A development oriented budget

Excerpts of the speech by Nirupama Rajapaksa, Member of Parliament on November 20, 2006

ADDRESS: I wish to congratulate the President and the Government as the budget is formulated on the policies based on "Mahinda Chintana" which focuses special attention on agricultural and rural development, infrastructure, social welfare and economic growth.

It is a people's budget which seeks to spur economic development and achieve Millennium Development Goals (MDG) over a ten year horizon development framework 2006-2016. It is a blueprint for economic and social change and eradicates poverty through economic empowerment.

An analysis of the budget proposals reveal that the government had laid heavy emphasis on infrastructure development without which economic resurgence would not be feasible. In this respect the government's mega infrastructure initiative called "Randora" has been accorded priority.

This program seeks to implement the Puttlam coal power plant, Trincomalee Coal power plant, Kerawelapitiya Power plant and related infrastructure to transform all fuel based plants to generate LNG based power.

Other major projects lined up under this special effort are the early completion of the four lane southern expressway and the expansion of the Colombo Port capacity and the construction of a new port, the second international airport at Weerawila and an international convention centre.

The government has also committed itself to building a northern expressway and several other main roads and bridges in districts in the North and East. Consequently Trincomalee will emerge as an important and strategic investment and tourism zone.

The government is also actively pursuing the reconstruction of the tsunami affected coastal highway from Katukurunda to Pottuvil and several highways to connect major townships.

All these activities would create additional employment opportunities, raise the income levels of the people in the respective areas and create business opportunities in several sectors. The development of a second international airport in the south will solve many problems.

The South is famous as a tourist attraction. The second international airport will attract tourists in large numbers to the south. It will also function as an alternate airport in Sri Lanka as there is only one International airport at present.

This clearly demonstrates that the government's policies are not short termed, but geared to develop the entire country over a period of 10 years which is necessary if we are to face a competitive world.

It is to be noted at this juncture that the Mahinda Chintana which was placed before the people at the Presidential Election 2005 spelt out the policies and programmes of the UPFA government towards building a disciplined society, an affectionate family, to provide employment both local and foreign and also to strengthen the Samurdhi programme to enhance the empowerment of the people for effective eradication of poverty. Consequently the proposals in the vision are being implemented by the concerned government ministries and departments progressively.

In this respect top priority has been given by the government for rural infrastructure development programmes such as "Maga Naguma", dahasak Maha Wav, new irrigation schemes and electrification programmes. So far the government has spent Rs. 12,000 million which is the highest ever for rural infrastructure.

The government biggest contribution by way of expenditure so far benefiting mainly the farmers and rural folk engaged in livelihood agricultural production had been the fertilizer subsidy of Rs. 11,000 million and paddy purchases of Rs. 2900 million.

Besides this the government has also given a subsidy to pharmaceuticals of Rs. 8000 million, and assistance to schoolchildren of Rs. 3600 million.

These programmes directly help the farmers and average citizen of the country which had been a long felt need to stimulate production and reduce poverty and unemployment.

The post tsunami construction activities had been pursued with 62,000 houses having been completed and about 43,000 still under construction. The total expenditure for post tsunami activities accounted to Rs. 9200 million.

The economic policies adopted by the government for the last three years have begun to bear beneficial results.

The agriculture sector has brought encouraging results. Local rice production has begun to exceed the domestic demand. Export of rice will be a possibility soon if only we could improve our quality and make the cost of production competitive.

The unemployment rate has come down to an all time low of 6.5%. No government has achieved this rate so far. This is due to the fact that the government has provided employment in the public sector and had promoted the private sector which controls 90% of the job market.

More than 3000 graduates have been found employment in the public sector. Another 8000 vacant positions have been identified and the government proposes to give area specified appointments in 2007.

The government has also taken steps to train skilled personnel for foreign employment which means that Sri Lankans will get better salaries in the foreign job market in the range of Rs. 50,000 (US $ 500) within the next three years.

As a preliminary step the minimum stipulated salary for employment abroad next year will be fixed at Rs. 25,000 (US $ 250)

The government also had to take a series of other measures. Foreign investment is essential for development of this country.

Several measures have been undertaken by the BOI to attract foreign investment. Sri Lanka missions are being restructured and strengthened to promote investment trade, foreign employment, and other economic activities.

Consequently foreign investment is likely to exceed US $ 600 million this year. Our tourist potentials are immense. The tourism industry is being developed giving adequate opportunities to the regions and with people's participation. Tourism earnings are expected to exceed US $ 400 million.

The budget contains a series of proposals which would ultimately benefit all sections of society. One of the most important proposals is the "Krushi Navodaya Programme" which will empower the small farmers by providing access to agricultural inputs at an affordable cost.

About 50,000 farmer families per year are targeted to benefit. Small farmers will be entitled to loan amounts ranging from Rs. 10,000 to Rs. 100,000.

Exemptions have been made from VAT on heavy fuel oil, Furnace oil, and electricity to regain competitiveness, which are lost fast due to high tariff.

Duty and VAT are exempted for replacement of buses by operators who already have a route permit. This will enable an improved bus service to the public. VAT and customs duties will be exempted for machinery imported for modernization of tea, rubber and coconut processing factories.

The VAT rate on supply of jewellery is proposed to be reduced to 5%. Vat on high tech medical equipment has been reduced to 5%. The VAT on the supply of prawns will be exempted to benefit the large number of small farmers engaged in prawn farming.

The VAT and duty on importation of cattle, buffaloes, goats, and other animals will be exempted to boost livestock farming.

The government has proposed to encourage the Small and Medium Enterprises (SME) sector which could be described as the backbone to our industrial production. Rs. 13,295 million is to be allocated at a concessionary rate of interest for a host of SME enterprises.

The government has also proposed to reduce the Economic Service Charges (ESC) in respect of all textiles, apparel manufacturers and trading houses to 0.1% in order to boost Sri Lanka's apparel industry and exports would reach US $ 5 billion by 2010.

VAT and import duty will be exempted for all material imported for processing and related industries to enable the leather industry to enter the global market trade.

The government has also proposed to revive 30-40 closed factories and provide about 10,000 job opportunities.

I hope that the people and political parties in the country will strengthen the hand of the President and the government to solve the long drawn North/East conflict and usher in a prosperous era.