Union Budget fails test of economic strategy, economic statesmanship: P Chidambaram

Congress leader and former Finance Minister P Chidambaram on Sunday said the Union Budget 2026-27 failed the test of economic strategy and economic statesmanship as it did not address several challenges put forth by the Economic Survey. Noting that the revenue deficit remains stationary at 1.5 per cent, Chidambaram said the Union budget presented this year is not a bold exercise in fiscal prudence and consolidation.

Congress leader and former Finance Minister P Chidambaram on Sunday said the Union Budget 2026-27 failed the test of economic strategy and economic statesmanship as it did not address several challenges put forth by the Economic Survey. Addressing a press conference at the AICC headquarters here, he said the government and Finance Minister Nirmala Sitharaman seem to have completely discarded the Economic Survey and fallen back on their ''favourite pastime of throwing acronyms at people''. Noting that the revenue deficit remains stationary at 1.5 per cent, Chidambaram said the Union budget presented this year is not a bold exercise in fiscal prudence and consolidation. ''There is nothing wrong with borrowing and spending. But the government should do fiscal consolidation quite rapidly and not as is being done at the current rate,'' he noted. ''Our verdict is that the Budget Speech and the Budget fail the test of economic strategy and economic statesmanship,'' he said. Chidambaram said the management of finances in FY 2025-26 was also poor as revenue receipts were short by Rs 78,086 crore, total expenditure was short by Rs 1,00,503 crore, while revenue expenditure was short by Rs 75,168 crore and capital expenditure was cut by Rs 1,44,376. ''Not a word to explain this miserable performance. Actually, the Centre's capital expenditure has fallen from 3.2 per cent of GDP in FY 2024-25 to 3.1 per cent in FY 2025-26,'' he noted. After the months-long exercise, Chidambaram said, the revised estimates of fiscal deficit have adhered to the budget estimates (4.4 per cent). The projection for FY 2026-27 is that the fiscal deficit will fall by a meagre 0.1 per cent of GDP. The former finance minister said the Centre's capital expenditure has fallen, as funds have been cut in crucial sectors and programmes, including the rural development, urban development, social welfare, agriculture, education and health sectors. ''Where does this budget create jobs and tell young people about jobs?'' he asked. Listing out 10 challenges identified by the Economic Survey, he said the penal tariffs imposed by the United States have created stress for manufacturers, especially exporters, and protracted trade conflicts will weigh on investment. He said the growing trade deficit, especially with China, the low Gross Fixed Capital Formation (approximately 30 per cent) and the private sector's reluctance to invest are other such challenges that remain unaddressed. He also highlighted the uncertain outlook for the flow of Foreign Direct Investments to India, the persistent outflow of Foreign Portfolio Investments for the last several months, the agonisingly slow pace of fiscal consolidation, the continued high fiscal deficit and revenue deficit contrary to the FRBM (Fiscal Responsibility and Budget Management). The senior Congress leader also highlighted the persistent gap between officially announced inflation numbers and the ground realities in terms of bills for household expenditure, education, healthcare and transport. Among other challenges, he said, the closure of lakhs of MSMEs and the struggle of the remaining ones for survival, precarious employment situation, especially youth unemployment, growing urbanisation and the deteriorating infrastructure in urban areas have not been addressed. ''It was therefore not surprising that the applause was perfunctory and most of the audience tuned out in quick time,'' he noted. Chidambaram said the government is currently providing an average of 50 days of employment in a year under its rural employment scheme by spending around Rs 88,000 crore. He asked how it would fulfil the promise of providing 125 days of work under the VB-G RAM G (Viksit Bharat -- Guarantee for Rozgar and Ajeevika Mission Gramin) Act by spending only Rs 95,000 crore. Chidambaram said the most serious criticism of the Budget speech is that the finance minister is not tired of adding to the number of schemes, programmes, missions, institutes, initiatives, funds, committees and hubs. He said he wondered how many of these would be forgotten and vanish by next year.

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