Parliament

Budget 2013:

Well balanced budget addressing all segments of economy - Dr. Amunugama

Sandasen MARASINGHE, Irangika RANGE and Disna MUDALIGE

Speaker Chamal Rajapaksa presided, when Parliament met at 9.30 a.m yesterday. After the presentation of papers and oral questions, the House took up the second reading of the Appropriation Bill (2013) for debate.

Ravi Karunanayake (UNP): The Opposition must take the stand of the people. We are always doing it. The budget has no fresh proposals. It is a repetition of last year's budgetary proposals.

When analysing last year's budgetary proposals, it is seen that they have not reached the mentioned target.

The loans we take are inter-generational. Even future generations must pay for the loans that we take today. In the past, the loans were multi lateral and bilateral. But today, most of these loans are non-concessionary commercial loans.

The total savings in Sri Lanka only amounts to 15.4 percent of the GDP. The savings are very important for development. How can the government pursue its goal of making Sri Lanka the 'Wonder of Asia' in this manner?

The fertilizer subsidy, which was given at Rs. 350 earlier, had been increased to Rs. 400. The allocations to farmers are not sufficient to write off the loans they have taken.

Finance and Planning Deputy Minister Dr. Sarath Amunugama: Ravi Karunanayake MP is misleading the House. The President, as the Finance Minister, did not say the loans of the farmers would be written off. What he said was those would be deferred until the next harvest season and the interest on them would be abolished.

Ravi Karunanayake (UNP): He is disturbing my speech.

Speaker Chamal Rajapaksa: The Minister has the right to correct any misleading facts presented in the House.

Ravi Karunanayake (UNP): The country's economy is taking a downward trend. This must be changed. We are ready to advise the government on this matter.

International Cooperation's Senior Minister and Finance and Planning Deputy Minister Dr. Sarath Amunugama: There had been so many budget debates in Sri Lanka's history. In most of these debates, Parliamentarians presented their views on the budget according to their economic policy. However, the opening speech of the debate from the Opposition today had no proposals of their own. How would they handdle the economy? There were no clues in his speech as to how they would manage the economy.

Budget 2013 has been prepaired in consultation with all stakeholders in key economic sectors. Therefore, it could be considered as a well balanced budget which had addressed all segments of the economy. The budget has targeted maintaining an eight percent economic growth rate through strategies and economic policies introduced in the five year plan from 2011 to 2015. It is expected to contain the inflation rate under seven percent. The trade deficit would be reduced to 6 percent by increasing export earnings and decreasing import expenditures. Today we are experiencing a rapid increase in per capita income.

We have already presented a road map to increase the per capita income upto US$ 4,000. Our goal is to convert the Sri Lankans into a poverty free middle income earning wealthy people. Food security, education, water, electricity facilities, improvement and environment security have been given the highest priority.

It is remarkable that Sri Lanka had achieved the highest human development status compared to other SAARC countries. The life expectancy has been high compared to most developing countries. Our achievements in the education sector too have been remarkable, compared to other developing countries.

Sri Lanka has already achieved remarkable results in poverty alleviation. Poverty has been reduced from 26 percent to 8.9 percent today. We are proud to say that around 1 million poor people have moved to middle class status during our regime.

It is significant that poverty in the plantation sector had been reduced to 11 percent from 32 percent. This was mainly due to the increased attention given to the plantation sector by the government. We are in the process of Millennium. Development Goals. A large scale development drive could be seen all over the country.

Sri Lanka has many business potentials. These potentials have to be converted into income generating avenues.Our target is to attract around US$ 2 billion worth of foreign investments. Hambantota is being developed into a world famous commercial and tourism hub.

S.Sumanthiran (TNA):

The Head of the State yesterday spoke on his three year plans, but not much on its financial aspects. This Appropriation Bill was challenged in the Supreme Court. Its determination was presented in Parliament on November 6.

I would like to ask the government if it would amend the clauses in the Appropriation Bill as directed by the Supreme Court and if not, a referendum would be needed.

The President said that the Local Government election system should be changed. It is good, but only pledges are not enough.

The Government has deviated its usual path which is not suitable to our country.

Education Minister Bandula Gunawardena:

Sumanthiran MP said that the Head of State made a speech of his political vision. But it is not correct.

A. H. M. Azwer takes the Chair.

Govt. did not hesitate to increase salaries of public servants

The supreme power is with the public. We all have to respect it. Parliament is vested with this power by the people.The Judiciary can give judgements on certain occasions. On one occasion, the Supreme Court gave an order on the Z-score issue. However, thereafter a large number of complaints from students were received, the government had to increase the university intake.

