Budget 2016: fixing the economy
Finance Minister Ravi
Karunanayake may be receiving kudos from the country's business elite
for his broadly well-crafted, maiden Government Budget presented on
Friday, but the middle classes and the nation's poor have been dished
out a mixed bag of some benefits along with the prospect of a persistent
high living costs.
This government, however, is not to blame for the huge financial
burden and excess liquidity generated by the wildly speculative
economics of the previous regime more famous for its war machismo than
any intelligent political and economic management. With massively
extravagant local and international debt piled up over the past nine
years of fantasy projects that helped line egos and political and
business crony pockets, it is unrealistic to expect any quick fix from a
successor regime. Thus, the financial costs that must be borne by the
national economy and its corollary burdens on those millions most unable
to bear them.
All credit is due to the current government for its Herculean efforts
in repairing both economy and polity 'on-the-go', as it were. After all,
a country's economy cannot take a 'break' while it is repaired in this
highly competitive global market. It must keep performing. It is in this
unmerciful global environment that Minister Karunanayake must operate
and manage the transition from an unkempt economic governance to a more
It was inevitable, then, that this first proper annual Government
Budget by the new National Unity government became a highly complex
balancing act between the imperatives of rapid economic growth and
fiscal repair on the one hand and maintenance of socio-economic safety
nets on the other.
Even if the Budget - in its income tax relief, for example - does
make attempts to meet some of the social equity concerns of the middle
classes, the emphasis on the rural economy has focussed more on
encouraging rural entrepreneurship rather than addressing current
socio-economic pressures facing many agricultural families. This focus
is, no doubt, laudably forward-looking in terms of boosting rural
productivity and greater integration with the national market. However,
the interim social pressures have to be borne. The new price controls on
some consumer essentials are welcome but cannot provide the wide relief
that some social sectors may seek.
This is something that a socially sensitive regime must keep in mind
and may require some mid-term course-corrections. It is to be hoped,
however, that such adjustments are not made purely with short term
electoral gains in mind.
Meanwhile, the business community, offered the new economic policy
foundation by the new regime, must now take up the challenge to risk
more and invest.
For this, the government must also provide the assurance of a level
playing field, free of cronyism and ad hoc policy gimmicks. As long as
the danger of a return to favouritism and ad hoc fiscal and other
economic policy measures remains, the business community cannot be
expected to take greater risks on its own accord without the assurance
that one's entrepreneurship is not ruined by uncertainty and an uneven
playing field. Persistent reports of major recurrences of political
favouritism and even nepotism even in this so-called 'new era' are not
at all helpful.
The Maldives and Sri Lanka
The Government and, especially the Ministry of External Affairs must
be commended for its care and sensitivity in dealing with the recent
political upheavals in our Indian Ocean neighbour, The Maldives.
The Maldivians are, linguistically and culturally, close cousins of
the Sri Lankans, and our only small neighbour that relies on our support
and friendship as a fellow developing island nation.
The progress Sri Lanka has made politically and socially are
important models that many in the Maldivian intelligentsia follow keenly
and aspire to emulate in their own island republic. The lessons of
dealing with religious and cultural extremisms are of particular
importance and interest to our neighbours.
While India has served as an off-shore sanctuary to many Sri Lankan
dissidents and democracy activists, Colombo has similarly served as a
sanctuary for the Maldivians over several decades and through succeeding
regimes in Malé. At the same time, however, Colombo cannot be seen as
taking one or the other side when it comes to political rivalry in Malé.
It is inevitable that many currents and under-currents bring the two
countries together. Recent events such as the seeming assassination
attempt and subsequent close investigative support provided by Colombo,
as well as the apprehension of a Sri Lankan with weaponry in Male, all
indicate the closely parallel political lives of our two nations.
So far, Sri Lanka has navigated inter-state relations with much
maturity and sensitivity in keeping with both international norms as
well as the necessities of good-neighbourliness.