Mahinda Chinthana strengthens domestic economy and its identity

The Mahinda Chinthana would strengthen the domestic economy, domestic identity and a new value to national wealth.

We have realised through our own experience and by looking at the global experience, the economic and social welfare cannot be successfully achieved through total reliance on the private sector or only through a market economy.

Notwithstanding funding constraints, we stopped relying on sale proceeds of public assets to bridge the budget deficit. Leave alone compromising deployment projects, we did not abandon constructing even rural roads, saying that there are no funds available.

We neither compromised development or welfare expenditure placing emphasis only on defense expenditure. We did not rely solely on the World Bank to raise funds. Measures were taken to increase bilateral aid and Government revenue. We commenced the construction of mega irrigation projects such as Moragahakanda, Uma Oya, Kirindi Oya and Daduru Oya to make an economic revival in irrigated and backward regions.

Funds were raised and steps were taken to modernise our road network in a manner that would cater to the demands of at least another 20 years.

Priority was given for the development of rural and provincial roads and bridges. Development of railways and the highways system has also been given priority in the Government's investment programme.

Mega projects such as the development of Colombo, Hambantota and Oluvil ports have been commenced to link our country with the global economy. Steps were taken to construct large power generation plants at Norochcholai, Upper Kotmale and Kerawalapitiya.

Water supply projects are in progress in all main districts to enhance the availability of drinking water. Although the required funds were in place, it is unfortunate that terrorists did not permit us to construct the Jaffna Teaching Hospital and the Jaffna water supply project. We believe that these projects can be commenced next year.

Recent Governments of this country tried to create a picture of economic development that is detached from agriculture and local industries.

A trend was created to import rice, flour, sugar, wheat, milk powder, vegetable, fish, medicine and crops which can be produced locally and even industrial products such as textile, footwear, boats and vehicles.Through the provision of duty rebates, people were tempted towards consuming milk powder. The local dairy industry was neglected. There was failure to ensure encouraging prices for farm products. BOI concessions were extended not only to import food for human consumption but even animal feed. Local producers were not given any concessions for parallel investments. This clearly demonstrates that we did not even attempt to produce animal feed within the country.

Our country being an island did not even have a strategy to make itself self-sufficient in salt. The potential to use rain water for agriculture purposes and even as an export had been totally disregarded.Since imported goods were provided at concessionary prices, local producers were trapped in a framework within which they had to face unfair competition. Even our leaders had started to endorse this policy as correct and effective.

The policy of 'Mahinda Chinthana' is to encourage local producers and production. As such, imposition of cess, introduction of loan schemes and extension services were done to promote local production.Our country managed to escape from the prevailing global food crisis since we took a firm stand to move away from the aforesaid economic policy in 2006 itself. We were able to give encouraging prices to farmer for crops such as paddy, wheat, onion, potatoes, fruits and liquid milk.

A subsidy of around 96 percent of the price of fertiliser, was given to paddy farmers. Substantial investments were made to promote the production of high quality seed paddy, provide extension services and loans to farmers and to revive the rice milling industry.Our policies helped farmers to get richer and enabled large foreign exchange savings. However, still we spend about US $ 800 Mn. to import food items.We need to develop agriculture, milk production, fisheries etc., on an accelerated basis if we are to make further savings. The income of farmers could thereby be increased and poverty could also be alleviated. Food security could be ensured. Our external reserves could also be increased.

This is why we are implementing 'Api Wawamu - Rata Nagamu' policy strategy as a national priority.The industrial sector also experienced a reawakening. Production of motor cars, fishery boats, high value tea, garments, footwear, gem and jewellery, perfumes, furniture etc., have seen new beginnings within the country.

Even the security forces have ventured into producing their uniforms, boats, security vehicles etc., within the country in addition to being engaged in the important task of combating terrorism.I was able to mobilise aid to commence mega investment projects from every State visit that I have made so far. Substantial development aid was received from countries such as China and Iran.

Increased aid was mobilised from countries such as Japan, India, Pakistan, USA, France, Australia, The Netherlands, Denmark, Sweden, Hungary, Spain, UK, Korea, Saudi Arabia and Kuwait.

This is how we were successful in increasing foreign aid up to US$ 1,000 million towards development activities, within the last 3 years.

If not for development assistance extended by our friendly countries, we would not have been able to proceed with mega development projects such as Norochcholai coal power plant, Moragahakanda and Uma Oya irrigation projects and Hambantota Port operations of the Sapugaskanda oil refinery were proposed to be given to the private sector for the next 25 years.However, with assistance from the Government of Iran steps are now being taken to increase the production capacity of this CPC refinery to 100,000 barrels per day.

We will thereby be able to refine the entire national demand of oil. We should appreciate the seven month credit facility extended by the Government of Iran that helped us to successfully face the global oil crisis.World Bank and the Asian Development Bank have allocated a US$ 1,700 million for development projects, for the next 4 years. In the above programmes, priority has been given to increase the capacity of 11 main irrigation tanks including Parakrama Samudraya, Ridiyagama, Kaudulla, Thabbowewa, Chandrikawewa, Inginimitiya and Giritale and to develop provincial and rural roads.

- President Mahinda Rajapaksa in Parliament on November 6, 2008