BUDGET _ 2013:

Progress based on ground realities

While the international headlines were focused on the US Presidential Election, which Barack Obama won with comparable ease, confounding many pundits on swing-state and politics, and the Chinese Communist Party conference that will decide on the new leadership of the Asia's largest and the world's second largest economy, Sri Lanka had its own matters of importance.

Having sent a message of congratulations to President Obama on his successful re-election for a second term, with encouraging expectations of the progress in his policy of 'Change' in US politics, President Mahinda Rajapaksa presented his eighth Budget in Parliament on Thursday, which had much to offer in areas of economic and social importance. Education, agriculture and investment, were the areas where most focus was in the budget proposals, with considerable importance being given to relief to wide and diverse sections of the people.

On the rate of economic growth, which is a key aspect of the Budget, and about which there has been much concern, especially with worsening economic conditions in Europe, and the slow growth in the US, both affecting our exports, the President was confident that in 2013 Si Lanka will record an economic growth of 7.5 percent to 8 percent, clearly countering the warnings by opposition pundits that growth would fall below 5 percent next year. As Minister of Finance and Planning, the President explained that by maintaining this level of growth the country would be able to reach the goal of a per capita income of US$ 4,000 by year 2016.

Allocations for free education

In the context of social welfare and investment, free education in the country, which comes down from the pre-independence period, remains a key aspect of social progress and long-term investment. Beginning with the policy of free education introduced by the late CWW Kannangara, and the free-mid-day meals, textbooks and uniforms that followed many years later, this Budget stands out for the funds it has allocated to strengthen free education, at a time when there was concern in some quarters about commitment to its continuance.

The prolonged strike by the university academics saw much focus on education in recent months, and the Budget proposals show that, as President Mahinda Rajapaksa had indicated on many occasions earlier, that this was an area to which the government was indeed paying the attention it deserved. The Budget proposals made it clear that the government was committed to supporting and strengthening the country's long tradition of free education, which has helped Sri Lanka have more than 90 percent literacy, being the highest level of literacy in South Asia and beating most other countries in the Asian continent.

Detailing the government's new allocations for free education, which the President emphasized will not be undermined in any manner, he proposed that government expenditure on education for 2013 be increased 15 percent in comparison to the current year, which amounted to Rs.150 billion, amounting to around 9 percent of government expenditure.

In a significant move to strengthen education the Budget has proposed that Rs.306 billion be allocated for this sector, which amounts to around 4.1 percent of the GDP.

The President also proposed allocating that a sum of Rs.900 million for teacher training to improve the primary education in the country, which is of increasing importance to improve the quality of overall education. In considering the demand for university admissions, and the situation arising from the Z-score issue, President Mahinda Rajapaksa also proposed the allocation of Rs. 4,000 million to enroll 5,000 students to the universities in the coming year.

Rural sector

The government's policies have always had a strong emphasis on the Rural Sector. The crisis faced by those engaged in agriculture due to the recent drought conditions, in many rural areas, gravely affecting rice cultivation and other cash crops, has clearly not been lost of the government. In a major initiative in the social welfare, with emphasis on the Rural Sector, the President announced that interest on loans obtained by farmers in the drought hit areas will be written off and farmers will be allowed start re-paying loans from the next Maha season. A further Rs.1,000 million will be allocated for aiding the farmers who were affected by the drought.

In a special incentive to paddy cultivators the minimum guaranteed price for a kilo of paddy will be increased to Rs.32-35.

Recognizing the importance of the plantation sector too, in the overall development of agriculture and agro-industry, the President announced an increase in subsidies given to tea small holders from Rs 300,000 to Rs. 350,000 per hectare.

With the special interest being paid to eco-friendly agricultural processes, and the government's commitment to sustainable development, among the Budget proposals announced by the President was that producers of organic fertilizer producers will be given a certified price of Rs.450 for a 50Kg pack of fertilizer, and that both direct and indirect taxes for organic fertilizer transportation will also completely be abolished. Is expected to be a major encouragement to the producers of organic fertilizers in the county, and should help in its wider use in cultivation. This will be of significance for the plantation sector, especially for tea production, where there is a greater demand for tea produced with organic fertilizer at a time when the world economic crisis, and the US sanctions on Iran have caused problems for Sri Lanka's tea industry.

In a further move to give relief to those engaged in agriculture, especially in the rural sector, the President proposed that 1 percent of bank profits and Rs.150 per 50kg of subsidized fertilizer should be given to the National Insurance Trust Fund for a new crop insurance scheme, and a mandatory insurance policy will be introduced for farmers in the country.

The Budget also has important relief measures such as a monthly grant of Rs. 5000 to all persons above 65 years who and have no permanent means of livelihood, and a Rs. 1,500 allowance for public sector employees. Students in remote areas will receive an additional uniform set and a pair of shoes free of charge and all equipment used by people with special abilities to be provided duty free.

The Budget made it clear that the government will continue with its policies on infra-structure development, with continued improvement of roads and highways for better transport, the further development of the important Tourism Sector, and continued emphasis on the development and expansion of the IT Sector in the country. All of this will be major attractions for investors, both local and foreign, with the government's push for more joint venture investments in identified sector of economic growth.

In the 66th National Budget since Independence and his own 8th Budget, President Rajapaksa demonstrated a good understanding of the current needs of the country, and the strategies for progress in the coming years, based on the ground realities of a world financial crisis that has its impact on Sri Lanka, and the country's own need to move ahead in the strengthening of peace and reconciliation. It is significant that these proposals for economic progress came after 99 countries accepted the progress made by Sri Lanka in the field of reconciliation, especially through development, resettlement and rehabilitation, at the Universal Periodic Review on Human Rights in Geneva earlier this week.