The advocacy group Centre for Financial Accountability (CFA) has sharply criticised the Union Budget 2026–27, calling it a “budget sans kartavya” that weakens public welfare while favouring private corporations, even as inequality, climate risks and social distress deepen across the country.
In its annual budget analysis released after Finance Minister Nirmala Sitharaman presented the Budget on February 1, CFA pointed out that public health spending by the Centre remains stuck at just 0.27 per cent of GDP, while education spending stands at 0.35 per cent of GDP, far below the long-promised 6 per cent target under the National Education Policy. The organisation also highlighted a decline in the agriculture sector’s share of the Union Budget from 2.71 per cent in 2025–26 to 2.63 per cent in 2026–27, describing it as a signal of policy neglect at a time of rural distress.
CFA noted that despite the government’s own admission that more than 80 crore people continue to depend on the public distribution system, the allocation for the Pradhan Mantri Gareeb Kalyan Anna Yojana amounts to only 0.63 per cent of GDP. It also flagged what it termed “tokenism” within social justice spending, pointing out that economic development schemes for Scheduled Castes, Backward Castes and safai karmacharis have been allotted just Rs 1 lakh each.
“The Budget shows a lacklustre effort toward strengthening public welfare while continuing to mollycoddle private corporations,” CFA said, adding that the overall fiscal approach reflects indifference to social protection even as inequality widens.
The analysis examined seven key areas, including social sector spending, climate and energy, infrastructure, NREGA, taxation and banking, and warned that the Budget’s priorities could have serious social and environmental consequences. While India continues to project ambitious climate commitments internationally, CFA highlighted a 640 per cent increase in allocations to the Ministry of Coal, signalling a renewed policy push towards coal and lignite gasification. It also drew attention to the Rs 20,000 crore outlay for Carbon Capture, Utilisation and Storage (CCUS), arguing that it enables continued fossil fuel use rather than real emissions reduction.
According to CFA, the CCUS allocation is closely tied to export-oriented strategies linked to the India–EU Free Trade Agreement and the EU’s Carbon Border Adjustment Mechanism. “The CCUS outlay effectively acts as a subsidy to exporters by absorbing carbon costs and reducing CBAM-linked taxes, instead of investing in cleaner production or domestic demand,” the organisation said. It added that while MSME allocations in sectors such as fisheries, textiles and leather are being positioned to serve export markets, the absence of parallel measures to strengthen domestic consumption leaves small enterprises vulnerable, given that exports contribute only about 20 per cent of GDP.
CFA also expressed concern over a shift in MSME support from broad-based credit mechanisms to selective equity support through the proposed Rs 10,000 crore SME Growth Fund. While this may help a handful of “future champions,” it does little for the wider MSME sector struggling with weak demand and limited access to credit. The growing reliance on gold-backed loans by MSMEs was flagged as particularly worrying, blurring the line between household and business finances.
On environmental governance, CFA criticised cuts to pollution control and Central Pollution Control Board funding despite worsening air quality and regulatory staff shortages. It pointed out that less than Rs 52 crore has been allocated for biodiversity and ecosystem conservation, compared to over Rs 1.33 lakh crore for petroleum, refinery and petrochemical sectors. Coastal protection funding has declined even as cyclone and sea-level risks intensify, while initiatives like the Deep Ocean Mission promote seabed mining, CFA said.
The organisation also questioned the extension of basic customs duty exemptions for nuclear power project imports till 2035 and the expansion of the exemption to all nuclear plants, alongside what it described as an “abysmally low” Rs 3,000 crore cap on nuclear liability. It warned that large public outlays for nuclear expansion, CCUS, rare earth mining and hydropower-linked infrastructure reinforce carbon-intensive development pathways while adaptation and ecosystem restoration remain underfunded.
CFA further criticised the creation of a Rs 1,000 crore Infrastructure Risk Guarantee Fund, arguing that it uses public money to absorb risks shunned by private investors, effectively socialising losses while privatising profits. It also questioned incentives for seaplane manufacturing, citing past failures such as the short-lived Statue of Unity–Sabarmati seaplane project.
On transport, the organisation said the announcement of seven high-speed rail corridors overlooks the everyday realities of overcrowding and poor amenities faced by ordinary passengers, despite a massive Rs 2.81 lakh crore allocation to the Railways. In taxation, CFA highlighted rising inequality, noting that the top 10 per cent of earners capture 58 per cent of income and 65 per cent of wealth, while the bottom half receives just 15 per cent. It pointed out that personal income tax now accounts for 33.3 per cent of total tax collection, compared to 28 per cent from corporate taxes, and argued that heavy reliance on GST and other consumption taxes places a disproportionate burden on households.
Finally, CFA challenged claims of improved banking health, stating that low non-performing assets and rising public sector bank profits are underpinned by Rs 6.15 lakh crore in write-offs over the past five years, constraining credit for MSMEs and smaller borrowers. It also expressed concern over key banking decisions being shifted outside parliamentary scrutiny through high-level committees on mergers and disinvestment.
“The Economic Survey argues that climate action diverts resources from social welfare, even as the Budget prioritises infrastructure, defence and industry over both welfare and climate resilience,” CFA said, warning that such policy choices risk deepening inequality and undermining long-term economic stability.
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