'Pro-people, pro-development budget'

Excerpts of the speech made by DEW Gunasekara, Minister of Constitutional Affairs and National Integration in Parliament during the Budget Debate on November 18.

BUDGET: To be exact and precise, I wish to describe this Budget as pro-people and pro-development Budget with burdens to none, relief to the needy and satisfaction to all. Its philosophy was based on Mahinda Chinthanaya, disregarding IMF-World Bank prescriptions.

The LTTE leader - Prabhakaran on the day that the President assumed office assured him of time for one year for he believed him to be a pragmatic man.

What happened? Not even ten days were given and before he could present his maiden Budget - Budget 2006 he recommenced violence and demonstrated his belligerence and intransigence once again.

You could remember that the Budget for 2005 commenced with an unprecedented catastrophe - tsunami - the natural disaster. Yet we recovered from it faster than we expected restoring our economic fundamentals and placing them well under control.

Then the Budget for 2006 had to commence with a man-made disaster - LTTE violence. Yet, the operation of the Budget for 2006 is being completed, with economic fundamentals being truly sustained and with a GDP of 7 per cent plus, for the first time since the Open Economy and in fact since the Independence.

Before I come to my analysis of the Budget - 2007, let me start from the performance of the Budget for 2006.

As compared with the Budget for 2005, the performance in 2006 has been spectacular much to the disappointment of the predictions by the economic pundits of the Opposition.

There was an increase in growth in all the three main sectors of the economy - agriculture, industries and services.

It is necessary to comprehend the background - the international trends and developments in which the Budget for 2006 operated and the Budget for 2007 is expected to operate.

I drew the attention of the Members last year to the realities of the changing world - the emerging multi-polarity of the world, the on-gong changes in the world balance of forces, resurgence of the Asia-Pacific Region as an engine of global economy, emergence of two potential economic giants - China and India.

By the year 2015, the GDP of Asia would rise up to 45 per cent of the world GDP. The GDP of Asia, Africa, Latin America and with Russia the GDP would be in the region of 63 per cent of the world GDP as against the combined GDP of 37 per cent for US and Europe - once the glorious empires.

There is a polarisation taking place in the world in spite of globalisation. This is the main reason why a 'global war on terror' is being leashed out.

It is nothing but a pretext, as a necessary contrivance to defend neo-liberalism and prevent a change in the world balance of forces. In order to justify western powers, foreign policy of 'pre-emption' and defence policy of 'unilateralism' they use the 'global war on terror' as only a pretext.

The concept of neo-liberalism in the guise of globalisation, which was first tried and tested in Latin America, is being rejected by country after country. Neo-liberal economics, which my good friend Bandula Gunawardena advocates so faithfully is being dumped everywhere.

In addition to Cuba, country after country is opting out for alternatives to neo-liberalism. Venezuela, Brazil, Argentina, Chile, Uruguay, Ecuador, Bolivia and now Nicaragua. There was a narrow escape in Mexico.

The main lesson to be drawn from the Latin America is that under neo-liberalism, the economic development did not accompany human development along with it. It was essentially a new version of neo-colonisation under globalisation.

The world economy is in good shape with a 5 per cent growth but the most unjust, unequal world order hitherto unknown in history is being created - the world of poverty, insecurity, and inequality - brought about by neo-liberalism through unbridled globalisation - This is today the most formidable challenge facing the human society.

It is in this context of development that the United Nations launched its project of Millennium Development Goal (MDG) in the year 2000, whereby it was expected by the year 2015 to achieve a reduction of poverty by half, education to all and a world with no fear of diseases.

However, all the three pillars of development namely (i) development assistance, (ii) international trade, (iii) security have crumbled, the people's aspirations being frustrated.

Today we witness through the prism of the United Nations itself a potential danger of a world economically volatile, politically unstable and morally insecure. As a reaction to this, new independent, sovereign, and realistic approaches are being explored by new emerging countries as alternatives to neo-liberalism.

What are the lessons that we should draw from these international developments? It is necessary to shape the character of economic growth. Experience has shown that growth can translate into higher levels of human development. Here much depends on the nature of growth. They are not attempting to go back to closed economies.

The relationship between growth and human development is dynamic Economic growth provides the resources to permit sustained improvements in human development. On the other hand, human development improvements raise people's capacities to boost economic growth.

There should be a proper balance between economic growth and human development. It is not economic growth or human development.

This is precisely the difference between Mahinda Chinthana and Ranil's Chinthana. It is the role of the state as well as the role of the market and not market alone. It is not spending regardless, no matter where resources come.

Subsidies are necessary not as a permanent feature but as a temporary measure to give reliefs to the poor, the disadvantaged. I believe that in this context Samurdhi Programme needs careful review - to be more realistic, pragmatic and scientific.

If human development is prioritized then such a strategy will run into fiscal constrains and balance of payments crises.

Similarly, growth first strategy can run into political instability and social crises. This is why the government uses the Budget as an instrument to ensure a balanced growth - growth with human development.

This is the hallmark of President Mahinda Rajapaksa's two Budgets. This is preciously the difference between the Mahinda Chinthana and Ranil's People's Agenda or Regaining Sri Lanka. This is the striking contrast between Mahinda and Choksy as Ministers of Finance.

The correct strategy in this era of globalization demands, "planning cum market", "growth as well as equity", "economic development along with human development", "private sector together with public sector".

This was why "Regaining Sri Lanka Programme" witnessed a jobless growth in the years 2002 and 2003.

This jobless growth is a phenomenon that we witnessed throughout the world under neo-liberalism. In fact, we have our own experiences in Sri Lanka since 1977, since the dawn of neo-liberalism.

This is why, we of the Communist Party of Sri Lanka reiterate the imperative need for reorientation of our foreign policy, the need for new economic co-operations, and relations, need for regional co-operations, having regard to not only to geo-politics but also geo-economics.

The main focus of this Budget is infra structure development in three main areas of the economy, hitherto neglected, i.e. regional development, the SME Sector and the rural economy.

This was what was absent in previous Budget. These are the most salutary features of Mahinda Chinthana from the point of economic development, in my view.

The Ten-Year Horizon

This year, the Budget has been formulated on the basis of a 3-year medium term strategy, which will lay the foundation for a 10-year development effort that will generate an annual growth rate of 8% - i.e. to raise the per capita income level 3 fold - $ 1000 - $ 3000.

At the first glance, it may look unrealizable. Let us debate this. This is open to debate.

The future development prospect of this country rest on four pillars - (i) Human Resources (ii) Infrastructure (iii) Private Sector (iv) Public Sector.

The four pillars must be grounded on terra firma i.e. Peace, Democracy, and Rule of Law - which are inter-related.

There are two problem areas in the implementation of Budget proposals, as possible barriers.

Firstly, we cannot co-exist with terrorism and violence any longer. If we cannot arrive at a consensus and offer a political solution to the national question, our economy cannot be sustained. Are we to pass this question to the next generation? I am only saying that time is running out - mark my words - "Time is running out".

It is my firm conviction that it was the political culture, which has prevented us from finding a solution. Let us consider what Tamil people need and not what the LTTE demands and seek a solution.

Secondly, with the present state of affairs in the Public Service - with corruption, inefficiency, lethargy, negative attitudes and unless the Administrative Reforms Commission awake from slumber, you will not be able to implement Mahinda Chinthana.

I told the President in clear terms. Now I tell it openly in this House. This Commission, is it still to be born or still born? This needs highest priority consideration with these observations.