Development should seep down to the masses - Prof. Indraratne

President, Sri Lanka Economic Association, Prof. A. D. V. de S. Indraratne, was the guest speaker as the Key Person at the monthly forum for Public-Private Policy Dialogue of the Federation of Chambers of Commerce and Industry of Sri Lanka (FCCISL) at the Trans Asia Hotel. Prof Indraratne spoke on "The Economy: Opportunities and Challenges and Outlook for 2008 and Beyond".

The Key Persons' Forum is organised by the Small and Medium Enterprise Developers (SMED), a project of FCCISL and Friedrich Naumann Stiftung (FNSt.).

Prof. Indraratne said that after Sri Lanka secured Independence the country's economy was favourable and export income was more than adequate where the economy was relatively open.

There was employment and exports of tea, rubber and coconut brought in adequate foreign exchange, but with all this prosperity in the country, Sri Lanka failed to realise to lay the foundation to invest and diversification to take the economy forward. He said that this trend continued for some time but by 1955 it collapsed, until 1977.

In 1977 the economy was liberalised, open and regulating and restrictions were taken off. Economic prosperity was in again, but this time too the country failed to make use of the opportunity to put the economy into a stable position. The growth rate then reached 8.2 per cent and the unemployment rate was halved.

He said there was full growth in those several years after the liberalisation of the economy in 1977.

Then again, the economy revived around 2002. In 2002 the growth increased from 1.5 per cent to around 6 per cent despite the tsunami devastation and oil price hikes. Even the security situation was brought under control and the economy was resilient.

The per capita income in 2006 was recorded as US$ 1,350 and in 2007 it recorded US$ 1,430 and further unemployment has been declining. But what has been worrying is the inflation which has been rising to 20 per cent, despite the tight monetary policy of the Central Bank.

Prof. Indraratne said that this was the third occasion that Sri Lanka failed to capitalise the opportunity to take the economy to a stable position.

He said that there is some kind of economic progress in the country, where things such as liberation of East, development activities there to be launched and the other development work such as roads and infrastructure are on the cards.

He said that what was disturbing though is the galloping cost of living and the poverty of a large segment of people resurging. He said that they boast about the high per-capita income, but it appeared to be highly exaggerated, because half of the population is below the poverty line and some of their per capita income is less than US$ 250.

This is the problem that all of them have not realised and they do not talk about equitable income distribution among the population. He said that it was very unfortunate that whatever the development in the country they never seep down to the bottom line of the people - the poor people never enjoy the benefits of all these development in the country.

Prof. Indraratne said that one-third of the total population is absolutely poor and some of them do not have basic amenities.

He said that the bulk of the industrial capital is concentrated in the Western Province. The population growth has come down to one per cent and with all these the country could get into 7 per cent growth and the conditions if properly managed the living conditions of the people could be doubled in 11 to 12 years.