National Prosperity: Economic Retardation

By Ananda Ariyarathne | Published: 2:00 AM Jul 21 2021
Columns National Prosperity: Economic Retardation

By Ananda Ariyarathne 

Planning, though it sounds a very complicated task needing super human abilities, is just commonsense. It can be interpreted as the pre-determination of the path to be taken. The destination can be achieved only by taking the appropriate steps, in order to reach the final objective. Each step has to be to achieve a purpose and the total process shall be a cumulative process of such steps. 

Anyone may challenge the position that in Sri Lanka we have total confusion when it comes to planning, but sadly, it is the truth and the whole truth. The main reason is the absence of a proper understanding of the objectives and their priorities. Therefore, all we see will be a hive of activity where no one seems to be idling, but if we go a little deeper, do we realise that its seriously and rationally objective oriented. 

The result can be negligible. It would remind one of the saying that it is just like “Giving birth to a mouse after having labour pains for a mountain.” The deficiencies we are confronted with, as a Nation, account for the efficiency losses. It is a situation graver than it looks as the needs are not frozen. We are a very rich country having enough resources to generate the wealth our Nation requires to make a comfortable life for all. 

But, we are a set of scatter brains when it comes to the need to identify a process that can make use of the resources we have for the utilisation in the most ideal combinations. Although we do not give it due attention, there are certain key sensitive factors and out of these, the most prominent is the actual ‘poverty level’. Our experts blindly follow what those specialists in Western Economies identify and for that matter, even the assessment of the ‘Poverty Line’ is decided and applied according to the norms specified, by them. 

Symptoms 

The economic indicators are based on assumptions and the interpretations and declarations are naturally over generalised. The chain reaction that follows is the expenditure budgets of our country are totally unproductive and challenges the Government to resolve it with the inevitable increase in ‘direct’ as well as ‘indirect’ taxes. 

This situation is further aggravated by the inefficient export marketing that results in the weakening of the par value of our currency on one hand and it is further complicated by the erosion of foreign exchange reserves, becoming the main avenue for weakening Sri Lankan Rupee. This where the pathetic picture of the Exports darkens the sky of our economic capabilities while the equally pathetic import substitution weakens the external resources further ending up with the ever escalating costs of imports. 

Imagine the gravity of the situation where the requirements for the ever essential requirements of the petroleum bill which compels the regulatory authorities to increase the prices locally, sending our experts to runaround screaming to look out for the scapegoats to save faces. This paves way for a sickening drama aimed at the objective of finding someone to be blamed. In the meantime, the whole pricing mechanism gets affected and the citizen is burdened with the over loaded costs dragging them from the frying pan to the fire. 

As usual, the citizen first grumbles and then curses someone according to the personal political affiliations and the rippling effect dies down to a position that gives the impression that there is no problem. So, the cycle remains, with the values indicated getting higher, causing more and more grievances. 

The scene is further enriched by some political jokers utter explanations they themselves would not understand, by making the best use of multi-media and escaping the wrath of the citizen once again, thinking like the ostriches hiding their heads in holes so that they do not see the hunters.

 Economy Retardation Syndrome

It is obvious that we have not found a remedy for this syndrome. Every time it’s indicated it’s getting better, in reality it’s getting worse. Instead of suppressing the realities and preventing openings that prevent decision-makers from seeing the truths. It is high time our President somehow finds time to look in to matters more dissected so that he will notice the pitfalls which normally get camouflaged. 

This phenomenon has become a system that has become an incurable infection the way it looks. In this framework, the whole society gets numbed and helpless, and only those who would understand figures would note the changes but such will not be effective towards themselves even. It is a kind of a cancer that has come to stay. 

False sense of confidence 

This is the most destructive aspect as it does not allow those responsible to see reason and think rationally. Worse is the organisation of meetings for those who are supposed to be in the field trying to enforce and implement. The moment it is felt that there is nothing wrong, the same process continues.

The time and other resources get wasted and naturally, there shall be no benefits generated. It has been further affected by the misunderstood administrative concepts that were left behind by the British Rulers when they were leaving their systems which were very efficiently done in maintaining infrastructure. 

Meticulous planning and the procedures maintained a very high level of Accountability and Responsibility. One may raise the question then, that strictly following those regulatory procedures would not have created any negative developments. In other words, the whole country was managed more or less as an estate to support an economic process that was controlled completely by some ‘Sterling Companies’ and the revenues were available for the maintenance of the existing infrastructure-related facilities. 

