I am willing to accept that the government will destroy religion.
Are you referring to oppressive regies like the Communists of the 20th century, who tried to outlaw religion? If so, they didn't succeed in eliminating it. They just drove it underground.
But if you're talking about something more like America, the government is not the enemy of religion, although the theocratic Christians see it in those terms. Refusal to support their religion is understood as being its enemy by that faction.
But it is evaporating away as the religious surveys of the last 35 years show us. Every year, fewer people identify as religious or Christians and more as nones, which includes an assortment of types including the "I'm spiritual, not religious" types
But the question remains with what will they substitute it?
In America, they substituted humanism for religion in government in 1789. It's worked well, but is now under siege from both the theocratic conservatives and MAGA, who between them have little regard for church-state separation, egalitarianism, the rule of law, and democracy itself.
If it is substituted by spiritualism then it would be good for this world. But if it is substituted with hedonism then it will be negative for the world.
I don't know what you mean by spiritualism, especially when you posture it as the or an alternative to hedonism. In my estimation, what I define as spirituality is not the business of government. For me, spirituality is an attitude toward nature and life. It is a warm sense of connection and belonging (opposite: alienation) generally associated with some degree and combination of a sense of awe, mystery, and gratitude.
Sometimes, hedonism means the pursuit of pleasure, and sometimes, it means the pursuit of selfish pleasure and perhaps a dissolute and destructive lifestyle. If you mean the latter, religion (I'm focusing on American Christianity, because that's what I know best and what religion in America generally refers to) doesn't prevent that.
You seem to be influenced by such religious ideas, although your name suggests that you are neither American nor Christian (does "from India" mean you mostly have lived there, or that you began life there?). If you have assimilated Christianity as I am used to it from experience a as Christian in my youth, from following the news thereafter, and from posting on RF and a now defunct competitor for a decade before joining this site in 2017, then pleasure and the pursuit of same are considered selfish.
I understand that as a message that you are not to think about what you want or enjoy and turn your attention to obedience to the church and to devote your life and resources to promoting its agenda to spread and accrue wealth and societal hegemony. So, forget that vacation and give more to the church, and if you don't, you're being an immoral hedonist.
But I believe in the pursuit of pleasure, which doesn't exclude moral and charitable behavior. It is not selfish hedonism, although the religious might disagree.
One consequence of that attitude is that we didn't have children (my wife and I met after I left Christianity), which made it possible to travel to exotic locations twice a year, take weekends out of town in hotels to see three Grateful Dead shows on Fri/Sat/Sun every other month, frequently perform musically with my wife at night after work on an average of three times a month, eat out every day, and retire early.
My pastor before I left his religion would have disapproved for the reasons I just gave. He would have rather seen me turn those hours to religious pursuits and those dollars to his church, and to create more children, the company of which I don't care for.
Anyway, replacing religion in my life with atheistic humanism was a big improvement, and if I extrapolate that across a nation, I see a net benefit. I prefer humanist thought and moral values, which have made me a little better person than I was as a Christian. I see no loss there, but I do see a net societal gain.