Sun, 2007-11-11 03:47

Analysng the causes of the high inflation and increasing budget deficit Somawansa Amarasinghe, the leader of the JVP, told the Asian Tribune that the government is heading for further trouble if it fails to improve the economy. He said that the Politburo will meet before November 16, 2007 to consider which way they would vote on the budget.

Somawansa Amarasinghe: "JVP takes all these things into consideration and we will have our politburo meeting before 16 November to finalize our position about the budget before we cast our votes on the budget. Also it must be pointed out that JVP has expressed our opposition to the government regarding the budget in the floor of the parliament when the debate on it started."

In a wide-ranging survey of the economy he said:

“I think there is nothing to discuss about the Budget 2008. There are no policies. There is a big challenge before country economically. We have been pursuing the so called free market policy for the last 30 years without taking into consideration about the national economy.

Successive governments have neglected agriculture, local production, and local industry. As a result we are now depending on foreign goods, services and capital also.

Now for example, we have failed to produce even those that can be produced by us. We are importing flour, rice, milk. We are also importing fruits including mangoes, guava etc., etc.

In fact we are spending more than US$1.5 billion on importing food items alone.

Who are the losers - the ordinary people, farmers from the North, East, South and Central?

Now the government is talking about the development in the East. How can there be development if the farmers are neglected? All the successive governments use to import rice during the harvest time in the country. Only we stopped that practice, during our time when we were managing the Ministry of Agriculture. If the government continued with our same policy, farmers of this country would have been benefited a lot.

Now as it is there are private companies owned by brothers and sisters of some of the ministers who are now buying all the paddies that is being harvested in the country for a price which is usually less than price fixed by the government.

This year Prima Company purchased lot of paddy to produce animal food, because it was cheaper for them to buy paddy from the local market.

Now there is no Paddy Marketing Board in this country. The UNP Government dismantled the Paddy Marketing Board and the storage facilities have been rented out to their friends. So the Government is not buying the rice from the farmers.

Though there is a government guaranteed price the farmers do not get that price as there is a monopoly by the private owners of the rice mills – large scale paddy mills. The private companies now own the mills and the government do not have any rice mills.

The price of rice is determined by owners of the rice mills and not by the government.

As I told you earlier one of the owners of a mill is a sitting member of parliament belonging to the ruling government party, therefore it as pointless to ask the government to bring down the price of rice.

As I told you earlier the major problem is that `we have ruined the national economy.

It is the UNP that started ruining the national economy in 1977 and no one took in the last 30 years meaningful steps to revive and restructure the national economy. We allowed the foreign goods, services and capital without any control and any considerations as to what will happen to the national economy or the local producers.

Now we find it difficult to exist. The government is appealing to the people to eat rice and give up eating bread and other items made out of wheat flour.

If we look back, we can see that all the paddy fields either are abandoned or reclaimed for other purposes.

We don’t think that the budget would provide solutions for these problems. . What we say is that Government without any delay launch a movement to increase the production in the country – food and other goods and services rather than importing other items that could be produced here.

For example India has reached almost 10% growth of their GDP against China which during the last two decades was able to achieve not less than 10% growth of economy.

So, one must draw the example from these countries that they never betrayed their national economy for the sake of attracting little money from outside.

We don’t say that we are against capital flowing into the country, but we must be careful that we don’t destroy our national economy for the sake of attracting foreign capital. We should have safeguarded the food security that we had before.

Now India has ceased to import milk food items. By doing that India protected their national farmers, producers of the other items, manufacturers, industrialists, entrepreneurs and businessmen.

At least now, though we are already late, we must rectify the mistakes and the grave errors committed by the successive governments which ruled the country since 1977.

So this budget has not taken into consideration the serious economic situation the country is facing today.

The government is only thinking of collecting tax and loans, debts from foreign sources and not trying to make the country richer by concentrating on development inside the country, so that there will be more employment opportunities for the young people and also open up opportunities for local producers to earn more money.

The budget deficit, if I remember it correctly, is Sri Lankan Rs. 2903 billion, that means we will have to depend on foreign borrowings. Already every citizen of this country owes Rs. 144,000 per year. So the debt burden will be a real burden for the ordinary man in the future. Already inflation has reached a 20 % increase, which is unbearable.

Since there is no development plans to increase productions, we will have to expect a further sharp increase in the inflationary tendencies in the near future.

Already prices of essential food items are increasing almost every week. People are finding it very very difficult to plan their future.

There is a proposal in the budget to increase the price of 1 litre of milk by Rs. 10/ which will seems to be an increased income for the farmer but in turn they will have to spend more and more for their essential items such as rice, flour and other items. Therefore the increase in the price of milk is comparatively nothing.

As a whole the budget was an empty document not worth taking into consideration unless the government takes serious steps to put the economy in the correct path next year. There will be problems that will contribute to bring down the government. That will bring an end to this government.

Now the regressive taxation is becoming unbearable other than foreign borrowings that are going to be the main source of income for the government. If the government is going to face any difficulties in the future, the only option available for the government is to increase the taxes.

However it must be pointed out that the Defence spending of the country has increased from Rs. 116 billions to Rs. 136 billions. This is a little more than increase due to the added inflationary amount. When we think about the recent situation of the country, this is bearable. The only problem is that the government is not involved in a movement to make the people produce more. The government is not giving any incentives to do so and not taking any meaningful steps to stop corruption and waste.

We have not submitted our proposals to this budget unlike the last time, because we realized that the Government is not going to take our proposals seriously.

So unless the government shows the people that it is very serious, not by words but by deeds, it is going to be in trouble.

JVP takes all these things into consideration and we will have our politburo meeting before 16 November to finalize our position about the budget before we cast our votes on the budget. Also it must be pointed out that JVP has expressed our opposition to the government regarding the budget in the floor of the parliament when the debate on it started.

Courtesy - Asian Tribune