopoly laws, and embracing transparency in data and governance. Other nations have shown that a different path is possible – one where growth is shared and the tax burden is carried by those most able to pay. India’s own history, from the socialist-inspired decades to the rights-based welfare schemes of the 2000s, demonstrates that policy choices can lift up the poor if there is political will. In the end, it comes down to a simple question: Should the bottom 50% continue to bankroll the prosperity of the top 1%, or will India demand an economic model that works for the many, not just the few? The answer will determine whether the nation’s future is one of inclusive development or a descent into plutocratic inequality.

Sources: The analysis above is supported by data and reports from reputable sources, including Oxfam India’s inequality research, official statistics reported in The Wire. and The Hindu, global indices noted by The Economist, and investigative reporting by The Guardian, among others. These sources confirm the trend of a widening tax and wealth gap in India post-2014, and provide comparative context with international examples. The figures and incidents cited illustrate a clear narrative: India’s economic policies have increasingly benefited the elite, while shifting the burden onto its poorest citizens

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