The Rajpal Abeynayake Column                     By Rajpal Abeynayake  

So, is Amunugama as good as he looks?
Power, it has been said somewhere, is the best aphrodisiac. Sarath Amunugama may not need one, but power definitely has worked its charm on the Minister who last week delivered the Budget speech with the élan of a man who has at last reached his full potential. But behind the impeccable enunciation, was a message that Amunugama and the government wanted writ large.

They wanted to state out loud that the economy now belongs to the people. So everything was suffused with symbolism -- including the kiribath which replaced tea and cakes at the party for Members of Parliament.

But to judge a budget by its trappings is like trying to judge a bride by her train. Yet, this much can be said: last week's budget worked to a philosophy. Which was that if a budget doesn't benefit the people, it should at least appear to benefit the people.

Though this is not to write-off the budget, it is to say that its substance appeared to be rather thin and underachieving contrasted with its hubris. Amunugama will turn around and say that no budget can achieve anything substantial given the lean global economic environment, and doubtless his point will have to be considered. But how much in fact does the fine dress that's wrapped around this budget represent the reality that obtains in the country's actual rupees and cents environment?

Researchers such as Snodgrass and Abeyratne have done some rigorous probing into Sri Lanka's development story since independence, and Snodgrass particularly comes around to a very interesting conclusion -- that we are sure Sarath Amunugama would have heard of by now.

His verdict -- incidentally to be published soon in a Harvard Review of the War and Economy in Sri Lanka -- is that Sri Lanka's economy was torpedoed significantly on two separate occasions.

He points out that there was 70 per cent external trade at the time the British washed their hands off the affairs of this island. But this percentage went down to almost 30 in the 1970s after the Sirimavo Bandaranaike led United Front government placed the economy on a platform of self sufficiency.

By the time J. R. Jayewardene reversed the trend, he says, it was too late. But however, the country (according to him, I stress) made modest gains and was on a upwards trajectory until the Tamil Tigers decided to rebel against the state. These two developments combined put the brakes on the economy which has been struggling to work to its full potential since, despite the fact that some impressive gains have been made in certain spheres of public endeavour.

An inward looking development paradigm which is ostensibly for people's welfare ended up impoverishing the very people that it was supposed to serve, and this fact, leave alone the conclusions of Snodgrass, was borne out by the scale of defeat that the Bandaranaike government suffered in 1977. The phase that followed was of liberalisation and laissez-faire which no doubt shored up the economic indexes and got the country back on an even-keel, but then, due to the events beginning '83 or otherwise, vast sections of the rural and urban poor have not benefited at all from the effects of this 'reform.'

The ideological project of Amunugama and his JVP backed think-tank is to keep the economy running on the same track but to reverse some of it's trends which have been helping only the Colombo bourgeoisie and its attendant entrepreneurial and landed classes. Hence the 'home-grown' slogan and the claim that the budget was not written in the offices of the IMF and the World Bank.

But one thing even Amunugma and his comrades have taken care not to do is to panic the so-called captains of business. The tack on the other hand has been to empower the working classes or at least to provide them with the illusion that this government is at pains to empower them.

But though even every Cassandra in Colpetty might agree that redress is good, there have been two inconvenient questions. A) Is the redress enough to put money in people's pockets so that the economy will be spurred into activity and growth? B) Was it affordable, even this little redress granted, or was it a cosmetic exercise at best, or a disastrous inflationary gambit based upon the monetary rascality of printing money?

Any view of that, though that might sound heavy, has to be seen holistically. Even for cosmetic purposes, a people oriented budget philosophy is probably a good one. At the least it will soften the social friction inasmuch as people will feel there is a government that seems to care, though it is probably one that cannot deliver. At best it will actually put money in people's pockets in the most difficult of economic circumstances, and get the economy moving again, while the IMF and World Bank mandarins will shake their heads in disbelief and perhaps try to put a spanner in the works probably out of spite!

That second scenario though it may sound absurdly upbeat, even naïve, is not entirely impossible, because time and again the World Bank recipes have proved to be recipes for disaster, whereas this conventional wisdom of the World Bank and its neo-liberal brahmins has worked often, as economist John Kenneth Galbraith says, when stood on its head.

So assuming that Amunugama and his players have their hearts in the right place concerning a people's budget, it may also well be that they have not just their hearts in the right place but their heads too. But the problem with these so-called left of centre governments (…non-UNP somehow seems the better way of putting it) is that they were never able to strike the mean. It's hardly a way of articulating it, but one can say that the Sirimavo Bandaranaike government of the 70s went way over the top in its experiment for self sufficiency and self reliance, all administered with a bitter dose of price control.

Certainly the dapper Sarath Amunugama does not either in style or substance share in that kind of isolationism, but the UPFA government will have to strike a fine balance of people-economics and simple neo-liberalism. Any government will entirely ignore the IMF and World Bank at its peril, and would also ignore the donor community and the so called investor club at its peril.

While hoping that its ostensibly people friendly economic policies will actually empower people and spur some sort of growth, the government needs to keep sending the correct signals, find new markets for textiles, keep the tourism boom going and generally keep at least some of the charming neo-Liberal compradors purring.

As if that was not enough, all this has to be done while keeping that war reasonably down so that it won't erupt again in an all consuming fury. It's a tall order that can hopefully only be sustained by men of fine fettle who can draw on more than just Peradeniya charm and chic post-Paris intellectual bravado.

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