Union Budget 2026 fails test of economic strategy, statesmanship: Former FM P Chidambaram

NEW DELHI: Former Union home minister P Chidambaram on Sunday sharply criticised the Union Budget 2026-27 presented by FM Nirmala Sitharaman, saying it "failed the test of economic strategy and economic statesmanship".Addressing a press conference after the Budget was presented in Parliament, the senior Congress leader questioned whether the government had even considered the Economic Survey 2025–26."I am not sure if the government and the Finance Minister had read the Economic Survey 2025-26. If they had, it appears they have decided to discard it completely, and fall back on their favourite pastime of throwing words—usually acronyms—at the people," Chidambaram said.Chidambaram said the FM’s speech was filled with announcements of schemes and initiatives, with little clarity on outcomes."The Finance Minister peppered her speech with schemes and programmes. She is not tired of adding to the number of schemes, programmes, missions, institutes, initiatives, funds, committees, hubs, etc. I counted at least 24. I leave it to your imagination how many of these will be forgotten and vanish by next year," he said.Referring to changes in income tax rates, Chidambaram said the impact would be limited. "Months after the passing of the Income Tax Act, 2026, which will come into force on 1 April, 2026, the Finance Minister has tinkered with some rates," he said.He added that income tax changes matter little to most citizens. "It must be remembered that the overwhelming majority of the people have no concern with income tax or income tax rates," he said, adding that indirect tax reliefs announced in paragraphs 159, 160 and 161 were "minor concessions"."Our verdict is that the Budget speech and the Budget fail the test of economic strategy and economic statesmanship," he said.Chidambaram said the Budget failed to address at least 10 major challenges highlighted by the Economic Survey and experts."The penal tariffs imposed by the United States have created stress for manufacturers, especially exporters; protracted trade conflicts that will weigh on investment; the growing trade deficit, especially with China; the low Gross Fixed Capital Formation (approx. 30 per cent) and the reluctance of the private sector to invest," he said.He also flagged concerns over foreign investment and fiscal health."The uncertain outlook for the flow of FDI and the persistent outflow of FPI for the last several months… the agonisingly slow pace of fiscal consolidation and the continued high fiscal deficit and revenue deficit, contrary to the FRBM," he added.The former finance minister said ground realities faced by households and businesses were ignored."The persistent gap between officially announced inflation numbers and the ground realities in terms of bills for household expenditure, education, healthcare and transport; the closure of lakhs of MSMEs and the struggle for survival of the remaining MSMEs; the precarious employment situation, especially youth unemployment," he said.He also pointed to deteriorating infrastructure in urban areas.Chidambaram said the government failed to explain major shortfalls in spending during 2025–26. "Even by an accountant’s standards, it was a poor account of the management of the finances in 2025-26," he said.He cited figures showing revenue receipts were short by Rs 78,086 crore, while capital expenditure was cut by Rs 1,44,376 crore."Actually, the Centre’s capital expenditure has fallen from 3.2 per cent of GDP in 2024-25 to 3.1 per cent in 2025-26," he said.According to Chidambaram, the expenditure cuts were made in sectors that affect ordinary citizens. "In revenue expenditure, the cuts have fallen in heads that concern the common people," he said.He highlighted a steep cut in a flagship scheme. "Expenditure on the much-vaunted Jal Jeevan Mission was cruelly cut from Rs 67,000 crore to a paltry Rs 17,000 crore," he said.Chidambaram said the fiscal deficit trajectory showed little ambition. "After months-long exercise, the revised estimate of the fiscal deficit has adhered to the budget estimate of 4.4%, and the projection for 2026-27 is that the fiscal deficit will fall by a meagre 0.1 per cent of GDP," he said."It is certainly not a bold exercise in fiscal prudence and consolidation," he added.