The economy was totally dependent upon ‘plantation agriculture’ and the only finished product produced here was Tea. All the other exports which earned foreign exchange were limited to producing raw materials for industries in the United Kingdom. There was no need for promoting any industrial products as all those were supplied by the British Companies and a few local Agents. 

That reduced the responsibilities of the government here to be concerned about the basics only and the government had more or less a maintenance role. The biggest concentration of efforts was in paddy cultivation that reduced the need to import rice as it was the largest merchandise imported.

 The concentration on irrigation and agrarian services had already become the most important tasks for the government while the existing roads were maintained by the Public Works Department. The rest of the main activities were related to the essential services. Public Health and the Government Hospitals and Dispensaries, School Education, Police, Judicial System including Prisons were more or less the main areas focused. The quiet transition that made the local political leaders to take over the mechanism did not produce any drastic necessities. Budgetary needs were also fairly limited as the security and international complications were almost not there.

Role played in Economic Development 

As an independent country Sri Lanka, initially had no complicated issues other than the need to carry forward the welfare policies and the first major incident took place in 1953 with the protest initiated by the leftists and it was a sign of more complications that could be anticipated. But, the expectations were not that complicated. The increasing population and the related needs that started getting added up did not cause much concern. Now, let us stop for a while and see how the Government Mechanism coped with the new challenges which were mainly related to the inevitably increasing government expenditure.

 The Ministries and Departments, kept on following the systems that existed and the challenges were translated into the monetary implications and we shall note that the traditional solution of increasing taxes did not look like an unusual requirement. Restricted to the activities of the traditional economy, did not demand the administration system to exert on looking out for the solutions as it had been reduced purely to a matter concerning Accountancy. Planning was completely an unimportant task. 

With the increasing population and the relevant essential needs, it was a case of ever increasing government expenditure. Inevitable reaction was the trimming of some benefits offered to the people on one hand and on the other, slamming duties and levies became a normal trend. But, unfortunately, we are still depending on the strategies and processes practiced in practicing expenditure budgets. Revenue is determined by the deficits. 

Although, the popular identification of ‘Deficit Budgeting’ as a strategy to energies revenue generating resources, those have always been restricted. As the required funding came from external resources that became possible due to huge donations mainly, the final outcome became contributory only towards Government Revenue and the best examples for such can be noted as the major hydro-electric projects which became capable of adding revenue. 

The impact of the gained additional capacities helped in accommodating the ‘power demand’ of the nation and it is definitely very scary to think about even, if we try to get a realistic picture about the cost we would have been destined to care if we did not have the hydro-electricity but had to solely depend on ‘thermal electricity’. It is very clear that, we do not have a serious plan to stabilise the situation even, especially if the potential alternatives can be given serious consideration.

 It is because our great planners are either clueless and not willing to ponder into such unexplored areas. It was in the news about the potential of the petroleum reserves in the “Manner Basin” but, we are simply waiting for the big fortune arrives with Santa Clause bringing in the solutions. How many of our planners have studies deeply about the petroleum potential in the Mannar Basin? We are just spectators in the affair as the Indian Planners have already started exploiting the valuable natural resource but not through any off-shore drilling. 

Presently, they are busy in the Kaveri Basin which is linked to the Mannar basin. The international Boundaries shall not affect the petroleum in the liquid form as it is a matter to be decided by the simple theory of gravity. While we wait thinking and hoping or a benefactor, India being thirsty consumers shall not relax. It is a matter that is linked to simple economic needs, national security and global politics and therefore, the planners have to be conscious about all those. 

If Sri Lanka can find answers to the problems of the Power Requirements of the nation as it is the main costhead in our national cost. The unreasonable freedom granted to Free Economic Practices is the second villain that has retarded our progress. Have we ever had time to think about how the valuable foreign exchange is wasted for ‘scrap’, thinking as our moneyed people have thought of such would be good investments.

 In a sophisticated automobile market for used vehicles, our great traders provided ‘dumpyards’, in Sri Lanka for vehicle scrap, with the blessings of Free Economic Practices. In the meantime, the potential of the rural economic resources has been ignored. 

It is because of the traditions we have inherited with our so-called Independence. There is a grave need for the Revitalisation of the rural economy but the same ailment has prevented the planners from thinking radically. If we can make all our productive forces on a Micro Level and harness the potential of the Cooperative Movement, we shall have found the solutions.

By Ananda Ariyarathne | Published: 2:00 AM Jul 21 2021

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