 It was the late Dr. Colvin R De Silva, a leader in the glorious days of the LSSP, who said that the Budget is a document that not only states the economic objectives of a government and how it proposes to achieve them but also provides the political orientation that shaped its preparation and in the process gives away the class charter of the government. The 2011 Budget of the UPFA government is identical to other budgets presented by the Rajapaksa administration and is in line with Mahinda Chintana – Vision for new Sri Lanka which has been basically formulated in the context of neo- liberal policy principles.
The 2011 Budget comes in the wake of the total grip on power assumed by the President through the passage of 18th Amendment which amendment the so-called Left (movement) in the government had no compunction in supporting despite the governing bodies of their parties deciding to the contrary.
The 18th Amendment abolished the two – term limit on the presidency and allows the President to appoint people to all positions and posts mentioned in the 17th Amendment such as the Election Commission, Public Service Commission, National Police Commission, Human Rights Commission, Finance Commission, Delimitation Commission, and Commission to Investigate allegations of Bribery and Corruption, the Chief Justice, Judges of the Supreme Court, President and Judges of the Courts of Appeal, members of the Judicial Service Commission, Auditor General, Attorney General, Inspection General of Police, Ombudsman and Secretary General of Parliament .
The Left, having compromised its position in this manner, it is not surprising that its pleadings to the government that it repudiates all measures to increase revenue through the pursuit of neo – liberal polices have been ignored by the President who is also the Minister of Finance. The Parliamentary Left’s other proposals as submitted by Samajawadi Janatha Peramuna before the presentation of the Budget has been equally ignored. They were:
- Take immediate steps to provide essential goods at subsidised prices via Sathosa and the Co-operatives.
- Remove taxes and duties on Dhal, Sugar, Sprats, Dried Fish, Local Onions, Milk and Potatoes.
- Formulate a new wage scheme.
- Private Sector minimum wage be increased to Rs. 12,000.
- Grant the promised Rs.2,500 salary increase to Public Sector employees.
- Solve the problems of employees dismissed during the 1980 strike and during 1977 to 1994.
- Solve pension anomalies.
- Allocate more funds to Health and Education.
- Increase tax on personal income.
- Make state institutions efficient and profitable through elimination of waste and corruption.
- Increase custom duties on luxury items.
- Search international markets for local products and increase income through export promotion.
- Improve tax collection.
Though the government found no merit in the submissions of the Samajawadi Peramuna, it had no hesitation in accepting and implementing the proposals forwarded by capitalist interest groups in the country.
It should be realised that the Budget brings no relief to the common man, the poor and the working class. It is a capitalist budget through and through. The capitalist class has openly praised the 2011 budget as the best in 30 years. The sweeping tax breaks, concessions, facilities and benefits showered on the private sector are unprecedented. The taxation policy continues to be on neo-liberal lines with the rich getting richer and the common man languishing due to the iniquitous VAT coming on top of import duties on consumer goods of everyday use and, the fall in wages and income of the common man. The Department of Inland Revenue is being told “Let them (the Capitalists) pay what they can, believe them, trust them and win them over without treating them as rogues” ( PB Jayasundara – Sunday Observer 28-11-2010 )
The further relaxation of foreign exchange regulations in a bid to attract FDI are bound to have a severe impact on our Capital Account already loosened last year.
The development of physical infrastructure is aimed at furthering capitalist development and linking the country’s economy to the imperialist globalisation chain. The country’s economic growth is wholly dependent on the export sector, migrant labour and tourism. There is no appreciable increase in allocation for the development of social infrastructure such as Health and Education.
That the Budget has been formulated after the Article IV Consultation with the IMF is clear from the statement issued by the IMF’s Executive Board of Directors in October 2010. The directors of the IMF appear to be privy to the proposals contained in the budget and welcomed the planned new investment incentive regime, continued efforts to achieve full cost recovery of energy services. “This will require continued fiscal adjustment, a more efficient capital market, and improved business environment. Growth in the medium term will depend on progress in rebalancing the economy from traditional drivers of growth towards exports of service, building on Sri Lanka’s strategic geographical location and comparative advantage in service ” the statement said .
The IMF has recommended a gradual move towards more flexible monetary policy framework greater exchange rate flexibility in both directions. It has called for further efforts to put in place a deposit insurance system, establish a regulating framework for private sector pensions , improve access to bank financing by small and medium sized enterprises and deeper capital market. In particular the development of the Corporate Bond Market will be important for increasing the availability of financing for infrastructure investment, the statement said in October 2010. The 2011 Budget presented in November 2010 is within the policy matrix of the IMF.
The comprador capitalist class of Sri Lanka seeks a partnership with foreign private capital which the Government seeks to attract by loosening the capital account. The political and economic climate in Sri Lanka is not one in which foreign capital cares to operate. If foreign private capital is to be attracted the “climate” has to be radically changed in such a way that foreign capital is given the necessary freedom to function according to its own impulse.. Through the 2011 Budget the Government is laying the foundation to make the “climate” conducive for foreign capital to operate freely in the country.
The country’s labour laws which affords reasonable but important job and income security to the employed at present stand as the major impediment to foreign private capital and, the one demand on which they have been insistent is on the question of dismantling the so-called rigid labour law regime of the country. In view of the stiff resistance of trade unions to this move the advice of the international financial institutions to Sri Lanka has been to first institute social safety-nets and provide social protection to workers in a bid to neutralise possible opposition and then proceed with labour reforms. Apart from being a diversionary sop to the economically beleaguered workforce in the private sector, the government’s proposal to have a pension scheme for private sector employees is really intended to set the stage to bring about a flexible labour market for the benefit of the capitalist class both local and foreign. This is the compelling consideration for the proposed pension scheme for private sector workforce.
The political course of the government is now more than clear with the Budget for 2011. Despite the opportunist Left’s attempts to cover up the meaning of the proposals as not being neo- liberal the general conviction is that this is a Budget that seeks to sustain a system in which people are called upon to look after themselves and the open market to look after the distribution of resources of the social product.
All the proposed measures in the Budget for 2011 are intended to spur investment, create wealth with the hope that it would trickle down to the people, a classic WB/IMF advice. Both the economy and the people are to be “Self – reliant” - the economy absorbing the pulls and the pressures of the global market: the people eking out their existence by their requirements at spiralling prices in the open market with such wages and incomes as they earn. So much for the Left identity in the government !
(The writer is a veteran trade unionist) |
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