The Sunday Times economic analysis
Don't look back in anger
By the Economist
On the eve of the 54th anniversary of regaining independ-ence
there is much to regret in the economic performance of the country.
Some economists have characterised the post independent period of the
country's history as one of "missed opportunities". The disappointment
could be much more if one has read the Prime Minister's recent policy statement
that briefly indicated the state of the country's finances and the state
of the economy. Never in the economic history of post independent Sri Lanka
did the country register a decline in growth. No, not even in the dark
days of JVP insurgencies in 1971-72 or 1988-89. These were years of enormous
disruption of economic activity. Yet the economy registered at least a
very low rate of growth. Not so last year, when the value of the total
goods and services produced during the year declined by about one per cent
from that attained in 2000. Despite the gloomy situation and outlook, we
must not look back in anger and vitiate our efforts by condemning the previous
government or by attributing the bad performance to internal and external
shocks over which we had no control. Let us accept the economic situation,
recognize its gravity and brace ourselves to make sacrifices that would
put back the economy on a growth path once again. The task is not easy.
The poor state of the government's finances and an inhospitable global
economy makes it doubly difficult. There are no quick fixes. It is not
possible to achieve results in a hundred days. We can however take steps
in the right direction. The single most serious constraint to growth in
most of the post-independent period has been the politically motivated
economic decision-making. Economic policies whose objective is to gain
immediate popularity and political gains can hardly achieve the end results
of higher economic growth and development. This is more so in the situation
that we find ourselves today, when the treasury is empty, the public debt
enormous, foreign reserves low, export markets dwindling and war expenditures
high. Increasing government revenue must he high on the list of priorities.
Yet increasing taxes is a politically unpopular move, as the increased
taxes should fall on items to contain consumption rather than be a disincentive
for investment, enterprise and effort. This means higher prices on consumption
items and that is a difficult proposition for Sri Lankan governments. Some
innovative means by which such taxation is palatable has to be devised.
The revenues derived from personal income taxation are low. It is no secret
that many high-income earners avoid paying taxes. Bringing them into the
tax net would be one means of enhancing revenue.
Equally important are efforts to cut down government expenditure. This
is no easy task either, as cuts in expenditure would have to be on items
that would result in unpopularity. An example would be the need to cut
the huge expenditure on Samurdhi. As many as 55 percent of the country's
households obtain Samurdhi benefits. There is no justification for such
large numbers receiving poor relief. The poor are estimated at around one
fourth the population and unemployment is estimated at around 12 percent
of the labour force. Obviously the undeserving receive such assistance.
Similarly other expenditure cuts too would be necessary. There is a need
to contain defence expenditures, prune the public service and find means
of reducing debt-servicing costs. The pertinent question to ask is whether
the government would have the political courage to make the unpopular decisions
to increase revenue and decrease expenditure. It is a particularly difficult
task for a coalition government relying on the support of several parties
to maintain its thin majority in parliament and facing provincial council
elections. The postponement of the budget till after the provincial council
elections is an indication that the government intends to take some tough
measures. Can it? Will it? It is important for the population at large
to understand the gravity of the economic situation.
The government must explain the need to make sacrifices to tide over
the difficulties we face, rather than be an exercise in courting popularity.
The gover-nment must not waste time by repeatedly lamenting about the last
seven years in the manner that the pre-vious government spent valuable
time conde-mning the previous 17 years. The economic problems are with
us, whatever their causes. Firm actions on a carefully planned manner are
vital. Still there is no evidence of this.
The dilemma of independence
By Victor Ivan
More than five decades have passed since independence, but we have to commemorate
the 54th anniversary not with pleasure but with sadness.
Most countries shed blood to win freedom. This gives an added value
and meaning to the word, and a set of social attitudes and a political
system that enable people to live without shedding blood. However, Sri
Lanka gained its independence without shedding a drop of blood and we have
been unable to evolve social attitudes in a political system required for
the completion of that independence. As a result we have become a country
of unending bloodshed.
From the British we also received the constitution. Although the constitution
contains extremely modern ideas that a constitution should contain what
it did not include was a framework that would bring together divided ethnic
communities. The first framework of the Indian constitution was brought
into existence in prison. It was made considering other modern constitutions
and problems that could arise in the future. India proceeds with that constitution.
However, we have not only abandoned the Soulbury Constitution but have
also abolished the republican constitution of 1972 framed by Colvin R.
De Silva and now we have come to a position in which we are thinking of
yet another constitution. As a country we are still moving in the dark.
At the time of independence Sri Lanka was ahead of all other countries
in south Asia. However, now we are far behind all those countries.
Sri Lanka's per capita annual income for the year 2001 was 2,500 dollars.
In Singapore it was 26,300 dollars. In Thailand it was 16,500 dollars.
In Malaysia it was 10,300 dollars. Until the beginning of the 1960's Lee
Kwan Yew of Singapore dreamt about making Singapore a Sri Lanka. However
the leaders of Sri Lanka have now to dream of how to make Sri Lanka a Singapore.
Today Sri Lanka's rate of economic growth is minus 0.6. Sri Lanka recorded
the highest rate of inflation for the year 2001 which is 15%. In India
it was 4.3%. In Singapore it was 1.2%. In Thailand it was 1.7%. Interest
rates paid by Sri Lanka annually for loans obtained from foreign sources
have come to equal the sum received from foreign sources as loans and aid
equals the amount of interest aid annually for loans received from foreign
The expenditure incurred for the war by the government alone has been
estimated to be about Rupees 5000 billion. In 2001 the expenditure was
1000 billion. The population of the country is less than 20 million. The
number of those killed due to the war and rebellions in the South may be
about 100,000. Those who were made destitute are more than a million.
