The Government will present its Budget or Vote-on-Account in the Lok Sabha on February 1. With the next general elections expected in May and in the backdrop of the victories by its Opposition parties in three state polls last month, it is widely expected that the Government will try to woo rural and urban middle-class voters and farmers in this Budget, but economy watchers view that the Indian industry needs no less attention, considering several major challenges presently facing it.

According to official figures, the industrial output growth rate slowed to 0.5 percent -- its lowest rise since June 2017-- in November. This is not a good signal, and though the 5-percent growth in IIP during the April-November 2018 period is much higher than the 3.2-percent increase posted in the corresponding period last year, the recent fall – which, according to analysts, can be attributed to lower domestic demand, lower rural spending and lower lending to various sectors including MSMEs – should be taken as a warning sign.

Exports, too, are not doing well recently. External trade figures for December show a lacklustre exports growth of 0.34 percent to $27.93 billion from the $27.83 billion reported for the corresponding month of 2017. These figures are not that encouraging, particularly because major labour-intensive sectors including jewellery, engineering, leather, and handloom showed negative growth in the month. Also, SME exporters have long been complaining of poor credit flow and inadequate fiscal support and the upcoming Budget should take these concerns into account.

There is no doubt that the farm sector is ailing; our farmers are in distress, and everyone is expecting that the Budget or Vote-on-Account to be introduced just a few months before the next general elections, will be farmer-friendly. But it is equally important that the Centre does not turn a blind eye to the needs of the industry, including that of the manufacturing sector and MSMEs. Politically, too, it is important that the government gives a strong signal through the Budget of its willingness to back its past measures to support the industry.