By Santosh Kumar Mohapatra
Union Finance Minister Nirmala Sitharaman has made history by presenting her ninth consecutive Union Budget, drawing close to the record of ten Budgets presented by former Prime Minister Morarji Desai over different periods.
While presenting the Budget, the Finance Minister outlined a three-fold strategy inspired by “tri-kartavya”: accelerating and sustaining economic growth; fulfilling people’s aspirations by enhancing their capacities; and aligning policies with the vision of “Sabka Saath, Sabka Vikas.” She proposed interventions in six broad areas—scaling up manufacturing in seven strategic sectors, rejuvenating legacy industries, creating champion MSMEs, pushing infrastructure development, ensuring long-term economic security and stability, and developing city-centric economic regions.
However, a closer examination of budgetary priorities reveals a stark contrast between proclamations and outcomes. While the Finance Minister claims that the Budget reflects “reforms over rhetoric,” it increasingly appears to be rhetoric over realities. The economy today is beset with multiple structural challenges: rising household debt, widening inequality, subdued corporate investment, deceleration in agricultural growth, and massive unemployment. Yet, these fundamental issues remain largely unaddressed.
The government has reiterated its commitment to Aatmanirbhar Bharat, claiming gains in domestic manufacturing capacity, energy security and reduced import dependence. Contrary to these assertions, the share of manufacturing in GDP has continued to decline, while import dependence—especially on China—has increased.
Claims of significant poverty reduction are equally misleading. The continued need to provide free food assistance to nearly 80 crore people itself reflects persistent mass deprivation. Moreover, poverty estimates are increasingly based on subsistence or deprivation lines. Even if absolute poverty has marginally declined, relative poverty and inequality have unmistakably increased.
The government also claims to have undertaken over 350 reforms, including GST simplification, labour law notifications and rationalisation of mandatory quality control orders. However, these reforms have largely failed to benefit the poorer sections and the working class. The gains have remained disproportionately skewed towards corporates and affluent sections.
The size of the Budget as a percentage of GDP has fallen to around 13.6%, down from 15% in 2025–26 (BE) and 17.7% in 2020–21. This is abysmally low by international standards. According to the IMF, combined public expenditure of the Centre and states stood at 28.38% of GDP in India in 2024, compared to 57.17% in France, 50.56% in Italy, 48.4% in Germany, 45.34% in Spain, 39.1% in Japan and the UK, and 37.92% in the US.
Total revenue receipts have also shrunk in the revised estimates to Rs 33.42 lakh crore in 2025–26 from the budgeted Rs 34.20 lakh crore, growing at their slowest pace since 2022–23, despite massive dividends from public sector enterprises and the RBI.
The Finance Minister asserted that over the past 12 years, India’s economic trajectory has been marked by stability, fiscal discipline, sustained growth and moderate inflation. These claims do not withstand scrutiny. The fiscal deficit remains elevated at around 4.3%, well above the 3–3.5% FRBM target. The debt-GDP ratio is estimated at 55.6%, far exceeding the stipulated 40%.
Individual taxpayers are now contributing more than corporate entities. Prior to 2019–20, corporates contributed more to tax revenues. However, after corporate tax cuts, this trend has reversed. In 2024–25, corporate taxes accounted for 17% of total receipts, while income taxes accounted for 19%. In 2026–27, corporate taxes are estimated at 18%, while income taxes will rise to 21%, further deepening inequity.
Improving living standards requires universal access to free education and healthcare. Yet, expenditure on education has declined from Rs 1,28,650 crore in 2025–26 (BE) to Rs 1,21,949 crore (RE), with only a marginal increase to Rs 1,39,289 crore in 2026–27. Health expenditure has also been cut from Rs 98,311 crore (BE) to Rs 94,625 crore (RE), with a modest rise to Rs 1,04,599 crore in 2026–27.
Similarly, expenditure on rural development has sharply declined from Rs 2,65,817 crore (BE) to Rs 2,12,750 crore (RE) and remains stagnant in 2026–27. Allocation to agriculture and allied sectors has fallen from Rs 1,58,838 crore (BE) to Rs 1,51,853 crore (RE), with only a marginal rise projected for 2026–27.
The Budget has left the middle class and savers neglected. For inclusive and sustainable growth, economic policy must move beyond celebratory narratives and confront the lived realities of the vast majority of citizens.
The writer is an Odisha-based economist and columnist
