Budget - 2015
President Mahinda Rajapaksa presented the tenth Budget - Budget 2015
last Friday which was a development oriented Budget focussing on the
needs of all citizens alike. The Budget presentation received a
thundering ovation in Parliament while the people of this country were
also overwhelmed with it. A salary increase of Rs 3000 upto Rs 30,000 is
envisaged for those with low salaries enabling them to earn a monthly
salary of Rs 30,000.
Highlights of the Budget Speech are given below.
*Preserving and protecting a free health care system is also an
important priority in the Mahinda Chintana Development Framework. Our
Government recruited the required specialists, medical personnel, nurses
and para-medical staff, revised their emoluments and incentives, an
increased expenditure for pharmaceutical drugs, ambulances, and medical
equipment to develop hospital facilities. Nearly 50,000 persons were
recruited to the Health Sector alone. The Government has also expanded
its capacity to manufacture essential drugs in addition to encouraging
local pharmaceutical manufactures to increase their production capacity
so that the cost of these drugs will reduce while also saving foreign
exchange. The total annual expenditure for the provision of free health
services as of now is nearly Rs. 150 billion.
*The provision of fertiliser at Rs. 350 per 50 kg bag from 2006 to
date for paddy and at Rs. 1,200 per 50 kg bag for other crops,
popularizing the cultivation of maize, onion, potato, green beans,
vegetable and fruits, as well as promoting poultry and aquaculture,
processing dry – fish and engaging in small industries have helped low
income people to expand their livelihood opportunities. Micro financing
facilities have been expanded through Divi Neguma community banking
societies and agrarian banking. The provisions in the annual Budget for
Divi Neguma/ Samurdi cash allowances have been increased. Over 100,000
motorcycles have been distributed among field level officers at villages
giving new recognition to government services at rural level. The
Farmer?s Pension Scheme was restored and crop insurance and compensation
coverage for wild life related destructions were expanded.
*The income growth and improved living standards among low income
people are shown from the decline in people below poverty line. The
number of people living below the National Poverty Line has declined
from 15.7 percent in 2006/07 to 8.7 percent in 2012/13. Rural poverty
has declined from 15.7 percent to 7.6 percent while poverty in the
plantation sector has declined from 32 percent to 10.9 percent. People
below US$ 2 per day income have declined from 28.3 percent to 18.9
percent. Maternal mortality has declined from 12.1 per 100,000 live
births in 2004 to 7.2 in 2013. The nation has approached malaria free
The number of children attending primary schools has increased to 98
percent while the number attending secondary schools have increased to
84 percent. Rural unemployment has also declined from 7.8 percent to 4.5
percent. Unemployment among youth in the age group of 18-30 has declined
from 15.8 percent to 13.1 percent.
*Export industries have picked up showing a 12 percent growth. The
apparel industry has shown a 15 percent growth and is expected to
generate US$ 5,000 million export earnings this year. Value added tea,
rubber and cinnamon products have increased exports earnings to US$
3,000 million. Software, gem and jewelry, handloom and confectionary
industries have gained momentum. Export earnings are expected to
generate US$. 11,500 million this year.
*Sustaining an employment level at 97 percent of the labour force
remains our employment goal for 2020. Our vision is to engage students
after reaching GCE Ordinary Level and Advanced Level standards, either
in higher education for graduate studies or in the vocational stream of
education to drive the economy making optimum use of knowledge and
skills of our work force, is the overall target of our employment
strategy. Maintaining youth employment at 95 percent is a special target
of our employment strategy.
*A National Drug Policy has been formulated for the regulation of
drug usage, clinical trials and research activities in specialized
hospitals. Parallel to these developments, we propose to expand the
subject areas of the Postgraduate Institute of Medicine and also to
double the intake for postgraduate studies in medicine. The Post
Graduate Institute of Medicine will be transformed over the next 3
years, as a state-of-the-art facility that would connect neighbouring
teaching hospitals to engage in postgraduate research and advanced
studies and increase medical specialists capable of treating kidney
ailments, malnutrition and similar contemporary challenges faced by our
*The Government’s effort over the last 8 years to promote IT as a
major industry is expected to raise foreign earnings to about US$ 1
billion by 2016, while creating around 100,000 well-paid employment
Our vision is to lift Sri Lanka to be among the Top 30 IT
destinations in the world over the next three years and to raise foreign
earnings to US$ 5 billion and make it a major employment generation
sector for youth, by 2022.
