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Vision for Industrial Growth in Budget 2019–20
The budget articulates a vision for the growth of the manufacturing sector which is built on three pillars: (i) increase in investments, private investments in particular, (ii) enabling of conditions for small firms to grow and move into the next strata, and (iii) enhancement of the rate of growth of exports. However, as it turns out the vision has been clouded by some illusions. The challenge of growth acceleration of the industrial sector is confounded by the fact that factor augmentation is at a slow pace despite an increase.
The union budget 2019–20 was presented against the backdrop of great expectations. Three main issues were anticipated to be addressed in the budget to accelerate the overall rate of growth and especially of the industrial sector. First, that there would be loosening of the fiscal cords to boost growth or at least, arrest the slowdown of the economy. Second, the initiation of measures to uplift domestic demand and address the dampeners of strategic sectors. And third, the announcement of some big bang reforms to let loose the “animal spirits” to shore up tepid investments. These expectations, however, had to be tempered with the reality of the state of the economy and an unusual urge to maintain the status quo. The end result, however, is an exercise which signals more of continuity than change.
Even though the Economic Survey 2019 paints a rosy picture of the economy and achievements of the past government, the present state of the economy is a representation of the sum of the parts not adding up to the whole. Both the overall and sectoral growth have slowed down, the magnitude of which has come under scrutiny. In the last fiscal, the economy grew at a five-year low of 6.8%. Given the global trend of a synchronised slow growth and the internal contradictions provided by macroeconomic indicators, it would not be off tangent to conceive this growth rate to be much lower than what the official numbers actually reveal.1
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