Budget 2026-27: Behind the Budget Applause, Warning Signs on Spending and Implementation

The morning after provides some vital signals that may have been missed in the noise of a much-cheered annual Union Budget speech.There is a cricket joke that comes to mind as I digest the fine print of announcements made by Finance Minister Nirmala Sitharaman, which admittedly spell out a rich fare of high-technology with livelihood aid for the poorer lot in a slew of projects and programmes. The joke, from the age when there were no video action replays, is about a biased umpire who rejects several valid leg-before-wicket decisions. The desperate bowler now gets into a classic run-up and uproots all the three stumps of the batsman and shouts a loud appeal: “Howzzat!”.“Can’t you see he is bowled?” the umpire says.“I know,” the bowler replies sarcastically. “But is he out?”With a rich fare of capital expenditure laid out and mega announcements on everything from biopharmaceuticals to city economic regions and artificial intelligence, not to speak of infrastructure schemes, Sitharaman’s menu looks good. But the pudding is yet to be eaten.Budget 2026: FM Announces Rare Earth Corridors, ₹20,000 Cr Carbon Capture SchemeThere are strong signs that suggest that the government needs to go that extra mile to push spending and monitor it to truly create the outcomes beyond the outlays. In simple language, the problem has shifted from the availability of funds to actual implementation of projects, schemes and initiatives, if one looks at the bottom lines beyond the headlines.Though the government increased the allocation for infrastructure in the budget for 2026-27 by 9 percent to Rs 12.2 lakh crore, it now transpires that the actual spending in the current 2025/26 year, as per revised estimates, is about Rs 30,000 crore less than the original budget estimate of Rs 11.2 crore. There are also sharp falls in grants to states for creation of assets.The minister proudly claimed that the government had met its fiscal deficit target of 4.4 percent of the GDP in the FY 2026-27 Budget, but a week before the budget, a newspaper reported that it would be possible because as much as Rs 70,000-75,000 crore would be “saved” this fiscal year because key ministries have been sitting on funds. Even flagship welfare schemes that have been widely advertised, such as the Swachh Bharat Mission and Jal Jeevan Mission, have been lagging in utilisation of sanctioned funds.This happens partly because of bureaucratic inefficiency, but also because, in my assessment, there is a severe shortage of hands-on administrative talent in Prime Minister Narendra Modi’s council of ministers, many of whom are happy loyalists owing their position to caste, ideology, community, region or loyalty. Development schemes require close monitoring in the best of times. There is a serious talent-objective mismatch that one sees in the Bharatiya Janata Party (BJP) administration.'Houses Built Under PM's Scheme Bulldozed': The Lives Being Uprooted in NalandaThere are other obstacles as well. The Narendra Modi government’s approach is to rely on cooperation and collaboration with both state governments and private sector entities. In the absence of matching contributions or initiatives from partners, headline-grabbing announcements fall short of goals. I also do not rule out political tugs-of-war involving opposition states that hold up implementation of projects, as we have witnessed in the education-linked Samagra Shiksha scheme in Tamil Nadu.The minister mentioned “challenge” mode/route/method at least four times in her budget speech with regard to new initiatives on chemical parks, textile parks, new universities and “city economic regions”.Her reference was to SCM—or the Swiss Challenge Method—under which government agencies try to ensure efficiency, innovation, initiative and transparency through a specialised bidding process. Private players or state governments can identify projects and present proposals, followed by disclosures and transparent bidding with some extra privilege for original bidders.This method has its downside as it can result in charges of crony capitalism as well as reduced competition, or implementation delays. The government publicly admitted last year that “transition and procedural changes” linked to the challenge method were a problem.Union Budget Sets Fiscal Deficit Target at 4.3% of GDP for 2026-2027Another bottleneck I see ahead is in the adoption and adaptation of new technologies. India faces an age-old problem in research and development. On the one hand, major private sector companies and groups are reluctant or limited players in global-scale innovation. On the other hand, government agencies like the Council of Scientific and Industrial Research (CSIR) are not adept at commercialising innovations efficiently. The government needs to go that extra mile on this front. This underlines a management problem that is a long-term issue but it looks bigger now because of the new ambitions spelt out by the government.The budget speech mentioned biopharmaceuticals, semiconductors, artificial intelligence (AI), medical tourism, carbon capture and rare earth permanent magnets among areas where the government will support research and development. My simple response: Really? How? There is a lot of management plumbing that is required in these areas, possibly involving restructuring and long range work.Given the uncertainties in the global economy following tariff wars launched by US President Donald Trump in the US and a India-EU free trade agreement with the European Union that is yet to be ratified by the European Parliament, I see less scope for scalable innovation. Intentions become achieved goals only when an entire ecosystem is such that it can prioritise its resources and does not have to look over its shoulders.We badly need mid-year reviews of budgetary initiatives, than the current fashion of speech-to-speech assessments. Between outlays and outcomes, we have the syndrome of the cricketer who wanted “bowled” to be clarified as “out”. Howzzat for a reality check?(Madhavan Narayanan is a senior journalist and commentator who has worked for Reuters, Economic Times, Business Standard, and Hindustan Times. He can be reached on Twitter @madversity. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)Even With Fiscal Crunch, Modi's Budget Shows It’s Playing the Long Growth Game

BECOME A MEMBER

From AI to Infrastructure, the Budget Risks Overpromising and Underdelivering

We badly need mid-year reviews of budgetary initiatives, than the current fashion of speech-to-speech assessments.

Read Latest News and Breaking News at The Quint, browse for more from opinion

Topics: Budget Budget Breakdown