The ICT Zone at Hambantota offers facilities of global standards for
IT/BPO services, to transform Sri Lanka as the emerging ICT Hub in South
*We have set our export target at US$ 20 billion in 2020. Our aim is
to raise export earnings of high value tea, apparel, handlooms and
rubber products to US$ 15 billion by 2020. Our vision for tea, apparel
and cinnamon exports is to position Sri Lanka among the Top 10 high
quality product manufacturing countries in the world by 2020. Natural
rubber, cinnamon and spices while being exports capable of securing
premium value, will also protect our environment and bio diversity
interests in development.
We have requested the World Trade Organization to declare Ceylon
Cinnamon as a specific product based on a geographical identification.
These will pass on broad based benefits of development to a majority
of our people, who are predominantly smallholders. Our desire is also to
promote fruits, vegetable, foliage and poultry also as exports, since
our producers have developed such products to a level that meets
The promotion of pineapple, mango, papaya, banana, dragon fruit and
strawberry as export earning sources, are expected to earn US$ 500
million by 2020.
*The Government is committed to gain a higher Investment Grade by
reducing debt to GDP to below 60 percent, further strengthening
country’s already strong macro economic environment by 2020 to
consolidate country’s economic strength. In the backdrop of this
direction, the overall investment to GDP is expected to rise to 40
percent. The total Gross Domestic Production is expected to exceed US$
165 billion at a rate of around 13 percent growth.
Taking the process of transforming the economy from a less developed
economy with a per capita income of less than US$ 1,200 prior to 2005 to
a US$ 4,000 per capita economy by 2015 - moving further forward we plan
to surpass US$ 7,500 per capita income for our people, as a high middle
income country is our national income goal by 2020.
*With all these measures that have been taken, the Budget deficit has
been reduced to 5 percent of GDP in 2014 and will target 4.6 percent in
2015. We are determined to raise a surplus in the revenue account
gradually towards 2.5 percent of GDP and bring down the Budget deficit
to 3.8 percent by 2016 and 3 percent by 2017, underscoring our
commitment to limit borrowings only for capital formation and not for
consumption. We will reduce the Debt /GDP ratio to 65 percent.
We have paid back almost half of IMF debt of US$ 2.5 billion, which
we obtained through a Stand By Arrangement in 2009 to stabilize our
economy. We will provide a strong National Budget that is capable of
servicing all such debt of our country promptly, to maintain the
creditworthiness of our nation.
*The Government revenue in 2015 is likely to be around Rs. 1,600
billion and current expenditure will be around Rs. 1,400 billion.
This will secure payment of salaries, pensions, the fertilizer
subsidy, for pharmaceutical drugs, welfare expenditure and interest cost
of debt. Further, the Budget will maintain public investments of Rs. 730
billion to expand infrastructure, human resources development and
*I propose to fix the maximum PAYE tax rate at 16 percent to ease the
burden of wage earning employees and professionals. It is proposed to
reduce the Value Added Tax to 11 percent.
*The Inland Revenue Department is being computerized to link all
relevant agencies to improve tax administration and to enable the use of
a Personnel Identification Number to co-ordinate all transactions. I am
pleased to announce that with effect from tomorrow the Inland Revenue
and Customs will go online to simplify income tax registration and
export and import transaction related payments.
*The Central Bank manages the Employees Provident Fund, which has an
asset base of Rs. 1 trillion. Central Bank in recent years has invested
about 10 percent of its assets in income earning commercial assets,
which has gained capital appreciation of around Rs. 10 billion this
I therefore propose to distribute dividend to members of Provident
Fund who has over 10 years of active accounts.
