‘Ignores key challenges from Eco Survey’: Chidambaram pans Union Budget 2026-27

New Delhi: Senior Congress leader and former Finance Minister P. Chidambaram issued a scathing critique of the Union Budget 2026-27 presented by Finance Minister Nirmala Sitharaman on Sunday, declaring that it “failed the test of economic strategy and economic statesmanship”.

In a detailed statement, Chidambaram expressed astonishment at the budget speech, arguing that it disregarded the major challenges highlighted in the Economic Survey 2025-26 and relied instead on a barrage of acronyms and new schemes without substantive addressing of pressing issues.

Stressing that a budget speech must provide a coherent narrative tackling the economy’s core problems as identified in the Economic Survey, he questioned whether the government and the Finance Minister had even read the document, suggesting they had chosen to discard it entirely.

He listed at least ten critical challenges pinpointed by the Economic Survey and experts that went unaddressed in the budget presentation.

These include the stress on manufacturers and exporters caused by penal tariffs imposed by the United States, protracted trade conflicts dampening investment, the widening trade deficit particularly with China, low Gross Fixed Capital Formation hovering around 30 per cent coupled with private sector reluctance to invest, uncertainty in foreign direct investment inflows alongside persistent foreign portfolio investment outflows over recent months, and the slow pace of fiscal consolidation with persistently high fiscal and revenue deficits violating the spirit of the Fiscal Responsibility and Budget Management Act.

He also pointed out the disconnect between official inflation figures and the actual rise in household expenses on education, healthcare, and transport, the closure of lakhs of micro, small, and medium enterprises with survivors struggling to stay afloat, the precarious employment landscape marked by high youth unemployment, and the strains of rapid urbanisation accompanied by deteriorating urban infrastructure in municipalities and corporations.

Chidambaram observed that the budget speech’s failure to engage with these realities led to muted reactions in Parliament, with perfunctory applause, audience disengagement, and even intermittent interruptions in the Sansad TV telecast.

He described the account of financial management for 2025-26 as poor even by basic accounting standards. Revenue receipts fell short by Rs 78,086 crore, total expenditure by Rs 1,00,503 crore, revenue expenditure by Rs 75,168 crore, and capital expenditure by a substantial Rs 1,44,376 crore, including Rs 25,335 crore at the Centre and Rs 1,19,041 crore for states.

The Centre’s capital expenditure as a share of GDP declined from 3.2 per cent in 2024-25 to 3.1 per cent in 2025-26, yet no explanation was offered for this underperformance.

The cuts disproportionately affected sectors impacting common people, with reductions in rural development by Rs 53,067 crore, urban development by Rs 39,573 crore, social welfare by Rs 9,999 crore, agriculture by Rs 6,985 crore, education by Rs 6,701 crore, and health by Rs 3,686 crore.

Chidambaram particularly highlighted the drastic slash in the Jal Jeevan Mission from Rs 67,000 crore to Rs 17,000 crore, calling the subsequent boost to Rs 67,670 crore for 2026-27 lacking credibility given the pattern of revisions.

On fiscal parameters, he criticised the revised fiscal deficit estimate for 2025-26, sticking rigidly to the budgeted 4.4 per cent and the projected drop of just 0.1 per cent of GDP for 2026-27, with the revenue deficit remaining at 1.5 per cent, describing it as far from bold fiscal prudence or consolidation.

The former Finance Minister reserved sharp criticism for the proliferation of new schemes, programmes, missions, institutes, initiatives, funds, committees, and hubs — at least 24 by his count, many of which he predicted would be forgotten by the next budget.

Regarding taxation, he viewed the minor tweaks to rates post the Income Tax Act, 2026, as insignificant for most citizens unaffected by direct taxes, though he welcomed limited indirect tax concessions in specific paragraphs.

Overall, Chidambaram concluded that the budget speech and underlying proposals fell short of delivering meaningful economic direction or leadership, prioritising superficial announcements over genuine responses to the economy’s structural vulnerabilities and the needs of ordinary Indians.

IANS