Senior Congress leader P Chidambaram criticised the Union Budget 2026 on Sunday, questioning the government’s handling of trade risks, tariff policies, defence spending, and fiscal consolidation. In an exclusive interview with ANI, he asked, “There is a tariff threat. There is a penal tariff in India. What is she doing about it? Why has she not even mentioned it in the budget? Have they mentioned the penal tariffs imposed on the United States? The growing trade deficit, especially with China? The low gross fixed capital formation and the private sector’s reluctance to invest in India? The uncertain outlook for FDI flows and persistent portfolio investment outflows.”
He emphasised the need for these issues to be addressed: “These are questions which should be addressed in the budget. These are the issues which concern the country. These are the issues which concern the economists. These are the issues which concern investors. Therefore, these concerns must be addressed. After you address them, we can weigh the merits or demerits of your answer. But you don’t even address them. What do I say?”
Regarding defence spending, Chidambaram stated that although the allocation appears higher, in real terms it has not increased. He noted that defence expenditure as a proportion of GDP has declined from 2.3% in 2013-14 to 1.9% in 2026, and as a share of total government expenditure, it has decreased from nearly 16% to 14.5%.
He said, “India has not hiked the defence budget. I’ll tell you. India seems to have allocated more money for defence. I don’t disagree. But as a proportion of GDP and as a proportion of total expenditure, it is less than what it was in 2013-14. For example, in 2013-14, according to the numbers that I have, the defence expenditure as a percentage of GDP was as high as 2.3%. This year it is 1.9%. As a proportion of total expenditure, it was as high as 16%… close to 16% in 2013-14. Today it is 14.5%.”
Chidambaram also questioned the government’s decision to reduce capital expenditure in 2025-26. He highlighted, “In 2025-26, capital expenditure was cut by Rs 1,44,376 crore. Of this, the Centre’s capital expenditure was cut by 25,335 crore, and the States’ capital expenditure was cut by 1,19,041 crore. The total is 1,44,376 crore, and that is there in the capital account at the budget at a glance. Therefore, they must explain why capital expenditure was cut in 2025-26. I’m not against outlaying more capital expenditure in 2026-27.”
On Rahul Gandhi’s remark about the economy being ‘dead’, Chidambaram remarked, “This has nothing to do with the budget. Don’t rake up old statements in a different context.”
He further criticised the pace of fiscal consolidation, noting that the fiscal deficit is projected to fall by only 0.1% in 2026-27, against the 3% Fiscal Responsibility and Budget Management (FRBM) target, which would require 13 years to achieve. He added concerns about the revenue deficit, stating it remains at 1.5% for both 2025-26 and 2026-27, and stressed the urgency of reducing borrowing for revenue expenditure.
He said, “In 2025-26, the budget estimate was 4.4, and the revised estimate is 4.4. In 2026-27, it will fall by 0.1%. The target is 3%. Under the FRBM target, the target is 3%. At a 0.1% annual rate, it will take 13 years. Therefore, this is not adequate fiscal consolidation. They must take larger, more aggressive, more bold steps to contain the fiscal deficit. The revenue deficit is equally important. In fact, Dr. C. Rangarajan, the former RBI governor, stated 10 days ago that the revenue deficit is as important as the fiscal deficit. This means a revenue deficit indicates you are borrowing to fund revenue expenditure. The revenue deficit for 2025-26 was 1.5, and for 2026-27 it was also 1.5. Where is the compression in the revenue deficit? Therefore, I’m not satisfied with the fiscal consolidation.”
Responding to US President Donald J Trump’s claim that India will buy oil from Venezuela, Chidambaram said he was unaware of the full implications or any agreements between India and the United States on this matter.
He stated, “I don’t know the implications. I don’t know what understanding has been arrived at between India and the United States. We should buy oil wherever it’s available, whether it’s Russia, Venezuela, or whatever. But our oil purchases from Russia dropped sharply because of the US threat. Now, if we can buy oil from Venezuela at a reasonable price, why not? But I don’t know what complications will arise. Only the foreign ministry and the prime minister’s office will know whether there are any complications in buying oil from Venezuela.”