Budget 2026: Oppn slams Budget for 'failing' the test of economic strategy

Opposition parties, including ruling dispensations in poll-bound West Bengal, Kerala, Tamil Nadu, said the Budget fails on economic strategy, worsens fiscal stress on states, and undermines federalism

The Opposition, including ruling parties of West Bengal, Kerala and Tamil Nadu, three of four states slated for Assembly polls by April-May, criticised the Union Budget for failing the test of economic strategy and also offering little for their respective states.

 

Opposition parties said federalism has become a casualty as the 16th Finance Commission's recommendations do not provide any relief to state governments which are under severe financial stress.

 

“Our verdict is that the Budget speech and the Budget fail the test of economic strategy and economic statesmanship,” former Union Finance Minister and Congress Leader P Chidambaram said at a press conference at his party’s headquarters in the national capital.

 

 

Chidambaram said Finance Minister Nirmala Sitharaman’s speech failed to lay out a narrative that addresses the major challenges outlined in the Economic Survey released a few days ago. Chidambaram listed ten challenges identified by the Economic Survey and several knowledgeable experts, which he said the FM did not address.

 

The Congress leader said the Budget did not address the US tariffs, which have created stress for manufacturers, especially exporters, or the growing trade deficit, especially with China. He said neither did the Budget respond to the low ‘gross fixed capital formation’ (approximately 30 per cent) and the reluctance of the private sector to invest, nor to the uncertain outlook for the flow of foreign direct investment (FDI) into India and the persistent outflow of foreign portfolio investment for the last several months.

 

Chidambaram also listed slow pace of fiscal consolidation, the continued high fiscal deficit and revenue deficit, the persistent gap between officially announced inflation numbers and the ground realities, the lack of jobs, and the deteriorating infrastructure in urban areas as other issues that the Budget failed to address. “Even by an accountant’s standards, it was a poor account of the management of the finances in 2025-26,” he said, adding that revenue receipts were short by ₹78,086 crore; total expenditure was short by ₹1,00,503 crore; revenue expenditure was short by ₹75,168 crore, and capital expenditure was cut by ₹1,44,376 crore (Centre’s ₹25,335 crore and states’ ₹119,041 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 gross domestic product (GDP) in 2024-25 to 3.1 per cent in 2025-26,” Chidambaram said.

 

In revenue expenditure, the cuts have fallen in heads that concern the common people, he said, pointing to rural development (₹53,067 crore), urban development (₹39,573 crore), social welfare (₹9,999 crore), agriculture (₹6,985 crore), education (₹6,701 crore), and health (₹3,686 crore). He said expenditure on the Jal Jeevan Mission has been cut from ₹67,000 crore to ₹17,000 crore.

 

Amit Mitra, the principal chief adviser to West Bengal Chief Minister Mamata Banerjee and the state finance department, said expenditure on education should have been 5-6 per cent of total expenditure but in reality it has declined from 3.8 per cent in 2015-16 to 2.6 per cent in the current Budget estimates. Mitra said allocation on fertiliser subsidy has been reduced from 4.04 per cent of total expenditure in 2015-16 to 3.19 per cent in the current Budget estimates. "This is a critical cut and is anti-farmer,” he said.

 

Mitra questioned the credibility of Budget figures and pointed to the wide gaps between Budget estimates, revised estimates, and actual expenditure in major schemes. For Pradhan Mantri Awas Yojana (Urban), he said the 2024-25 Budget estimate of around ₹30,170 crore was revised to ₹13,670 crore while actual expenditure stood at only ₹5,815 crore, he said. On the Dankuni-Surat freight corridor, Mitra said the existing freight corridors have remained unfulfilled for ten years. The announced Dankuni to Varanasi project is currently stalled at the Bihar border, he said.

 

“'Mission Mode' is now 'Challenge Route'. Reform Express rarely stops at any ‘Reform’ Junction. Net result: no policy vision, no political will,” Congress President Mallikarjun Kharge said. He said the government had no revival strategy for manufacturing, which is stuck at 13 per cent, nor for creating jobs. There is no response to export slump, tariff risks, trade deficit, shrinking global share, and the plunging rupee, he added.

 

Poll-bound Tamil Nadu’s ruling Dravida Munnetra Kazhagam’s (DMK’s) spokesperson Constantine Ravindran said, “Even the high-speed rail link is not for operations within Tamil Nadu; one proposed connection is towards Bengaluru and another link terminates in Chennai. Hence, Nirmala Sitharaman has again given zero as a gift to Tamil Nadu.”

 

Kerala Finance Minister K N Balagopal said the Budget’s tax proposals reflected an attempt to facilitate international trade agreements rather than strengthening the domestic economy. He said the Budget reflected a lack of economic growth, pointing to poor growth in revenue receipts. While ₹67,000 crore was allocated for the Jal Jeevan Mission in the previous Budget, only ₹17,000 crore was spent, he said, adding that it indicated that the central government does not have sufficient funds. Balagopal said Kerala's key demands, including funds for further development of Vizhinjam port and a dedicated cargo corridor from the port, were not considered.