Budget focuses on middle class economy- KPMG report

by Lalin Fernandopulle

The 2013 Budget is a development-oriented Budget focused on being a middle class economy, self sustainability with food and environmental security and an economy driven by technology, a KPMG report stated.

The report stated that fiscal proposals focus on helping the country reach a per capita income of $ 4,000 by 2016 with a framework and incentive structure to promote household income and enhance SME and private sector investment.

The Budget aims at diversifying domestic production and developing livelihood opportunities in food production, livestock and cottage industries, rolling out development projects in rural areas and inviting the private sector to support rural poverty reduction programs.

The report stated the Budget focused on rapid expansion in food production with a focus on a self-sufficient agricultural economy, expansion of tea, rubber, coconut and spice exports, import substitution in sugar, dairy and livestock and fisheries, development of irrigation facilities, encouraging exploration of hydro, solar and other renewable energy sources and implementation of environment conservation initiatives.

The Budget promotes a knowledge- services industry which will be a billion dollar industry providing 150,000 direct employment within the next three years.

It also focuses on incentives to private organisations conducting research and development, setting up 20 vocational technical university colleges and aligning skills and university education to ensure prompt employment and human resource development.

According to the KPMG analysis, the Budget has laid emphasis on liberalisation of exchange controls by encouraging investment in unit trust via foreign direct investment, opening of Foreign Currency Earners Accounts by those who provide goods and services for foreign currency and liberalising foreign borrowing regulations.

Tax incentives for undertakings in agriculture, dairy and livestock and export industries, increased import levies to protect domestic industries and boost confidence in local goods and services, support schemes for research and development in agriculture, health and IT sectors, concessionary rate for income tax for operating mini hydro power projects and investment in sustainable energy sources have been provided by the Budget, the report stated.