New Delhi: Former Union Finance minister P Chidambaram on Saturday argued that the Union Budget 2026-2027 fails to respond to the economy’s most pressing challenges and relies on fiscal arithmetic rather than strategy.
Turning to the government’s fiscal record for 2025-26, Chidambaram said the revised estimates painted a “poor account” of financial management.
Revenue receipts were short by Rs 78,086 crore, while total expenditure fell short by Rs 1,00,503 crore.
Revenue expenditure declined by Rs 75,168 crore, and capital expenditure was cut by Rs 1,44,376 crore, including substantial
reductions at both the Centre and State levels.
He noted that the Centre’s capital spending had slipped as a share of GDP compared to the previous year.
He flagged concerns over the slow pace of fiscal consolidation, persistent revenue and fiscal deficits that deviate from the FRBM path, and what he described as a widening gap between official inflation figures and household expenditure on food, education, healthcare, and transport.
The closure of large numbers of micro, small and medium enterprises, high youth unemployment and deteriorating urban infrastructure were among other challenges, he said, that had gone unaddressed.
Cuts in revenue expenditure, he said, had fallen disproportionately on sectors affecting ordinary citizens, including rural and urban development, social welfare, agriculture, education and health.
The steep reduction in allocations for the Jal Jeevan Mission, from Rs 67,000 crore to Rs 17,000 crore in revised estimates, drew particular criticism, with Chidambaram questioning the credibility of its subsequent restoration in the new Budget.
On fiscal consolidation, he said that maintaining a 4.4 per cent deficit in 2025-26 and projecting only a marginal improvement
next year could not be described as prudent.
He also criticised the proliferation of new schemes and initiatives, warning many would quietly disappear.
Chidambaram said the Economic Survey had clearly identified multiple stress points confronting the economy from penal tariffs
imposed by the United States and prolonged global trade conflicts to a widening trade deficit with China.
He pointed to subdued private investment, low gross fixed capital formation of about 30 per cent, uncertainty over foreign direct investment flows and sustained outflows of foreign portfolio capital as issues demanding urgent policy clarity.