Budget 2012 hailed by all quarters

The 2012 Budget presented in Parliament on Monday by President Mahinda Rajapaksa, who is also the Minister of Finance, has been hailed by all quarters as a rich blend of Sri Lanka's home-grown solutions to face future economic challenges as well as the latest trends in global money markets, with the focus mainly on development and nation-building with the ultimate aim of becoming the Wonder of Asia.

Many top economists and business leaders said the 2012 Budget would spur development, encourage investment and provide relief to the public in the long-term. They said the Budget is aimed at sustaining the Government's achievements and managing future risks in the country's economy. Economic experts said the implementation of the 2012 Budget proposals would pave the way to reduce poverty levels, check unemployment and social and financial inequity. Moreover State investments have reached a record Rs. 497 billion, the highest since Independence.

The Budget deficit has been reduced to one billion rupees for the first time in the country's economic history. This, no doubt, is a huge achievement for the country's economy and its future development.

Many top-notch analysts described the 2012 Budget as one which envisaged strategies to promote development and benefit the masses. The Budget proposals focus on improving the quality of education and skills of the younger generation to make them stakeholders in the country's development thrust.

By prioritising post-conflict economic recovery, long-term plans for improving the quality of people's lives, attracting foreign direct investments and strengthening the agricultural sector, the President amply demonstrated the Government's increased contribution to public welfare by making a significant increase in budgetary allocations on education, higher education, economic development and the health sectors.

Dispelling baseless allegations by the Opposition that the Government is not in a position to grant a salary hike for public servants, the President unveiled relief measures by granting a salary increase of 10 percent of their basic salary, which would be added to their monthly salary as an allowance. The non-staff category will be given this increase from January 2012. This, indeed, is a landmark proposal no other government has granted while allocating a colossal sum of money on mega development projects.

Moreover, the staggering sum of money allocated on health and education has been further increased, thus demonstrating President Rajapaksa's commitment to the nation's future - a healthy and educated nation that is second to none! Sri Lanka's health indicators are on par with those of developed countries and it is a major accomplishment achieved through the Government's health policies over the past six years.

The 2012 Budget allocation on health at national and provincial level in Western and ayurvedic medical services is Rs. 105 billion. The President, in his Budget speech, also proposed another Rs. 95 billion towards improving the quality of primary and secondary education. The development of 1,000 secondary schools to the highest level to be on par with the top schools in Colombo and over 5,000 primary schools linked to these secondary schools will benefit under the proposed project.

The President also stressed the need to maintain public investment at around six to seven percent of the GDP during the next six years while private investment will be incentivised to reach 26-28 percent of the GDP by encouraging priority sectors to engage in more export-oriented and import substitution activities. The President has proposed to provide incentives for manufacturers and new investors to invest in such fields to achieve these goals.

It was heartening to note that Sri Lankan expatriates have been given a golden opportunity to invest in their motherland, by encouraging them to become stakeholders in the nation's development drive. The 2012 Budget has proposed a five-year tax holiday on all capital investments by Sri Lankans returning from abroad. Among the incentives granted to investors is a six to 12-year tax holiday for investments in the range of Rs. 300 million - Rs. 2,500 million. Incentives have also been granted to encourage the expansion of enterprises.

In decades gone by, Budgets provided tax holidays and incentives to new investors, ignoring companies which had made significant investments in the past. Nevertheless, the 2012 Budget would provide incentives for both new and current taxpayers.

The Government presented a people-friendly budget that maintains a 6.2 percent deficit - one of the lowest in the country's history. The dividends of peace clearly reflect in the budget deficit which dropped to eight percent in 2010 after the Security Forces vanquished the LTTE in May 2009. The Budget deficit was further lowered to seven percent this year and would improve further in the coming years.

Unlike the earlier UNP regimes, including that of 2001-2004 led by Ranil Wickremesinghe, the present Government never danced to the tune of international organisations and curtailed social benefit schemes. The masses continue to benefit by various concessions such as the fertiliser subsidy and Samurdhi benefits. On the other hand, no subsidy has been curtailed but increased. The Government has allocated Rs. 40 billion for the fertiliser subsidy while another Rs. 32 billion has been set aside for Samurdhi under the beneficiary package.

It is indeed encouraging to note several proposals in the Government's 2012 Budget, which are aimed at managing the rural economy and further strengthening rural-centric development initiatives. The Government has put in place effective strategies to formalise the informal sectors in the rural sector under the Divineguma and Divineguma Enterprise Villages.

The SME sector has been given priority under this Budget while providing many concessions to uplift the standard of their livelihoods. The 2012 Budget has also focused on macro-economic variables and investments by proposing to increase production with the objective of enhancing employment opportunities.

The 2012 Budget proposals will undoubtedly bring about a huge change in the country due to its development-oriented proposals. These significant changes would help Sri Lanka to maintain its current economic growth of over eight percent in the next few years as well. This would be a creditable achievement as only a few countries, including China, maintain an economic growth of over eight percent at present.

The dividends of the steadfast economic policies under the Mahinda Chinthana are already evident and Sri Lanka's dream of becoming the Wonder of Asia would be a reality sooner than later.