The government did not hesitate to increase the salaries of public servants when it could be done. The economic policy of the UNP has always been that the government income should be maintained over 20 percent. There is no other way for the UNP, but to impose heavy taxes on people to maintain the income.

The government has four main expenditures, firstly to pay the salaries and wages of public servants, secondly to pay pensions, thirdly to buy day-to- day goods and services and the fourth was to pay interests on loans. There alone, the government has to spend Rs. 1,267 billion per year. However, the government income is not enough to pay this amount. In addition, the government also has to continue development projects.

We had to depend on oil to provide power

Power and Energy Minister Patali Champika Ranawaka: The next three years are free from decisive elections. Therefore, it is a period in which serious work could be done without political pressure. This budget has catered towards this goal.

The financial stability in the global market has been shattered due to fiscal recessions. The US hegemony in the world is also deteriorating with the emergence of China as a world power. We have to face several challenges in this global context.

One such challenge is to reduce the amount of debts of the country. Many European countries too have faced this challenge. We can reduce our debts by seeking loans with low interest rates and by utilizing these funds efficiently for rapid development. The government income which is about 14 percent should be increased.

Another challenge is the energy crisis. This year too we had to face so many difficulties in that sector. The sanctions imposed by the US on Iran affected us badly on our oil importation. The country did not experience rain for 15 months and we had to face severe drought conditions.

We had to depend heavily on fuel to continue with the power supply round the clock. We had to spend extra money on fuel. In future, we have identified the power consumption in Colombo, Hambantota, Trincomalee and Kalpitiya would rise sharply. We have to cater to this need. The government should also pay attention to the green energy. We are glad that the first step in this direction had been kept by this budget.

Environment Minister Anura Priyadarshana Yapa: This budget caters towards short-term, mid term and long term aims.

We are providing a large number of concessions to the people with the aim of uplifting their living standards. In all the budgets presented by President Mahinda Rajapaksa, the theme had been to alleviate poverty. Many strategies have been presented to measure the equal distribution of money. As a results, the government had been able to narrow the income disparities among society.

In this budget many proposals have been presented to boost local production. We have to update our technology. Technology is one key in economic development.

In contemporary times, we also have to face a fuel crisis. We have to spend a large sum of money for oil importation.

The world is now talking more about a the green economy. However, the capital investment required for these green initiatives is very high. Therefore, there must be a mechanism for developing the country to obtain this technology at concessionary prices.

Essential items skyrocketing

Sunil Handunnetti (DNA): Prices of essential items are skyrocketting. Prices of milk powder, telephone charges, electricity charges, sugar, LP gas, dhal, garlic, big onions, potatoes and canned fish have increased by three fold.

Ordinary people are helpless today and are undergoing severe hardships.

The government has misled the people in the 2013 budget. The President said that Sri Lanka was self sufficient in rice and maize. Then how is it that 7,000 metric tones of maize and US $ 28 million worth of rice had been imported to the country last year?

Sri Lankan labourers work in the Middle Eastern countries for very low salaries. If you want to honour our foreign workers, please take measures to fix a minimum salary rate for them. Please prepare a programme to secure the job rights of foreign workers.

Tax payers will enjoy many privileges

Social Service Minister Felix Perera

Handunnetti MP said that we had privatized institutions. But in reality, since 1991, the government received monies by privatization, until 2003.

In 2003, Rs 10,223 million had been received due to privatization. Since 2005, we have not received even a penny by privatization.

People said Obama had stiff competition from Romney. But Obama won the race. The analysis had revealed that the act of Obama in removing Osama Bin Laden and attempts taken to uplift the motor vehicles industry had been appreciated. The same phenomenon has been applied here.

The JVP always depended on poverty. But it has been reducing dramatically. We import Basmathie rice and fruits needed for the tourism industry. This budget has concentrated on all aspects of industries in the country.

In 1977, we produced 31 percent of the sugar requirements. People have to pay their taxes. It is a corporate social responsibility. It is not a demon as identified by the Opposition. The tax payees will enjoy remarkable privileges.We are being penalised because people are not paying taxes. The people who amass wealth have a responsibility to take care of others.

Ven Ellawala Medhananda Thera (UPFA):

The dedication and commitment of the President to develop the country after the defeat of terrorism, reflected from this budget.

