National Prosperity Development Planning and Budgets

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By 2017-12-14

By Ananda Ariyarathne

National Prosperity is not a condition that appears automatically as it is the ultimate result of overall inputs of national efforts made in a well-planned and coordinated manner as a combination of remedial measures that would bring in the most ideal solutions. It may be only in heaven or a paradise that prosperity need not be pursued as it is there already.

In Sri Lanka, it is a very commonly misused term and therefore, has none of the mentioned features as plans are made more as a ritualistic administrative function while annual National Budgets which have to provide guidelines required to ensure the path of progress, is more or less a glorified concoction that has given a camouflaged appearance to a kind of State sponsored extortion.
National Prosperity

Prosperity is 'well-being' materially as well as psychologically. The psychological prosperity is the level of happiness that depends on contentment and that in turn shall depend on the availability of the bare minimum and the basic essentials such as, food, shelter, clothing, conveyance and health facilities and opportunities for the development of skills needed for survival.

That in turn shall give a sense of satisfaction with time and resources that can make members of society comfortable in spending their free time positively through entertainment which makes it a richer environment where they will have opportunities for all to live a blissful life.

That is a direct result of the level of affluence in a Nation and that in turn is linked to the revenue earning capacity, by being able to contribute their productivity so that they are assured of sources of revenue. That means that such a government can have a very effective and a people friendly taxation system in order to provide essential expenditure linked to maintaining Government facilities and services. Public services are run as serious commercial services and not as burdens which are inefficient and therefore not productive enough for self sustenance.

Taxation is geared without discouraging productivity and the continuity of revenue generation. The key to 'success' is the commitment on the efforts to optimise the productivity. Prosperity and productivity go hand in hand.

Colonial Powers like United Kingdom had wealth pouring in and its positive effects naturally resulted in the best living standards.

The trading that developed first in the capacity of 'colonial partners' continued even after 'Independence' in colonies, and all the Foreign Exchange earnings were generated resulting in a mutually beneficial relationship but tilted more towards the former 'colonial masters.' The status of 'affluence' did not change as a result of the new relationship as the 'basis for value exchange' did not change at all. The 'Colonial Masters' could still rake in more revenue with their exports into the former colonies which had to go through a continuous struggle to make ends meet. The 'export markets' for those colonies for raw material and agricultural produce had to plan for prosperity with revenue from unpredictable markets. Although not understood, it was the naked truth.

Post War Changes

The British Empire gave into the popular movements for independence, as in Sri Lanka. The Socialist Block that influenced the whole globe openly helped Anti Imperialist armed struggles in Africa and Asia. The special support given to Japan helped it became a giant industrial nation in Asia.Sri Lanka, hopeful of becoming a strong country along socialist lines imposed strict import controls and economic policies to nationalizing the Estate Sector which saw to the emergence of new African nations promoting crops like tea. In short, the little advantage Sri Lanka had with the reputation for Pure Ceylon Tea started getting clouded with new teas coming from Africa.Sri Lanka, on one hand had an increased population to look after, with fewer opportunities for Foreign Exchange earnings. The import substitution policies of Sirimavo Bandaranaike's Government was a desperate attempt to conserve the little foreign exchange while new policies to encourage exported value adding industries became a success story under the guidance of Dr. N.M. Perera. That earned a name for Sri Lanka as a quality export oriented readymade garments manufacturing nation. It opened up avenues for increased trading with USA too. The smooth run was soon over when USA imposed quota systems. Export oriented readymade garments became the largest foreign exchange earner. But with the opening up of the economy in 1977, the little reserves of foreign exchange Lanka had disappeared in no time. The free market that was left after all the changes, survived through an expensive thirty year secessionist war and international interference saw to it that Sri Lankan exports suffered too. It is now eight years since the end of the accursed war which bled this nation dry. Sri Lankan economic history in brief is something like that.

In the meantime, even those affluent Western countries also started losing due to new economic powers. With the destabilization of Western economies and uncertainties and chaotic political situations prevented Sri Lanka from taking drastic decisions.

Economic Development

Sri Lankan realities never improved from the time of Independence. The materialistic development that can be seen is quite deceptive as it is a result of the impact that comes connected to the efforts to stay on par with the developing standards of the world. It is an aspect which has become a kind of an additional burden, in reality. In that process, the main Sri Lankan experts have always failed to note that systems that may look and sound as indicators of success in the so called prosperous nations are not necessarily the most ideal to be accepted and followed in Sri Lanka too,.As a small nation with limited resources, Sri Lanka has a very limited scope in enhancing her national revenue which can be attempted only under two categories, namely the development of Sri Lanka's agricultural potential and through the opening up of avenues to value addition industries to be based on raw material from other countries to make the best use of human resources. At this moment it is just wishful thinking only as the planning is done without taking such serious aspects into consideration.

Due to the open economic policies and invasion of high tech agricultural machinery and the extensive prominence given to artificial fertilisers and pesticides, it has turned even domestic agriculture into a highly costly activity. It has become inevitable with the non availability of domestic farm labour.

Excessive use of farm machinery and chemicals in agriculture has been more negative and destructive than indicated. Except for natural equipment (E.g. Water Wheels made of bamboo), all others have added costs to production while affecting people negatively. Farm mechanization has made thousands of people unemployed thereby depriving them of a decent living, added costs of fuel needed for making those machines work and maintaining them. Those costs are added on to the cost of the produce up to the point of reaching the consumer markets while leaving behind sections of rural people as unemployed and not suitable for any other professions.

The extensive use of chemicals has resulted in people suffering from chronic kidney ailments which have now grown to scary proportions, while the destruction caused to flora and fauna is great. Above all those, the ever rising import prices due to the loss of Rupee value has made it costlier.At the same time, able bodied rural youth have been attracted to urban regions and even the limited numbers which have remained in rural regions have started demanding higher pay, discouraging land owners. Both ways, the possibility of reviving rural agriculture has become a very remote possibility.

The situation is further complicated by the absence of logical and strategic planning. The way national Budgets are prepared, it is obvious that the National Experts are clearly clueless. Instead of planning ways to muster locally available resources, to be utilized through a very cost effective system, the whole economy has been engulfed in cycle of self destruction.The absence of measures to revitalize local agriculture itself is an indication that even the Finance Minister has completely ignored this matter which needs priority attention. Strictly and blindly following Open Economic principles, the Budget does not have any kind of incentives offered to encourage 'Subsistence Agriculture.' The possibility of reviving the concept of 'Self Sufficient Rural Economies' has been completely ignored.
In the paddy sector alone, great strides could have been taken if proper encouragement had been planned with a focus on the mobilisation of human resources as a measure to reduce the cost of labour.

Failures of Budgets

Budgets should be the most accurate and effective tool that can be put to use, in gauging the progress achieved in national planning for prosperity. Can we think of a single instance where a Budget has reduced the burden of the people? Although there could have been some isolated price reductions, they are like some 'pain-killer balms' made available to impose some anaesthetic effect on people.

Role of Annual Budgets - To be continued

Photo Credit: Institute of Policy Studies

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