This is the first ever dividend distribution by the EPF and I see
this as a special benefit to members.
In addition, the Fund has got stronger to pay all members of the fund
an interest income in excess of 10 percent each year.
*As maternity care should be given special attention, I propose to
allocate Rs. 1,500 million to develop Karapitiya, Colombo, Kandy and
Anuradapura maternity hospitals as super centers in maternity care and
develop Badulla and Beliatta hospitals as maternity and child care
specialized centers. Steps have also been taken to accelerate the
modernization of the two national children’s hospitals as centers of
excellence capable of providing the next 10 year pediatric care needs of
our country as well as medical research on pediatric care. The OPD
treatment and ancillary facilities of the Colombo National Hospital
expanding its outdoor patient care capacity, will be completed by 2017.
*I propose to allocate Rs. 500 million to implement accelerated
medical examinations of all citizens through mobile medical clinics and
expand testing related facilities to strengthen preventive health care.
I seek the support of all religious places of worship to give leadership
in organizing such clinics in each Grama Niladari division. I propose to
commence a mobile ambulance service in all main hospitals through the
National Insurance Trust Fund to provide emergency care at their
doorsteps to persons who fall ill suddenly, to be taken to hospital
*I propose to allocate Rs. 500 million for the rehabilitation of
Ayurvedic Hospitals and promotion indigenous medical research. I also
propose to grant a monthly allowance of Rs. 5,000 for indigenous medical
doctors who serve in government Ayurvedic Hospitals. I propose to
implement a loan scheme for indigenous medical practitioners be able to
draw upto Rs.500,000 at 6 percent interest, to improve their
dispensaries and to process required medicinal treatment.
*In order to incentivise vocational education, I propose to implement
a new student scholarship scheme for 50,000 students per year from low
income families who pass ordinary level and advance level examinations
but are unable to enter universities or other advance institutes for
further studies. Each student will be given a Rs. 3,000 monthly student
allowance. This scheme will bring about Diploma and Certificate holders
above level V of the National Vocational Qualification, in employable
I also propose to increase the number of student scholarships to
50,000 per year and grant a student allowance of Rs. 3,000 per month to
those studying at technical university colleges.
*As part of broadening horizons of our higher education, I propose to
set up a school of Economics and Development Engineering that offers
arts, commerce and science students qualifying from GCE A/L exam to
learn multi disciplinary subjects such as economics, law, engineering,
science and mathematics being subject options in a single degree.
Further, I propose to allocate Rs. 500 million for research on cancer
by the Colombo University, on kidney diceases by the Peradeniya and
Rajarata universities and on diabetics by the Ruhuna University and
another Rs. 500 million to the National Research Council for research on
*I propose to allocate Rs. 500 million for the provision of
nutritious food for children, to improve nutritional standards of
mothers and children by engaging nutritional specialists in each
district and to carry out community level mobile clinics to distribute
Threeposha and Samaposha nutrition supplements to all lactating and
pregnant mothers and for the provision of meals to children attending
pre schools. The Divi Neguma/Samurdi programs are directed to popularise
consumption of homegrown vegetables, milk and eggs towards improving
I promoting breast feeding through these initiatives. I also propose
to give infant milk food at concessional prices through Lanka Sathosa
outlets. Since infant milk food is totally free from taxes, I request
all super markets and traders to reduce the price of infant milk food.
*I propose to grant dual citizenship or 5 year work visas to young
Sri Lankans living abroad and do not have a Resident Visa to that
permits them to serve their motherland.
I also propose to grant concessionary duty permits similar to those
given to public servants to high income earning Sri Lankans working
overseas for the importation of a motor vehicle to the value of 60
percent of foreign exchange they remit to Sri Lankan banks.
* To ease the burden of small land owners speccialy in urban areas in
having to pay a heavy lease rentals to the State, I propose to exempt
those earning less than Rs. 25,000 per month or Rs. 300,000 per year
from having to pay any such lease rentals. Further, I propose that
introduce a sliding scale ranging from 0.5 percent to 4 percent for each
income slabs of Rs. 100,000 in excess of Rs. 300,000. The 4 per cent
slab will only if the income is in excess of Rs. 600,000 per year.