We, the Sri Lankans like to boast that we are in par with the most developed
countries so far as literacy is concerned. However, our social attitudes
and conduct do not suit our social literacy. Although there are countries
which find it difficult to rise up due to natural disasters that cannot
be overcome easily, we have turned minor matters into major problems.
Sri Lankans would prefer to spend their time in pleasure rather than
in fruitful work. When there are cricket matches the pattern of life in
offices too change. Sri Lanka has the highest number of holidays. Sri Lanka
may be the country where the employees take the most number of no pay leave
in addition to the leave available officially. After the Sinhala New Year,
the shops in Colombo close for several weeks.
However, the life and conduct of a Sri Lankan going abroad change in
a revolutionary manner. He becomes a person who respects the rights of
the others, works tirelessly, observes the laws and regulations well and
becomes an efficient and productive person. So far as competence is concerned,
too, he shows his abilities.
Such contradictions are observed in politics too. There is almost no
country in the world in which the people are so sensitive as those in Sri
Lanka. However, what prevails in the country is a backward and lowly political
We in Sri Lanka gave up feudalism not because we wanted to give it up
but because the whites wanted to give it up. We got our freedom not because
we wanted to get it but because the whites wanted to give it. Consequently,
what flows in our veins is blood of feudalism although we want to appear
capitalist and democratic.
We are still not disciplined enough to respect the rights of other communities
while protecting the rights of our own community.
Although more than five decades have passed since independence, the
country has not been able to get a set of political leaders who are respected
beyond their narrow ethnic limits. The leaders D.S. Senanayake, Dudley
Senanayake, S.W.R. D. Bandaranaike, Sirima Bandaranaike, J.R. Jayewardene,
R. Premadasa were leaders respected by the Sinhala people, but they were
not leaders respected by the Tamil or Muslim people.
Leaders like G.G. Ponnambalam, S.J.V. Chelvanayagam and A. Amirthalingam
may be considered leaders respected by the Tamil people, but they cannot
be considered leaders respected by the Sinhala or Muslim people. Even persons
like Rohana Wijeweera and Prabhakaran who chose a revolutionary path won
the confidence of either the Sinhala or the Tamil youth, but were not leaders
who had the confidence of the Sinhala, Tamil and Muslim communities.
The future of Sri Lanka depends on our ability or inability to overcome
the fundamental problem relating to human relationships.
The writer is the Editor of Ravaya
Bollywood, holy men and eunuchs ... it must be an
Where do you find 18 eunuchs, several Bollywood stars, various criminals,
and a large number of sadhus or Hindu holy men? The answer is Uttar Pradesh,
India's most populous state, which is due to hold elections next month.
The state elections will not only help to determine the fate of India's
Hindu nationalist government but they will also reveal the national mood
at a time in which India is embroiled in yet another stand-off with its
arch enemy and rival Pakistan.
The state is currently run by the Bharatiya Janata party (BJP), which
also holds power in New Delhi. In theory, the BJP should romp home. But
recent opinion polls suggest that the ruling party is in trouble, despite
its attempts to revive one of the most contentious issues in Indian politics,
Ayodhya. Over the weekend, around 4,000 protesters belonging to a militant
Hindu organisation marched on New Delhi demanding the construction of a
temple in the town. The demolition of a mosque in Ayodhya by Hindu zealots
in 1992 prompted some of the worst communal rioting ever seen in India.
But it also helped propel the BJP into national office on a wave of Hindu
India's BJP prime minister, Atal Bihari Vajpayee, appears to have given
this weekend's protestors short shrift, and refused to give in to their
demands to build a Ram temple on the disputed site by the middle of March.
But Ayodhya is a tricky issue for Mr Vajpayee.
On the one hand it is an undoubted vote-winner, at a time when anti-Pakistani
(and anti-Muslim) sentiment in India is rampant. On the other hand, the
prime minister is increasingly reluctant to give in to the often-unreasonable
demands of his Hindu revivalist allies.
The BJP, meanwhile, faces a renewed threat in Uttar Pradesh from the
Samajwadi party- not least because the party is supported by India's biggest
film star, Amitabh Bachchan - the subcontinent's grey-bearded answer to
Mr Bachchan is already campaigning in the state. He yesterday entertained
tens of thousands of supporters with a mixture of poetry, songs, and political
points in the town of Etawah. "I have not seen such a huge sea of humanity
in more than three decades of my public life," the Samajwadi party's ecstatic
leader, Mulayam Singh Yadav, declared.
Yadav's party has been campaigning hard for the votes of Uttar Pradesh's
large Muslim minority, many of whom appear to have fallen off the electoral
roll. The BJP has its own share of glamour in the shape of the Bollywood
actress Hema Malini, popularly known as the Dream Girl.
If this were not enough, at least 18 eunuchs have unveiled their candidature.
Eunuchs have been the surprise addition to India's political scene over
the past two years, with eunuch legislators winning elections in several
north Indian constituencies. Their argument - and it is a good one - is
that eunuchs are less likely to be corrupt than ordinary politicians since
they have no children and no family interests to advance.
There is of course one final ingredient in the mix - violence. The Asian
Age reported yesterday that there had been at least five incidents of pre-poll
skirmishing in the state, and concluded that the elections could end up
"as one of the most violent ever".
Several voters have already died - one was beaten to death by iron poles
- for refusing to bow to the wishes of local political parties. Many of
the politicians who have announced their candidature are themselves criminals,
Indian newspaper reports suggest.
The results of this fascinating contest will start pouring in from February
24. It is no exaggeration to say that India's future as a secular democracy
will be shaped by the outcome.
- The Guardian, World Despatch