India News | Union Budget Has Failed the Test of Economic Strategy, Economic Statesmanship: Chidambaram

New Delhi [India], February 1 (ANI): Senior Congress leader P Chidambaram on Sunday said the Union Budget presented by Finance Minister Nirmala Sitharaman in Parliament earlier in the day "failed the test of economic strategy and economic statesmanship."

Addressing a press conference here, Chidambaram, a former Finance Minister, said he is not sure if the Finance Minister and the government read the Economic Survey 2025-26 and even if they have, they have decided to discard the challenged and fall back on "their favourite pastime of throwing words at the people".

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"Every pre-budget commentator and writer, and every student of economics, must be astonished by what he or she heard in the Finance Minister's speech to Parliament today, Chidambaram said.

"I accept that a Budget is more than a statement of annual revenues and expenditure. In current circumstances, the Budget speech must lay out a narrative that addresses the major challenges outlined in the Economic Survey released a few days ago. 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," he added.

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Chidambaram said he can count at least 10 challenges identified by the Economic Survey and many knowledgeable 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; the uncertain outlook for the flow of FDI (foreign direct investment) into India and the persistent outflow of FPI for the last several months," he said.

"The agonisingly slow pace of fiscal consolidation and the continued high fiscal deficit and revenue deficit, contrary to the FRBM. 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 and growing urbanisation and the deteriorating infrastructure in urban areas (municipalities and corporations," he added.

Chidambaram said none of this was addressed by the Finance Minister's speech.

"Even by an accountant's standards, it was a poor account of the management of the finances in 2025-26. Revenue receipts were short by Rs 78,086 crore, total expenditure was short by Rs 1,00,503 crore. Revenue expenditure was short by Rs 75,168 crore and capital expenditure was cut by Rs 1,44,376 crore (Centre Rs 25,335 crore and States Rs 1,19,041 crore). Not a word was said to explain this miserable performance. 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.

Citing examples, he said in revenue expenditure, the cuts have fallen in heads that concern the common people.

He said funds have also been cut in crucial sectors and programmes. 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.

The Congress leader said that after the months-long exercise, the revised estimate of the fiscal deficit has adhered to the budget estimate of 4.4 per cent, and the projection for 2026-27 is that the fiscal deficit will fall by a meagre 0.1 per cent of GDP.

He said the revenue deficit will remain at 1.5 per cent and noted that "it is certainly not a bold exercise in fiscal prudence and consolidation".

The Congress leader said the Finance Minister 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," Chidambaram said.

He said 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.

"While the impact of the numerous minor changes has to be examined carefully, it must be remembered that the overwhelming majority of the people have no concern with income tax or income tax rates. As far as indirect taxes are concerned, the average person will be concerned with only paragraphs 159, 160 and 161 of the speech. I welcome these minor concessions. Our verdict is that the Budget speech and the Budget fail the test of economic strategy and economic statesmanship," he added. (ANI)

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