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Survival With Austerity For Development

The budget presented by the Finance Minister and President to Parliament on Thursday, would certainly be praised for the sheer macro economics statistics cited. The growth rate of the economy has been estimated at 7.5 percent to 8 percent.

That is indeed a stupendous achievement which could rival or even beat the highest growth rates in the world; certainly beating India and even overtaking China, countries that have recorded the highest growth rates in recent years. The budget deficit has been maintained at 5.2 percent which would make the mandarins of the IMF and World Bank tap our economic wizards on their shoulders and ask other developing countries to follow our example.

Meanwhile the rate of inflation is projected to be at a ‘mid single digit level’ i.e. between 5 to 6 percent. Most ordinary mortals do not comprehend these economic indices that flow from the tongues of politicians and bureaucrats ever so often. However, since we have reached the highest levels of growth in the world beating even China which is now the second biggest economy in the world, these statistics should mean something to the ordinary folk of this land.

The Budget 2014 has been projected as a ’Development Budget’ as opposed to a ‘Consumer Budget’. What this means is that the resources of the state would be deployed more towards long term development than for consumer interests. The man in the paddy fields, plantations, on the streets and in offices (state and private sectors) and retired persons who now comprise a sizeable proportion of the population however are looking for immediate relief.

According to UNP economist Dr Harsha de Silva there have been serious cuts made in subsidies such as the fertiliser subsidy and school uniforms by 49 percent and 29 percent respectively. This is because state revenue is falling and therefore expenditure has to be cut.

There is also to be a food tax revenue increase by Rs 13 billion through the Special Commodities levy, the super market tax revenue of Rs 15 billion and a ‘reload tax’ by another Rs 4 billion.

These taxes on fertiliser and clothing, etc., will be heavy burdens on the middle and lower middle classes struggling to make a living. For them infra structure development that passes them by on superhighways in luxury vehicles will have no meaning if their hunger is not appeased

State employees who demanded salary hikes of Rs 10,000 a month will instead receive increases ranging from Rs 1,200 to Rs 7,500 a month; they will no doubt raise a howl of protest since the bulk of them will fit into the category of Rs 1,500 a month. Apparently the government’s strategy is to make the public tighten their belts at the cost of national development. While the state employees will receive an increase of Rs 1200 as a cost of living allowance but not a salary allowance what happens to private sector employees who will receive no salary hike at all?

Although the belief is that private sector employees receive much better salaries than those in the state sector, this is not necessarily true particularly to those at the bottom of the salary scales.
A Pay Commission has been appointed on the question but employees will be wondering how soon this Commission will be activated and when their report will be made and of course what their recommendations would be.

No mention has been made of the vast amounts of revenue lost through waste, bribery and corruption.

There are clearly identifiable state institutions gobbling up billions to which the tax payer will be the ultimate contributor.
A laudatory measure is the revival of pensions for farmers, the scheme which was scrapped   a few years ago.

Those who toil in the fields their entire lives to feed the nation certainly need to be cared for in their feeble days.

‘Development Budgets’ necessarily result in calls for austerity among the ruling class, the super rich and even the bureaucracy. The less fortunate will comply willingly or unwillingly to austerity measures if their rulers and bosses are seen to be leading austere lives.

2 Comments for “Survival With Austerity For Development”

  1. VOX POPULI

    SURVIVAL WITH DEVELOPMENT?

    OF WHAT USE ARE PAVEMENTS ROADS AND PARKS?

    THE ORDINARY MAN CANNOT SURVIVE.PROLIFERATION OF BEGGARS

    WHAT BLOODY GOVERNMENT WHICH CANT GIVE A MAN A SIMPLE
    BREAKFAST “PAAN PARIPPU POSAMBOL AND TEA”

    THEN THE OTHER IS THE PROBLEM OF DRUGS.

    THE LTTE COULD NOT GET ME, BUT MAY NOT SURVIVE FOR LONG WITH THE
    SPEEDING MOTORISTS, THE HIGH COST OF LIVING AND WHEN ILL
    THE COST OF MEDICATIONS..

    THE ONLY BENEFECIARIES ARE RAYMONDS AND JAYARATNES!!!!!!
    WELL THAT IS IF YOU CAN AFFORD.

    THE REST LIKE YOU AND ME IT WILL BE A MASS GRAVE LIKE THE ONE
    IN MATALE, WITH “GOTA” IN CHARGE AND THE THE “RELIGIOUS RIGHTS”
    EVEN IT IS NOT THE CORRECT RITES BY “GALABODA”

    DOES IT MATTER , THE ABODE IS HELL FOR THEM.

  2. DMR Gunawardene

    People are getting poorer in tnis country.

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