Our economy is based on agriculture. We know there were 25,000 villages in the country and the kings developed 25,000 tanks for agriculture. According to Buddhism when wealth is amassed around a few people in the country, the country is subjected to poverty. So this budget has targetted to eradicate poverty.

When I consider this budget, I find it has been formulated in line with the Chakkawaththi Sihanada Suththa preached by Lord Buddha. It has it that when economy and moral values deteriorate, all sorts of crimes are committed in a country.

I accept that the criminals should be punished. People should not mingle with law and religion.

Crime such as those happening in Kahawatta should be stopped.

Resettlement Deputy Minister Vinayagamoorthy Muralitharan:

This budget has focused on education and agriculture.Twenty technical colleges are to be setup to train students to cater to the needs of the international job market.

It is very easy to criticize others. But it is impossible for such people to come up with creative proposals to overcome those issues. With the Divi Neguma concept, a large number of people in Batticaloa have been given a new breath of relief.

Some people predicted that the dollar would increase to Rs. 200, but it did not happen due to the positive economic approach of this government.

The farmers are getting a good income and the harvest in all sectors of agriculture have increased remarkably. It is not an accidentally budget, but the results of the measures taken by this government.

Economic Development Deputy Minister Laxman Yapa Abeywardena:

The 8th budget of this government is another means to take forward the pledges and policies of the Mahinda Chintana - Future Vision farther.

This is a constructive budget proposed amidst many issues in the international sphere. The opposition in their criticism spoke of the salaries of public servants. But they don't have a moral right to speak of the salaries and pensions of public servants who curtailed all of them, including the strength of the public service.

The price of an egg has increased to Rs 24, but today it had reduced to Rs. 9, Rs. 10 or Rs. 11. This was a result of the measures taken by the government.

Now we are sending employees overseas after a training. We didn't face any problems with the employees sent to Korea, as they were well trained employees.

The President has given an assurance to the people that the government would not cause any damage to the people and they trust it. No person protested for the increase of pensions or an allowance to people above 65 years.

But we gave them at a time when other governments in the world curtail them.

We have introduced the farmers an insurance scheme to protect them from natural disasters.

Today there are a large number of people in Jaffna who are unable to go to their residences after the war. But our government was able to address the issue within 3 years.

Many concessions to the people

Janaka Wakkumbura (UPFA):

The Budget has many proposals to grant concessions to the people. The President takes immediate action to provide all possible facilities to needy segments of society.

When a group of students complained of teacher shortages while on a visit to Temple Trees, the President immediately intervened to solve the matter. He has proposed to give a free set of uniforms during the mid year and also a free pair of shoes to children in rural schools.

Fertilizer subsidy had been maintained continuously, bearing a heavy cost. This is a people - friendly move.

A. H. M. Azwer takes the Chair:

Vijitha Berugoda (UPFA):

The President hopes to fulfill three main targets through this budget. One is to alleviate poverty. The second is to ensure food, water and environmental protection. The third aims to obtain rapid development in the education sector with high levels of skills.

The President is keen in boosting agriculture. We could reduce imports of food items by improving local production. The opposition does not see the positive side of the Budget.

Child Development and Women's Affairs Deputy Minister M. L. A. M. Hisbullah:

The foundation for a strong economy has been laid from this Budget. The allocations for local governments to facilitate rural development had been increased. The President has concentrated to provide more facilities to the poor.

Measures have also been introduced to develop the liquid milk industry. The infrastructure is improving at a rapid speed in the country, and I invite all politicians to support this endeavor, irrespective of their political ideologies.

Disaster Management Minister Mahinda Amaraweera:

I thank all members who spoke during the debate today. The President has included proposals to improve the living standards of the people.

The government aims to increase the per capita income to further strengthen the economy of the people. The country is now self sufficient in rice and maize. These are great achievements.

The Paddy Marketing Board has been strengthened. Its storage capacity has been expanded. Measures have been taken to promote organic fertilizer, instead of chemical fertilizer.

The House adjourned until 9.30 am today.

KRRISH Group willing to develop Transworks House

Irrigation and Water Resources Management Minister Nimal Siripala de Silva yesterday, stated that the UDA entertained an unsolicited proposal received by the KRRISH Group India that expressed willingness to develop Transworks House property in Colombo Fort, as the efforts made by UDA in the recent past had not materialized.

He made this observation a ministerial statement in response to a special statement made by Opposition Leader Ranil Wickremesinghe, under Standing Order 23(2) on November 6.

