'Budget 2015, a future-oriented, inclusive program'

By Gamini Warushamana

The 2015 Budget is a future-oriented inclusive budget. It is inclusive, because the budget proposals cover vast sectors of the economy and not only the business sector.

It is future oriented, because the decisions taken today look at the scenario in 2020, said National Chamber of Commerce of Sri Lanka (NCCSL) President Sunil Wijesinha at a media briefing last week.

He said that by 2020, the economy will transform to a new level and businesses that are competitive today will not be competitive in the same way and, therefore, labour skills that have a high demand today will not remain the same.

The input-driven economy is gradually transforming to an efficiency-driven economy and, therefore, the demand for labour and skills will change. Sri Lanka needs skilled labour and every sector in the economy experiences a shortage of skilled labour.

At the Budget consultative meetings, NCCSL officials pointed out this issue and in this Budget steps were taken to address it. The NCCSL welcomes the proposal to fast track 100,000 diploma and certificate holders in employable fields which is in line with our recommendation, Wijesinghe said. He said that Sri Lanka also needs a strong manufacturing base. After 2008, countries hit by global recession such as Germany which had a strong manufacturing base recovered faster. Therefore, in the structural change of the economy we need to keep our industrial base strong. We also welcome the proposed incentives to the SME sector and broadly they are in line with NCCSL proposals.

Reduction of tax on small vehicles will be beneficial to small industries to improve their delivery system. They had faced difficulties in transport as vehicle prices were high in the past. Incentives given to the SME sector will boost the supply side of the economy.

The increase in the State sector minimum salary and pension payments, reduction of water and electricity bills for domestic consumption by 10% and 25% will increase consumption and boost the demand side of the economy.

"We observed that there has been a slow growth in the consumption side of the economy in the recent past and consumption still stands as one of the significant components of the growth trajectory of the economy," he said.

However, the NCCSL cautioned against inflationary trends that can emerge if there is an uninterrupted flow of imports into the economy with the improvement of disposable income of the people through various incentives introduced by the Budget.

Further there is a delayed effect on the supply side of the local economy responding to the stimulus extended through the Budget if the incentives are taken up effectively by SMEs.

Even though inflation stands at a moderate level at present, careful management of the situation is of paramount importance, an NCCSL official said.