* I propose to provide lands on long term leases to set up 300
factories in every divisional secretary area in the background of
improved prospects for export and import competing industries.
Provisions will be made to permit lump sum depreciation for the
importation of plant and machinery in addition to exempting them from
dividend tax and providing a half tax holiday for a period of 3 years.
I also propose to provide modern machinery and equipment for small
and medium handloom industries to expand this industry to cater global
markets. Investors undertaking new investments in excess of Rs. 500
million will be given a 7 year half tax holiday provided such
investments are registered with the Inland Revenue Department before end
* I propose to increase the Rs.1,000 allowance granted to elderly
people to Rs. 2,000 from January 2015. Elderly clubs will be set up in
all Grama Niladari areas to create an enabling environment for elderly
people to spend their leisure time watching TV, reading and being
engaged in other facilities available at day centers. Medical clinics
will also be organized at these centers. An accelerated program will be
carried out to ensure eye care as well as primary health care of the
elderly. I also propose to allocate Rs. 250 million to provide financial
assistance to reputed social organizations, which promote elderly care
in our society. Rs. 200 million will be allocated to rehabilitate
elderly homes at Saliyapura, Katharagama, Mirigama and Jaffna. I also
propose to allocate Rs.100 million to provide financial grants to film
producers and artists to make films and teledrams promoting success
stories of traditional family values towards elders.
* The coordinated effort of Sri Lanka Women?s Bureau, Child
Protection Authority and Sri Lanka Police have reduced child abuse and
violence against women, considerably.
I propose to allocate Rs.300 million to strengthen field level
officers at Divisional Secretariats to expand awareness programs in
schools through parents - teachers associations, Divi Neguma community
based organizations and to engage retired public servants in family
* The new Pay Commission, which I appointed last year, has
recommended some changes to the salary structure introduced in 2006.
Therefore, I propose to introduce a new pay structure with effect
from January 2015. Accordingly, the special allowance given to public
servants will be absorbed to the salary structure and raise the minimum
salary to Rs. 15,000 per month. I propose to maintain a salary ratio of
1: 4.25 between minor employees and Secretaries to accommodate higher
annual increments. I also propose to raise the Cost of Living Allowance
by Rs. 2,200 to Rs. 10,000 per month from January 2015 to all public
servants. Accordingly, the minimum monthly income of a public servant
will increase to Rs. 25,000.
*The new salary structure, allowances and other salary related
benefits will provide public servants a pay increase of Rs.3,500 to
15,000 per month from January 2015 with a minimum monthly income of Rs.
30,000 to lowest rank employees. I also propose to allow public servants
to borrow up to 40 percent from of their gross salary, including all
allowances. Grade 5 and Mahapola Scholarships will be extended to
children of public servants as well.
All public servants will be given a bank card with a credit limit of
Rs. 10,000 on interest free basis to be paid in 10 installments, to meet
festival advances. This credit facility will be guarantee by the
National Insurance Trust Fund. I also propose to increase the insurance
coverage under Agrahara Scheme for surgical operations from Rs. 350,000
to Rs. 500,000.
* I propose to place pensioners' salaries not on the 2006 salary
structure as was requested by all pensioners but on the proposed 2015
salary structure to once and for all correct the inherent anomalies
affecting pensioners when salaries of public servants are revised.All
pension payments will be adjusted in accordance with the 2015 new salary
structure and hence there will be no pension anomalies hereafter.
* Therefore, I propose to raise the minimum wage of the private
sector employees to Rs. 10,000 per month from January 2015 and to
increase all minimum wages above that threshold at least by Rs. 500 per
As new sectors have been emerged in the economy, I propose to extend
Minimum Wage Boards to those sectors within a rational economic cluster
I also propose to increase the employer contribution to EPF by 2
percent to 14 percent so that each employee will have 22 percent savings
from their salaries.