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Constitutional Affairs and National Integration Minister, D.E.W. Gunasekera speaking during the Budget debate in Parliament yesterday (November 22) said:

"At the outset on behalf of the Communist Party of Sri Lanka which is a Constituent party of the Freedom Alliance Government I wish to thank my friend and colleague Finance Minister Dr. Sarath Amunugama for presenting his maiden budget. It was not only the longest budget speech made in the legislature but also a complete and meaningful speech."

I value it for the following reasons:-

* Firstly after the advent of the open economy it has attempted a clear alternative economic strategy, it is a budget which has deviated from tradition and been formulated after consultations with the people, it is subject oriented, pragmatic, practical and has a scientific approach and basis, it has been drafted after considering the international economic pattern, modern trends and developments, experiences of complete development processes in other countries and the current status of the national economy.

After independence it is a budget which had moved closer to the rural economy and small and medium scale enterprises, it is a budget directed towards the market as well as a planned economy, it is a budget which reflected the dual economic process of the private and the state sectors, it is a budget based on economic progress as well as social justice, it is a budget directed towards balanced development of all regions, areas and social strata. It is for these reasons that I called it a complete budget.

Mr. Speaker, what were the expectations of our party in this years Budget? We had three objectives (1) We expected it to strengthen the social base of the Alliance Government, (2) We expected it to build and strengthen the indigenous economy and, (3) We wanted it to ensure human development parallel to economic development.

Mr. Speaker, before speaking on Budget proposals I need to explain as to why we called for an alternative approach for rebuilding the economy. Twenty years have passed since the implementation of the open economic policies in 1977. All analyses, research done on it as well as experiences of life and experiences of other countries lead to one clear conclusion regarding the urgent and compulsory need to move onto an alternative development path.

There are no wide differences between the results of the closed economy implemented before 1977 and the open economy implemented after 1977. When we consider the percentage of economic progress it had been between 4 to 5 percent.

When we consider other economic indicators there has been no tendency for the increase in the percentage of investment, savings, and capital formation in relation to GDP during the last 27 years.

On the other hand its results had been most damaging to the politico-social and cultural fields.

The Western Province accounts for 50 percent of GDP. Provinces like Uva are in a very backward state while the income of the 20 percent super rich had increased by 121 percent, the income of the 40 percent of the lowest rung in society had increased only by 15 percent.

The per capita daily income of 40 percent of the population is less than Rs. 200. Almost 60 percent of them live in rural areas while 20.8 percent of the people in rural areas are in abject poverty the percentage of the urban population in abject poverty is 6. There is a wide disparity between rural and urban areas.

Will the private sector come forward to eliminate this disparity? Can we expect it to come forward and do it. If it does not do it the government has to intervene by increasing the percentage of state sector investment.

Therefore, a change is necessary in the economic strategy. The results of the economic progress achieved during the last 27 years had not percolated to all areas according to the population ratio even. When we consider economic sectors there have been no adequate investments in the small and medium sectors. When we consider various social strata they too have not benefitted from that progress.

Therefore, Mr. Speaker we need a change in our economic strategy. Results of the last election as well as results of elections held in India have shown that the rural and lower rungs have sharply reacted against the open economic system.

Let us look at the true state of the economy from another angle. State revenue has dropped from 21 to 13 percent between 1990 and 2004. But per capita income has increased from 280 to 947 US dollars. Economy has improved by 5 percent. Why isn't this progress not reflected in the state revenue?

Mr. Speaker, this proves that there has been a clear and strong anomaly in the manner income and wealth has been distributed among society. The gap between the haves and the have nots has increased dangerously.

This is indicated by what is happening in society today. Tax evation and unfair distribution of income is causing great damage to society. When there is a decrease in income the section that faces extreme pressure is the lower rung of society. It is due to the drop in state income that allocations made for education, health and social service has been curtailed. Therefore steps should be taken to increase state income.

What is the remedy? The remedy is to change economic strategy and also change the tax policy accordingly.

Mr. Speaker, when we introduce an alternative strategy we are accused of trying to go back to the 1970 era. Is there any truth in this charge? Absolutely no. We will never go back when formulating this Budget we have taken into consideration all economic strategies adopted and experiences gained since independence.

The world economic pattern which existed then has now changed. Today we have a different economic pattern. We have the strength to make use of the beneficial factors of previous economic strategies and leave out what has been detrimental.

Accordingly the Budget has been prepared as a mixture of both market and planned economies.

We should understand that the developed world as well as countries such as China, India and Malaysia have achieved progress through such a strategy. It is not through a nude open economy.

Experiences during the last 27 years have proved that the private sector alone cannot direct the economy. When economic history and life itself proves this why do we want to proceed along the same path.

That path will be a path to doom. We have seen what happened in Argentina and Brazil.

Mr. Speaker therefore we ought to fashion our economic strategy by taking international developments into consideration. Our lives have proved that we cannot build our economy by being subservient or attached to developed countries of the west.

The 21st century belong to Asia. All regions in Asia - East Asia, ASEAN, SAARC - individually and collectively are arriving along a strategy based on the market and the planned economy. Two massive economies - China and India - are coming forward like giants. The largest market in the world is in Asia.

A massive middle class market has also been created in it. It is Asia which is coming forward in capital, technology, market and management spheres. Therefore we need a change in our international economic relations our economic strategy too should change accordingly.

Mr. Speaker, this Budget has been prepared according to the aforesaid development framework. If we are to join hands and move forward with people of the awakening Asia, we should join that march through a Budget of this nature - That is the path ahead.

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