Ramesh raised two major concerns that could undermine the Budget’s credibility
File Photo: IANS
Senior Congress leader Jairam Ramesh on Saturday highlighted significant coordination challenges in India’s economic policymaking as the Union Budget for 2026–27 approaches, cautioning that key fiscal estimates might need revision shortly after being announced.
In a post on X, Ramesh emphasised that state governments will be particularly attentive to the Budget, slated for February 1, as it will unveil the implementation of the 16th Finance Commission’s recommendations. These recommendations, covering the fiscal period from 2026–27 to 2030–31, determine the distribution of tax revenues between the Centre and states, playing a crucial role in sustaining fiscal federalism.
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Ramesh raised two major concerns that could undermine the Budget’s credibility. First, he noted that many Budget figures are expressed as a percentage of GDP, yet a revised GDP series with the base year 2022–23 is set to be released on February 27, just 26 days after the Budget presentation. This timing raises questions about whether Budget numbers will require prompt adjustments.
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Second, he pointed to the upcoming release of a new Consumer Price Index (CPI) series based on 2024 data, expected on February 12. Preliminary indications suggest a significant reduction in the weight assigned to food prices, which could materially affect Budget calculations. Additionally, the Wholesale Price Index (WPI) is also undergoing revision and is expected to be updated in the near future, adding further uncertainty to key macroeconomic indicators.
“These developments reflect poorly on coordination in policymaking,” Ramesh stated, underscoring the potential challenges for policymakers, economists, and states as they interpret and implement the Budget amid evolving data.
The 2026–27 Budget will set the fiscal trajectory for the first year of the 16th Finance Commission’s award period, making clarity and coordination in economic data all the more vital.
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