Union Budget 2026-27: These ‘reforms’ are elitist and pro-business

Both the Union Budget 2026 and the Economic Survey repeatedly mention ‘reforms’. Every chapter of the survey uses the word, while Prime Minister Narendra Modi insists that ‘today, India is riding Reform Express’. What exactly does the word mean? Does it have a narrow connotation based on the policymaker’s belief or is it something wider?

The survey highlights the reforms already underway — production-linked incentives (PLI), liberalised foreign direct investment (FDI), logistics modernisation, tax simplification, digital infrastructure rollout, labour law changes, skilling drives, improved female workforce participation, infrastructure expansion and easier entry-exit norms for businesses. It’s an impressive list, credited for recent economic growth and lifting potential GDP growth to 7 per cent.

But are these reforms really delivering the goods?

The International Monetary Fund (IMF) has repeatedly flagged that India’s GDP data lacks credibility. It has pointed to many flaws in India’s methods of measuring its economy, most importantly in the informal sector. The bulk of available data is from the organised sector. Hence growth is misrepresented. The survey has nothing to say about this. It does not offer an explanation for the errors in GDP data nor does it clarify if these ‘reforms’ have led to good growth.

Despite the claimed reforms, the share of manufacturing in GDP has shrunk to around 12 per cent. The PLI scheme is way behind target with barely 10 per cent of allocated funds disbursed over four years.

Skilling schemes have missed targets, as skilled workers are unable to find appropriate jobs. Schemes launched under the Employment Linked Incentive (ELI), announced with much fanfare, have barely taken off. To cover up, marginal employment and unpaid work is being counted — practices that defy ILO definitions.

Poverty reduction is being claimed on the basis of faulty comparison of NFHS (National Family Health Survey) data.

The tax cuts announced in the Budget benefit the organised sector and the affluent. Raising the income tax exemption limit to Rs 12.75 lakh benefits only the top 1–2 per cent of the population. The middle class, especially those in the Rs 7 lakh to Rs 12 lakh income bracket, will benefit only marginally. Direct tax collections have declined by about Rs 2 lakh crore, impacting public expenditure on education and health.

Cuts in GST mainly help the organised sector — who pay the most GST — making their products cheaper when compared to the unorganised sector. Demand shifts towards the former may lead to higher consumption but will adversely impact income in the unorganised sector.

India’s vast black economy undermines any attempt at reform by escaping tax and regulatory frameworks. A low direct tax to GDP ratio of 6.5 per cent — one of the lowest in the world — indicates the extent of this black economy. It also reduces potential growth rate, which has not been factored in the Economic Survey.

The newly enacted Labour Codes and the move to replace MGNREGA will further weaken the negligible bargaining power of farmers and trade unionised workers. Both changes undoubtedly come in response to trade pressure from the EU and the US who want access to Indian markets. Agricultural prices will drop further below minimum support price (where MSP is announced) and non-agricultural producers will find their margins squeezed.

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Not only are these reforms pro-business, they are elitist. Air travel and over-priced deluxe trains are promoted while the masses are packed into trains and buses like sardines. Private businesses are being promoted via elite projects and privatisation. The Budget announced the setting up of five university towns — another red herring given that existing top universities are being eviscerated.

The anti-democratic stance of the government becomes apparent when it proposes dilutions in RTI, curtailing people’s rights to scrutinise policies and expose the anti-people stance of those in the top echelons of policymaking. How anti-labour our elites are came to the fore recently when a top functionary of our constitutional court publicly blamed workers for the closure of factories and inadequate industrialisation. The argument simply ignores the promise in our Constitution to give everyone a living wage.

The Budget promotes tourism as a means of promoting employment. Wouldn’t that promote commercialisation and overwhelm local cultures? There is talk of swadeshi and atmanirbharta while simultaneously promoting free trade. Given our weak R&D base, wouldn’t India get swamped, as has happened with previous free trade agreements (FTAs)? China overwhelms us without an FTA. To meet the challenge, there is a need to focus on education, but underinvestment in the sector coupled with promoting unscientific ideas undermines the drive for innovation.

Clearly, India suffers from a demand problem. That requires the government to promote policies to reduce inequalities. But the Budget does the exact opposite by giving more to those who have been cornering the gains from growth.

The marginalised need quality employment but that is not the focus since resources are being funnelled mostly into organised sectors.

The promotion of crony capitalism spoils the investment climate. When rulers play favourites among businesses, the rest feel threatened. No wonder a large number of ultra-high net worth individuals are leaving the country.

True reforms would ensure a level playing field, provide fair opportunities for marginalised groups, empower informal workers and boost public investments in education, healthcare and social security. In a vicious cycle, those benefitting from the system are demanding more — and getting it. The marginalised, on the other hand, are getting further marginalised. That is at the root of rising inequality. And that is why the so-called reforms have become a zero-sum game.

Arun Kumar taught Economics at JNU and is the author of Indian Economy’s Greatest Crisis: Impact of the Coronavirus and the Road Ahead. Get more of his writing here