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| Sunday, 13 January 2002 |
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| News Business Features Editorial
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'Hardly possible to avoid 12 - 14 per cent budget deficit' by A special correspondent Today the economy of the country is in jeopardy. We are quite aware that under this precarious situation the living standard of the people have dropped to a deplorable position. It is of paramount importance to analyse the circumstances which led to this pathetic condition and to find out ways and means of pulling the country out of the mire.
Records indicate a major set back in the export and tourist industry. This has brought down the expected income of the government from Rs. 264,400 million to 234,020 million creating a considerable gap of Rs.30,460 million, which is equal to 11 per cent of the revenue. The loss on account of the GST is Rs. 9,200 million while the loss on liquor, tobacco, vehicles and fuel are to the tune of Rs. 3,400 million. We also have sustained a loss in the reduction of the defence levy from 7.5 per cent to 6.5 per cent, and the actual loss is recorded to be Rs. 4000 million. Income on imports has come down to Rs. 8,420 million. Ever increasing deficit in successive budgets is unbearable to the country. Besides the government expenditure last year, increased from Rs. 281,380 million to Rs. 291,220 million, resulting in an increase of Rs. 9,840 million. Out of the difference of Rs. 9,840 million, Rs. 2,380 million was due to the salary increase of government employees by Rs. 1,200. Government expenditure has increased further by Rs. 1,500 million due to the enhanced amount paid to pensioners. Income has also been reduced on account of "Samurdhi" by Rs. 2,300 million and Rs.1200 million on the fertiliser subsidy. It is pathetic to note that while expenditure rises so high the capital expenditure on development programs such as electricity, highways, schools and transports have been reduced from Rs. 106,150 million to Rs.90,940 million. The expected budget deficit therefore, has increased from Rs. 123,060 million to Rs. 148,130 million. This has resulted in widening the budget deficit from 8.5 per cent to 10.5 per cent. Due to the delay in privatisation of Telecom only 1/3 of the expected income could be realised. Local loans have been increased from Rs.69,090 to Rs. 118,090 millions due to the widening budget gap. Government has raised loans from Commercial Banks and State Banks respectively to the tune of Rs. 45,600 million and Rs. 30,000 millions. Government loans have affected adversely due to the release of bank loans to the private sector, whereby retarding the progress of entrepreneurs. The loss sustained by Petroleum Corporation has been estimated to be Rs. 21,500 million. Under this situation even in case of reduction of fuel price in the world market, we would not be able to expect a corresponding reduction of same in the local market, for the benefit of the consumer. This year, as it has become necessary to raise a further loan of Rs. 16,500 million on power generators due to prevailing drought, the liability will be increased by, yet another Rs. 6,000 millions. Subsidy on flour in 1999 has caused a further deficit of Rs. 8,320 million. Loss experienced by the Dept. of Railways and the Postal Department amounted to Rs. 2,300 million, and the CTB has sustained a loss of Rs. 2,100 million. The loss on subsidy, on account of gas, milk-food and flour consequent to PA - JVP probationary government, is estimated to be Rs.4,000 million. The loss due to the waiving off agriculture loans for farmers is estimated at Rs. 180 million. A substantial expenditure has been recorded due to absorption of casual employees in the government cadre on the eve of the general election. Expenditure on new recruits to government service has aggravated the situation, furthermore. Under this prevailing condition it is hardly possible to avoid 12 - 14 per cent budget deficit. This situation lures the government to raise more and more local loans, which tends to increase the liabilities on account of local loans from Rs. 158,000 million to Rs. 200,000 million, which will definitely be a cause to place more burdens on the consumers, and to reduce the opportunities of investment. |
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We have to focus our attention on data available, in finding out a
solution for the problem. During the last three decades we have not
experienced any development in the economic sphere but have degenerated
instead. The economic development in the year 2000 was 6 per cent. But in
2001 it has taken a downward trend recording only 0.5 per cent.