Leader of the House and Irrigation and Water Resources Management Minister Nimal Siripala de Silva: The Transworks House property in ColomboFort remained undeveloped for many years, due to encumbrances and vulnerability to security threats which prevailed over the years. The efforts made by the UDA to develop the property jointly with the Central Bank of Sri Lanka in the recent past, did not materialize. A part of the site where the former Public Works Department building was located had to be preserved to secure its archaeological value. The portion of the land occupied by the electrical substation could not become part of the development. The above two parts of land are not vested with the UDA yet. Therefore, the UDA was complled to look for an investor who could make a proposal to develop the entire land parcel with a prior understanding about such limitations. With this backdrop, UDA entertained an unsolicited proposal received as a response to the UDA web advertisement as the land was not readily available to entertain public tenders through the media.

M/s KRRISH Group India, expressed their willingness to undertake the project on the entire land, excluding the electrical substation site and incorporated a local company called KRRISH Transwork Colombo Private Ltd., to undertake the project. Initially, the UDA entered into a Memorandum of Understanding (MoU) with the KRRISH Group to formulate the project. The Cabinet approval referred in the question was obtained to enter into a lease agreement subject to fulfilment of certain conditions with necessary statutory approvals.

The Company has initially deposited a sum of Rs. 499.5 Million, being 10% of the total lease premium as a commitment fee on 14/9/2012. As a follow up action, the UDA has taken steps to vest the Heritage building site in order to seek the final approvals to sign the lease agreement. Since the lease agreement had not been signed yet, the balance lease consideration had not been recovered by the UDA.

The process of inviting proposals had been explained in the Cabinet Paper. The UDA's intention was to give an opportunity to all local and international investors to make their proposals to the said property.

The offer made by the KRRISH Group for the above property, was evaluated by the UDA. In addition, the BoI had also recognized this project as a strategic development project.

The development proposals submitted for the site was for a mixed development project. The mixed development contains with shopping arcades, retails shops, office spaces, hotels as well as apartments. Zoning for Colombo Fort as per UDA Development Plan permits all the above uses.

The KRRISH Group has diversified business which include distilleries and Real estate developments. Investigations carried out through KPMG Sri Lanka (Charted Accountants M/s Klynveld Peat Marwick Goerdeler), revealed that the KRRISH Group was involved with various real estate projects in North India under various entities within the Group, including JBPL and KRRISH Reality Nirman. The following projects of the KRRISH Group have found reference in the public domain as per the above search report:

KRRISH Provence: This was a planned residential group housing project at Gwal Pahari, Sector 2, Gurgaon, Haryana on the Gurgaon - Faridabad road. KRRISH Township: This project was to be developed on the golf course extension road, Gurgaon, Haryana, on approximately 100 acres of land. The township is planned with villas, apartments, commercial complexes, schools and hospitals.

KRRISH Commercial Project: A commercial complex was being developed at Gurgaon on NH-8 besides 32nd milestone. The development was planned on over 1 million square feet having corporate offices and retail space.

Ibiza Park, Surajkund: KRRISH has undertaken a group housing project at SurajKund, Faridabad, Haryana.

Beneficial owners of the KRRISH Group are mainly the Katyal family, headed by O.P. Katyal, M/s Teekay Finvest and M/s Mahadev Infratech Pvt. Ltd. The Directors who are in the KRRISH Transworks Colombo Private limited are Amith Katyal, Rajendra Prashad Gupta, Ms. Aishwaraya Soni and Ms. Janaki Siriwardena.

The lease Agreement executed with the Central Bank of Sri Lanka for a Car Park project did not materialize and as such, it was cancelled with their concurrence. Therefore the Central Bank of Sri Lanka was no longer a party to this development. This proposal had been considered by the Board of Management of UDA, 6th and 7th Floors, "Sethsiripaya," Battaramulla and the Board of Investment, Sri Lanka World Trade Centre (west tower) Colombo 1 and the standing Cabinet Appointed Review Committee headed by the Secretary to the Prime Minister.

The media reported that a four acre plot of land in Fort has been leased to the KRRISH Group of India for commercial purposes under a lease payment of Rs.5 billion for 99 years by the Urban Development Authority. It must be noted that the Transworks House property (the former Public Works Department building) includes a building with archaeological value.

A Joint Memorandum submitted to Cabinet states that 134 perches leased by the Central Bank and another 137 perches leased by People's PropertyDevelopment Limited (PPDL), a subsidiary of People's Bank, was cancelled by the UDA to make it available to KRRISH Group.