poll: Subsidies, handouts but where’s the money?
Hotchpotch policies, unclear on funding
By Feizal Samath
Economic policies of the two main candidates – Prime Minister
Mahinda Rajapakse and Opposition Leader Ranil Wickremesinghe - are
a hotchpotch of ideas with an unclear forward path that could trigger
a dependency syndrome, according to a group of economists from the
deviating from economic fundamentals we are going back to a dependency
era,” noted Dr. Rev. W. Wimalaratana, adding, “We are
cultivating a psychology of dependency. It is not good for the country;
not good for development; and it is not for the state to provide
concern grew over promised subsidies and handouts and its impact
on the economy, The Sunday Times FT in a unique exercise assembled
a group of lecturers from the university’s economics department
led by its head Prof Nimal Attanayake, and posed questions on these
offers by both candidates in their manifestos and its viability.
The team which also included economists Dr. Sirimal Abeyratne, Dr.
M. Ganeshamoorthy and Ms Shashi Weerawansa, also concluded that
the two main candidates' policies and direction were unclear in
its policy and path; that manifestos are only ceremonial affairs;
that both manifestos if implemented could send the budget deficit
out of control and subsidies like these cannot be sustained.
measures in Mahinda’s manifesto are mainly nutritional food
for expectant mothers; monthly allowance of Rs 200 to purchase milk
food for infants; 2.4 million jobs; increased salaries and cost
of living allowances for public officers; duty free vehicles; increased
duty free allowance and pensions for migrant workers; discounts
on water and power use; kerosene subsidy; mid day meal; fertilizer
subsidy; increased Samurthi; increased payments for child birth.
manifesto offers subsidised milk powder; dhal and sprats; increased
food stamps; one million jobs; guaranteed price for paddy; fertiliser
subsidy; waiving agriculture loans; guaranteed farmgate price for
milk; tea estate subsidy and waiving of housing loans given to certain
key areas that worried the economists were creating a population
that would depend on subsidies and handouts and no clear indication
as to how these populist programmes would be funded. “Irreversible
Dependency Syndrome,” was how Dr Abeyratne tagged the subsidies.
He noted that when the manifestos were prepared, no thought was
given as to where the money would come from to meet this expense.
whether the country’s scarce resources were being auctioned,
he said the two manifestos had a ‘giving’ mentality.
“That is giving handouts, subsidy schemes, and welfare systems.
Growth strategies on how the economy would grow are absent,”
he said, adding however that the “Mahinda Chintana”
had far more subsidies than the opposition leader’s manifesto.He
said the offer of 2.4 million jobs in six years was also unrealistic,
adding that if this was the case the unemployment problem would
be solved in two years. Prof. Nimal Attanayake said Sri Lanka would
then have to import labour since it would be a full employment scenario.
Dr Wimalaratana was however of the view that employment creation
in Ranil’s manifesto was in line with the creation of five
economic zones. “If that works then this growth could create
jobs,” he said. Ms Shashi Weerawansa said the 8-10 percent
growth forecasts were unrealistic since only two countries - China
and Korea have achieved 10 percent growth.
M Ganeshamoorthy said high growth was impossible without permanent
peace and economic activity also in the north and the east. The
team agreed that 7 percent growth was a more realistic figure while
higher growth was possible only if the economic and political climate
changed for the better.
The economists said the UNP’s offer of relief measures for
the first time in recent years was an inevitable reality if they
wanted to win. “At the last election, the UNP addressed the
urban sector, overlooked the rural sector and lost. This time they
feel they have to give something – that’s the political
reality,” said one member of the team.
Attanayake said the manifestos were absent on the capacity to handle
these promised programmes agreeing that it was a hotchpotch of ideas
without any clear direction.
were bouquets however for the two leaders. The Opposition leader’s
proposal to create a national health insurance scheme was commended
in spite of that being a difficult task while the Prime Minister’s
plan to offer English medium nursing courses was a step in the right
direction as there is big demand for nurses overseas.
Dr Wimalaratana also raised an interesting point -- that amidst
these subsidy offers, the manifestos also spoke of macro economic
management planning. “It’s not clear how this could
be done,” he noted. Asked whether the budget deficit would
go haywire if all these promises were kept, he said, “It’s
difficult to provide numbers but it would go beyond management.”
economists however believed these were short term measures that
couldn’t be sustained. “It has happened in the past
… it will happen again,” noted Dr Ganeshamoorthy. The
team said there was no long term vision in the policies and no costing
done on its implementation. “Another problem is that on TV
(during the political talk-shows) everybody becomes an economist,”
quipped one economist.