CPI(M) Polit Bureau has issued the following statement on February 1

THE Union Budget 2025-26 is a cruel betrayal of the requirements of the people of India. Instead of addressing the root cause of the demand problem being faced by so many sectors of the economy, the lack of purchasing power in the hands of large sections of the population because of mass unemployment and shrinking wages, the Modi government through the budget is seeking to stimulate the economy by giving tax cuts to the small minority with higher incomes even as expenditures are cut. While the Economic Survey shows the desperate plight of India’s labour force, pointing out the decrease in earnings over the last five years, this budget with its emphasis on cutting government expenditures while giving concessions to the rich will only increase the huge inequalities in India.

Instead of mobilising resources by taxing the rich and the big corporate houses and pushing up public investment that would help generate employment and ensure a minimum wage for our people, it has chosen to do the opposite. It also seeks to foster greater wealth accumulation by the rich by promoting private investment, even placing public assets and public expenditure at its service. In this budget, the government proposes 100 per cent entry of FDI in the insurance sector and privatisation of power sector as well. It is therefore a budget by the rich for the rich.

Expenditure as a percentage of GDP is destined to come down once again, as has been happening every year since 2020-21 – this time from 14.6 per cent in 2024-25 to 14.2 per cent in 2025-26. The budget papers further reveal that the government in contrast to its tall claims, actually spent in the last year approximately one lakh crore rupees less than what the budget had promised. In other words, going by its past record, even the inadequate allocations made cannot be taken at face value as the government does not spend the amount it promises it would.  

In the last year, the central government cut down transfers to the states by Rs 1,12,000 crores compared to the budgeted figures – it reduced funds for centrally sponsored schemes by Rs 90,000 crores and Finance Commission and other transfers to the states by Rs 22,000 crores. The budget thus reflects the approach of a dilution of the principle of federalism, and the assaults on the rights of the states.

The cuts in 2024-25 also hit capital expenditures which are going to be almost Rs 93,000 crores less than the budgeted figure. Food subsidies, agriculture and allied activities, education, rural development, social welfare, urban development – all have faced this cut and the budgeted figures for 2025-26 are almost the same as in 2024-25. The allocations are in fact stagnant if one factors in inflation, and as a percentage of GDP less than last year. The allocation for food in the last budget was Rs 2.05 lakh crores but in the revised estimates of the last year, expenditure reduced by Rs 7830 crores while in this budget the proposed figure is Rs 2.03 lakh crores which is even less than the last year’s budget provision. Similarly in the case of education, the budget provision for the last year was Rs 1.26 lakh crores but the revised estimate shows that they spent Rs 11584 crore less while in this budget the allocation is only Rs 3012 crores higher over last year’s budget estimates. This is only 2.3 per cent increase in nominal terms; so considering inflation there has not been any increase in real terms.

Regarding allocation for health, the revised estimates are once again less than last year’s budget estimates. In agriculture and allied sector, the BE was Rs 1.5 lakh crore and the government spent Rs 10992 crores less according to the revised estimate. LPG subsidy has been cut down from Rs 14.7 thousand crores as per last year’s revised estimate to Rs 12 thousand crores in this year’s budget.

The hypocrisy of the government is symbolised by its measly allocations for a right which is a lifeline for the rural poor, the MNREGA. The allocations have stagnated at Rs 86,000 crores even as the demand has grown. This is not only a cruel blow against the rural poor, it is an outright assault on the legal right for 100 days work. The demand for MSP for farmers, a critical issue for addressing agrarian distress and farmer suicides has been given short shrift by the government.

The budget has separate statements for expenditures on Scheduled Castes, Scheduled Tribes and for women. Even at face value, the budget papers show the utter callousness of the government. In 2024-25 the allocation for Scheduled Castes has faced a cut of Rs 27,000 crores, while that for Scheduled Tribes similarly is down by Rs 17,000 crores – this is despite the shares of such expenditures in total expenditure being significantly lower than what the guidelines prescribe them to be, namely proportionate to the shares of these social groups in the population. For 2025-26, the allocations are only 3.4 per cent and 2.6 per cent of total expenditures for SCs and STs respectively. Allocations for North Eastern areas have also been reduced by Rs 13,000 crores in comparison to budgeted figures, while that on welfare of children have also been cut. Even the gender budget for 2024-25 is smaller than in 2023-24. Allocations under these heads continue to be low even in 2025-26.

Much is being made of the claim of “helping the middle classes” by raising the tax exemption limit to Rs 12 lakhs. The quantum of benefit from these changes in personal income taxes accruing to the middle class actually will be small compared to the benefits accruing to the really wealthy class of Indians – the less than 1 per cent of India’s population. It is they who will gain the lion’s share of the Rs 1 lakh crore loss that the government will suffer because of the income tax concessions. More importantly, the government has chosen not to increase the rates of taxation at higher income slabs, which could very well have been combined with a reduction in tax burden of the lower middle class.

The Union Budget 2025-26 reflects the bankruptcy of the Modi government, and shows that it is so committed to protecting the interests of the rich and corporate sector that it is not even able to formulate any real policy to address the slowdown in the economy. Neither the magnitude of the crisis, nor its character, seem to be visible to the government and its finance minister – who go on like a stuck record about their great stewardship of the economy, which as the Economic Survey showed has resulted in a situation where wages in India are below pre-pandemic levels and growth is also slowing down because of demand constraints. A mountain of evidence now exists that compressing expenditures and lowering taxes on the rich, and other measures to unleash the so-called animal spirits of private corporate and foreign investors, have not worked to address this problem and generate investment and employment growth. The Union Budget 2025-26 is only the latest installment of a policy that has abjectly failed.

The Polit Bureau of the CPI(M) calls upon all Party units to mobilise the people and organise protests against this anti-people budget of the Modi government.