Chidambaram slams Budget 2026, questions govt on trade, defence

P Chidambaram criticised the Union Budget 2026, questioning the govt on the trade deficit, low investment, and defence spending. He flagged concerns over capital expenditure cuts and the slow pace of fiscal consolidation.

Chidambaram slams budget on key economic fronts

Trade, Investment and FDI flows

Senior Congress leader P Chidambaram on Sunday raised concerns over the Union Budget 2026, questioning the government's approach to trade, investment, and defence expenditure. In an exclusive interview with ANI, he said, "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."

Senior Congress leader added, "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?"

Defence Expenditure

On defence allocation, Senior Congress leader P. Chidambaram said India has not increased defence spending in real terms, noting that while the allocation appears higher, as a proportion of GDP it has fallen from 2.3% in 2013-14 to 1.9% in 2026, and as a share of total expenditure from nearly 16% to 14.5%. "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%," he said.

Concerns over fiscal health and expenditure

Chidambaram also questioned the government's approach to capital expenditure and fiscal consolidation in the Union Budget 2026. He said, "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 dead economy remark, he said, "This has nothing to do with the budget. Don't rake up old statements in a different context. "

The senior Congress leader said the government's pace of fiscal consolidation is inadequate, noting that the fiscal deficit will fall only 0.1% in 2026-27 against the 3% FRBM target, which would take 13 years to achieve. He also flagged revenue deficit concerns, saying it remains at 1.5% in 2025-26 and 2026-27, stressing that borrowing for revenue expenditure needs urgent compression. "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," he said.

On buying oil from Venezuela

Reacting to US President Donald J Trump's claim that India will buy oil from Venezuela, the senior Congress leader and former Union Finance Minister P Chidambaram said he is not aware of the full implications of the statement or any understanding reached between India and the United States. He said, "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."

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