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Sunday, 9 November 2008

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Government Gazette

People's friendly budget

Protecting Sri Lanka from terrorism and shielding the masses from unfavourable world economic trends were the hallmark of the people's friendly budget presented by President Mahinda Rajapaksa in Parliament on Thursday.

In presenting his fourth budget as the Minister of Finance, President Rajapaksa proposed a wide range of benefits for the masses, mainly aimed at bringing down the cost-of-living and achieving long-term economic benefits to the country, including the development of local industries and strengthening the rural economy.

It was a commendable move by President Rajapaksa to immediately bring down the fuel prices, reduce bus fares and grant special discounts to lower income groups with reduced electricity and water tariffs. The reduction of petrol, diesel and kerosene prices was widely expected and now it's the duty of the Trade Ministry and Consumer Affairs Authority to ensure that the benefit of the reduction of oil prices is passed on to the consumer.

The Government will also consider another reduction of fuel prices in the forthcoming months, provided the world oil prices stabilise at its present level. The objectives of President Rajapaksa and his Government are crystal clear - to grant every possible relief, that would benefit the majority of the society.

It was the common man and the working class who have emerged victorious through the reduction of fuel prices, bus fares, electricity and water tariffs, VAT and income tax and the enhanced cost-of-living allowance granted to public servants and pensioners.

It was heartening to note that the Government was making every effort to protect local producers and exporters apart from strengthening the rural economy. The Government proposed an additional cess on imports on many items, including refrigerators and garments to discourage imports and encourage local manufacture. The Mahinda Chinthana policy is to encourage local producers and production.

Despite various views expressed by die-hard critics and political opportunists, the Mahinda Chinthana's ten-year Horizon Development Framework is being widely implemented across the country. At the same time, the humanitarian operation to eradicate terrorism has reached its final phase.

Though a considerable sum has been allocated to finance the battle against the LTTE's ruthless terrorism, massive development projects have been undertaken by the Government and hundreds of thousands of employment opportunities have been provided for youth. Rural production has increased considerably, making farmers in the provinces the victors.

This is an important and positive sign as the cash flow has now been diverted from the city to rural areas, thereby increasing the purchasing power of villagers, who are making an active contribution to the national economy.

The country's GDP has grown by an average seven per cent and inflation has decreased in the past several months. The per capita income has doubled during the past four years. Unemployment was reduced from 800,000 to 500,000, providing 300,000 new employment opportunities. Significantly, it was the rural youth who have mostly benefited from the new employment opportunities. The Government has taken several meaningful steps to increase State revenue which was Rs. 331 billion in 2004 to Rs. 712 billion in 2008. In addition, the revenue from Income Tax has registered a record growth of Rs. 143 billion. This is a favourable trend under which the Government has maintained a Revenue/GDP ratio of 16 per cent.

Budget 2009 has introduced a series of measures for the welfare of public servants and pensioners. The cost-of-living allowance paid to public servants would go up to Rs.4,500 with an additional expenditure of Rs.12,000 million by the Government. The cost-of-living burden on pensioners too has been reduced with the present allowance being increased to Rs.2,000.

Budget 2009 has also given due recognition to our valiant Security Forces.

The Government has paid tribute to our soldiers by proposing to increase the monthly allowance to Rs.5,000 for which an additional Rs.4,500 million is needed.

Protecting low income households with special discounts on water and electricity would undoubtedly win the hearts of the masses. Under the special discounts, households which consume less than 90 units of electricity and 15 units of water would benefit. More than 350,000 electricity consumers and 150,000 water consumers will benefit from these relief measures.

Local dairy farmers have been further protected with an increased Special Commodities Levy on imported milk powder. Similarly, the Commodity Levy on imported sugar has been increased to protect the local sugar industry and sugar cane cultivation.

All these measures contribute to a 'people's friendly' budget, presented by a 'people's President', who completes his third year in office on November 19 as Sri Lanka's fifth Executive President.

What is most significant is that all these concessions have been proposed amidst unfavourable world economic trends and increased defence expenditure to eradicate terrorism. Import substitution, saving foreign currency, promoting local industries and farmers were the underlining themes of this year's budget. At the same time, industrialists, hoteliers and entrepreneurs would benefit immensely from the fuel price reduction which would have a major positive impact, thereby leading to the further reduction of inflation.

The President's proposals, aimed at infrastructure development, too are commendable. More importantly, Sri Lanka has achieved a growth rate of around seven per cent which demonstrates that the country has now moved on to a higher growth path. This has been made possible due to the Government's favourable policies towards the industrial and service sectors. In addition, the agriculture sector too has achieved comparatively a higher growth rate.

The fourth budget of the UPFA Government under President Rajapaksa has correctly addressed several issues by catering to the fundamental requirements of the people. Unlike what happened during the previous regimes, State properties will not be sold to bridge the budget deficit. The Government has steered the economy in the right direction despite the global economic downturn.

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