The people's verdict

The people have spoken. They have elected Mahinda Rajapakse as their President for the next six years. The people have also placed their faith in his policy document "Mahinda Chintana" which outlined a series of measures for the welfare of the people and the development of the country.

One of the main planks of his election campaign was the building of an indigenous economy, which certain elements have unfortunately tried to portray as an inward-looking (closed) economy. Nothing could be further from the truth. Even if someone actually tried, we cannot go back to the days of a closed economy in this highly interconnected world. No country can exist in isolation.

However, any economy needs certain checks and balances to ensure that local industries and entrepreneurs are not unduly affected. Western countries which preach the virtues of an open economy often resort to protectionist and other measures to safeguard their industries.

This does not mean that the economy has to be closed to certain products and services. But there has to be a level playing field for the local businessman and industrialist to compete effectively with the onslaught of imports.

Certain sections of the business community seem to have developed an undue apprehension over the economic policies mentioned in Mahinda Chintana, most probably due to the new President's electoral alliance with the JVP. The stock market has gone down as a result of such sentiments.

Similar scenes occurred when the United People's Freedom Alliance (UPFA) swept to power in April 2004. But the stock market quickly rebounded, becoming one of the best performing markets in the region.

To its credit, the JVP did not try to impose any Marxist ideologies into the system of economy practised here during the period it walked the corridors of power. We hope that this would be the case this time as well.

The Mahinda Chintana has outlined the need to have an economic growth rate of eight per cent in the medium term, which is not an impossible target.

Many other countries with less resources than Sri Lanka have achieved this target. Sri Lanka already has a growth rate around 5 per cent and what is needed is a correct path to the top. One of the prime areas of concern in our economy is the agriculture sector, on which nearly 70 per cent of the population is dependent.

Many would like to pretend otherwise, but agriculture is the main component of the economy. Mahinda Chintana contained a number of measures to address farmers' grievances, including the provision of fertiliser at subsidised rates.

Subsidies have become a contentious issue, mainly because the State has to spend millions of rupees to provide them. However, there is no denying that farmers, small and medium scale industrialists and less privileged sections of society must be given some concessions.

Nevertheless, as they become self-reliant and more productive, they should be veered away from the subsidy culture. All subsidies must be ended in the long term and such monies channelled to development.

The new President is facing a number of other challenges on the economic front. Global oil prices are still high and many of our export products face a hostile environment in the new world trade order. Some of these matters are basically beyond our control, but we have to condition our economy in such a way that their impact is minimal.

The road ahead my not be paved with roses, but with correct economic principles it will not be such a harsh journey.