New Delhi, Jan 12 (UNI) Senior Congress leader and MP Jairam Ramesh on Monday raised sharp questions over the economic direction of the central government ahead of the presentation of the union Budget 2026–27, warning that it must move beyond what he called “statistical illusions” and squarely address deep structural challenges facing the economy.
Reacting to the announcement of the schedule for the next session of Parliament, Ramesh noted that the Budget will be presented in less than three weeks and will be shaped by the recommendations of the 16th Finance Commission, which submitted its report on November 17, 2025.
The recommendations cover the five-year period from 2026–27 to 2031–32 and deal with the sharing of tax revenues between the Centre and the States, as well as their distribution among States.
“The 2026–27 Budget will no doubt reflect the recommendations of the 16th Finance Commission,” Ramesh said in a statement, adding that States are already anxious about the direction of fiscal federalism. He pointed to the controversial 60:40 cost-sharing formula under laws that, he alleged, have weakened the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
“The 2026/27 Budget will no doubt reflect the recommendations of the 16th Finance Commission,” Ramesh said in a statement, adding that States are already anxious about the direction of fiscal federalism. He pointed to the controversial 60:40 cost-sharing formula under laws that, he alleged, have effectively weakened the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
“The States, already deeply concerned by the new 60:40 cost-sharing formula in the law that bulldozed away MGNREGA, will certainly be keeping their fingers even more crossed than ever,” he said. Ramesh outlined three major economic challenges that, according to him, require urgent attention in the Budget. First, he said, private corporate investment remains “markedly sluggish” despite substantial corporate tax cuts and robust profit margins.
Second, he highlighted a sharp decline in household savings, which he argued is constraining the economy’s overall investment capacity. Third, he warned that wealth, income and consumption inequalities continue to widen. “The economy faces many challenges. Three stand out,” Ramesh said, listing sluggish private investment, falling household savings, and rising inequality as key concerns.
He cautioned that headline GDP growth figures alone cannot mask these underlying weaknesses and stressed that job creation at the scale India requires will not be possible without addressing them. “Higher GDP growth rates in actuality, so very essential for vastly expanded job creation, will simply not be sustainable unless these steps are taken now,” he said.
The Congress leader said it remains to be seen whether the government will use the Budget to acknowledge these realities and take “meaningful steps” to tackle them, or whether it will continue with what he described as a comfort zone of selective data and optimistic projections.
The union Budget 2026–27 will be presented on Feb 1 during the Budget Session of Parliament, beginning later this month, and is expected to set the fiscal and policy roadmap for the coming year amid slowing global growth and rising domestic economic pressures.
