Amidst weakening economy and mounting pressure from western imperialist powers mainly USA, Modi led RSS-BJP Govt. has presented second budget of its third term. Last year in the aftermath of loss of majority in Lok Sabha in 2024 elections, Modi Govt. had taken some half-hearted measures to boost demand by increasing Income tax limit and reducing GST on some items. However, may be due to victories in several state elections even such half-hearted measures are absent in this year’s budget which is just catering to foreign and domestic corporate and pursuing supply side measures and ignoring and in some cases cutting expenditure on social sectors including health and education. This budget heralds even greater hardships for the labouring classes and even middle classes.

Over several years, the whole budget exercise has been denuded of its significance. Taxes are raised round the year and figures in the Budget are fudged and misleading. RSS-BJP has evolved a jumla formula of projecting higher expenditure on social sectors in the Budget backed by inflated expectations of higher revenue estimates and in the end of the year thus maintaining semblance of fiscal discipline but in the end of the year, the lower growth in revenue translates in cut in the heads of social sector expenditures thus claiming to stick to fiscal target. This jugglery with figures and patent fraud with the people is pushed to the footnotes by the Govt. friendly corporate media while Govt. is given accolades for service to the foreign and domestic corporate. This FDI dependent growth model has been in deepening crisis which is covered up by the Govt.

On the macro-economic level, nominal growth in the economy has been weaker, Total growth in revenue has been estimated to be 6.7%, income tax collections have fallen much below estimates, GST collections have increased by 1.9%. Of the claimed growth of 7.4%, agriculture in which nearly half of Indian work force is directly engaged and which is life line of nearly two third of Indian people living in rural areas. This short fall has seen that projected expenditure on most of the social sectors has been cut including rural development, agriculture, education, health, urban development, housing and drinking water as shown in Revised Estimates for 2025-26. Cuts have been made in expenditure on SC and ST welfare, cut in Anganwadi and other heads. Out of the twenty heads in the social sector, expenditure in 17 of them has been reduced. And allocations in this Budget is lower in most of them. Low rate of inflation is not due to low effective demand indicating low purchasing power of the people.

In the Govt. expenditure most of the emphasis is on the infrastructure projects in which huge sums of public money are spent in PPP mode thereby benefiting foreign and domestic corporate. There is much boast of increasing capex (capital expenditure) but in the end claims of its increase are sacrificed at the alter of crisis ridden economy. Last year capital expenditure was only 4.1% much below the budget allocation. This too going mainly going to infrastructure, sectors like health, education and other social sectors are neglected. This shows that RSS-BJP Govt. is sticking to failed model of economic development in its service to foreign and domestic corporate and reactionaries.

Govt. has totally neglected the most pressing concern of the economy i.e. of boosting elective demand. There is no attempt to address the deepening agrarian crisis and deteriorating conditions of peasantry. Despite this there is a cut in fertilizer subsidy. On the other hand through Electricity Bill and Seed Bill, RSS-BJP Govt. is further ensnaring them in corporate stranglehold. Nor is there any attempt to address the underlying causes of increasing unemployment which has assumed alarming proportions in case of educated youth. On the other hand, RSS-BJP Govt. has launched serious attack on the urban workers and rural labourers in the form of four Labour Codes and VB-GRAMG which will lead to depressing their wages further. VB-GRAMG will not only depress wages to benefit landlords and rich peasants, it will only increase migration to cities increasing the reserve army of labour in cities. MSMEs which employ large part of the industrial working class and contribute over a third of exports, are granted increase in credit limit ignoring the real cause of their crisis. Textile and apparel, other big employer, has been given mainly cosmetic reliefs.

The whole thrust of the Union Budget is to benefit foreign and domestic corporate even facilitating handing over of the vast tracts of land to them forcibly evicting peasants and agricultural labourers from their land and means of livelihood. This Budget epitomizes the policies of RSS-BJP Govt. which are leading to greater opportunities to unite in struggle urban workers, most of them of unorganized sector, agricultural labourers, poor peasants and other sections of peasantry especially middle peasants.

RSS-BJP led Govt. has been bending over backward to please western imperialist powers particularly USA. Even in last year’s budget, several concessions were given to US companies through reducing custom duties on items specially imported from USA. In this Budget, demands made by the USA during trade negotiations have been fulfilled like tax holiday until 2047 for any foreign company providing cloud computing services to customers globally by using data centre from India thus benefiting top US companies. Further duty exemptions have been granted up to 2035 on aircraft components and nuclear power generation equipment, areas in which US companies would be main beneficiaries being leader in these sectors. Several concessions including custom reliefs on machinery have been given to EU and earlier UK which have been reflected in this Budget. These measures will adversely affect industrial development in India especially in high tech sectors.

Equally alarming is the emphasis on establishment of mineral corridors. Indian ruling classes have been conspiring to open mineral rich areas of India to the loot and plunder of foreign and domestic corporate. This will bring new wave of forcible displacement especially of tribals and is totally against the interests of people of the country.

Budget is supposed to show condition and direction of economy. Condition is not easily discernible due to data fudging but direction can be seen and this direction will lead Indian economy to slowdown and gradually to disaster while ruining vast majority of the people of the country especially labouring masses. This would create conditions for the rise of struggle of workers and peasants against attacks on their wages, land and livelihood and for greater access to health, education and other legitimate rights.

CPI(ML)-New Democracy

February 2, 2026