Former Union finance minister P Chidambaram has mounted a sharp critique of the Union Budget 2026 presented by Nirmala Sitharaman, arguing that it fails to confront the principal economic challenges flagged in the government’s own economic survey and offers little by way of a coherent strategy at a time of mounting global and domestic uncertainty.Speaking shortly after the budget speech in Parliament, Chidambaram said the finance minister had not acknowledged the scale of pressures facing the global economy or the domestic spillovers that India must manage. He contended that neither the speech nor the underlying numbers reflected a clear sense of economic direction or policy intent. According to him, the absence of a roadmap undermines confidence in the government’s ability to navigate slowing growth, uneven private investment and persistent stress in household finances.
The critique comes as the government seeks to position the budget as one focused on fiscal consolidation, infrastructure-led growth and targeted welfare support. Sitharaman emphasised continued capital expenditure, efforts to contain the fiscal deficit and measures aimed at boosting manufacturing, exports and employment. She also underlined commitments to digital public infrastructure and incremental reforms in taxation and compliance.
Chidambaram countered that these elements, taken together, do not amount to an economic strategy. He pointed to what he described as a disconnect between the economic survey’s diagnosis and the budget’s prescriptions. The survey had warned of external risks ranging from geopolitical tensions to fragile global demand, alongside domestic concerns such as sluggish consumption growth, job creation and widening inequality. In his assessment, the budget did not meaningfully engage with these warnings.
Within opposition ranks, his remarks echoed a broader concern that the budget leans heavily on headline spending announcements while avoiding difficult structural choices. Critics have questioned whether the emphasis on capital expenditure is sufficient to revive broad-based demand, particularly when wage growth remains uneven and rural consumption shows signs of strain. They have also argued that social sector allocations, adjusted for inflation, may not be adequate to cushion vulnerable households against price pressures.
Economists outside government have offered more mixed readings. Some acknowledge that the budget stays the course on fiscal prudence, which could help anchor macroeconomic stability and keep borrowing costs in check. Others note that restraint on revenue expenditure limits the scope for a consumption-led rebound. The debate has centred on whether the balance struck between consolidation and stimulus is appropriate given the current phase of the economic cycle.
Chidambaram’s criticism also focused on what he called the absence of “economic statesmanship”, a phrase he used to suggest that the budget lacks a long-term vision. He argued that major economies are recalibrating industrial policy, supply chains and climate transitions, and that India must articulate how it plans to compete and protect growth in this shifting landscape. Without such clarity, he said, budgetary measures risk appearing incremental rather than transformative.
The finance ministry has defended its approach, stressing continuity and predictability. Officials have pointed to steady increases in public investment over successive budgets, reforms in logistics and manufacturing incentives, and the expansion of digital platforms that reduce transaction costs. They argue that these measures, combined with a stable policy environment, will crowd in private investment over time.
Market reactions have reflected this divide. Equity indices showed modest moves as investors weighed fiscal discipline against growth impulses, while bond yields remained sensitive to deficit projections and borrowing plans. Analysts noted that the budget avoided surprises, which may reassure some investors even as questions linger about medium-term growth drivers.