By a spokesman for Sihala Urumaya
I was quite intrigued to read the so called economic analysis of party manifestoes of someone in the guise of an Analyst (who shall hereafter be referred to as A) A has picked up a few items of the manifesto of Sihala Urumaya (SU) quite out of context and attempted to distort them with a view to malign Sihala Urumaya and boost up the UNP. This is evident from the fact that he has not referred to the manifestoes of parties other than these two, and the JVP, which too he has belittled. If A had read SU manifesto in its entirety and understood the Sinhala in which it has been written, he would not have made those sweeping statements which lack any depth of analysis.

Let me start where A ends stating that "We should vote for a party that promises good governance, that promises to balance the budget or at least bring down the deficit to 5 % of GDP, not to a party that promises to give worthless money by resorting to inflation". If A has read the preamble to our manifesto (para 4 on page 4), he would have noticed the emphasis we have placed on good governance. Balanced budgets, of course, are a thing of the past, and a deficit or surplus in the budget depends upon the direction in which the economy is required to move.

SU has not made any promises of dole payments (or in the words of A promises to give worthless money by resorting to inflation) like the UNP or the PA. On the other hand it has made several proposals to release a significant volume of resources for development such as elimination of corruption, and establishing good governance under a unitary constitution ( see below). A has conveniently ignored, for reasons best known to him, the proposals made by the two major parties which are inflationary

In commenting on the Economic Policies of SU, A starts on the wrong premise that SU is opposed to the open economy. On the contrary, if he has only read the opening para of Section II on National Economy (p.9) he should have learnt that SU is opposed to a closed economy. This is what it says: "In the process of Globalisation, going back to a closed economy is unthinkable; While availing of the opportunities thrown up by globalisation certain safety nets must be in place in order to protect the domestic entrepreneur and the economy from its ill effects" This is, in fact, in line with what 1999 Noble Laureate in Economics, Amartya Sen has said.

A has completely missed the point when he states that SU wants "to escalate the war and protect agriculture". One of the first tasks of SU when it comes to power is to militarily defeat the LTTE terrorist war (I. 3) by giving the proper policy direction to, and boosting up the morale of, the armed forces by eradicating all corruption associated with arms deals and imposing capital punishment on those guilty of such offences (see IX. 3) and putting in command those top, efficient officers such as Janaka Perera and not political stooges. Then the youth will willingly join the forces and no conscription would be necessary to recruit the required additional 20,000 troops..

Moreover, the money saved from the abolition of the Executive Presidency (more than 2 billion), abolition of Provincial Councils (another several billions) and reduction of the number of parliamentarians to 125 and the number of Ministries to 18 and termination of luxury perks enjoyed by them at present including duty-free luxury cars, heavily subsidised meals and automatic pensions (another several billions) would release ample resources both for the war as well as for the development of the economy. Additional resources required to augment the arms newly acquired would be, in any case, much less with the transparency and corruption -free deals, which the SU will prescribe.

Once terrorism is eliminated and good governance is firmly established, investor confidence, which is in shatters today, will be restored and foreign investment and tourists will freely flow in. It is a complete distortion of facts by A to say that SU opposes foreign investment. As spelt out in Section X, foreign investment would be welcome without hindrance within open economy policies but, of course, with safeguards and guarantees that would protect the domestic entrepreneur and the national assets such as Eppawela, which SU will not allow to be sold to multinationals at give-away prices. This is, indeed, similar to the policy followed by our neighbour India.

Similarly SU is opposed to privatisation of commanding heights of the economy such as telecommunication, port facilities, gas and electricity which would enable monopoly companies to make unconscionable profits by imposing heavier and heavier burden on the people. This does not mean that SU places its sole trust on the public sector to spearhead economic growth, as A tries to distort out of its context. However, it is mindful of the role which the public sector has to play in a developing economy like Sri Lanka, in supplying public goods and laying down guide lines, and providing the necessary incentives, to the private sector, and implementing income redistributive measures, for rapid economic growth with equity.

The public sector under a SU government will be an honest, disciplined and efficient management, and will be able to fulfill this role very well, unlike the public sector A has in mind. The question of wasteful and unproductive expenditure "including the money going into the pockets of ministers and their henchmen" would arise only in the latter on which the growth of GDP depends.

(Incidentally, it was shocking for A to have not known that GDP in Sri Lanka is computed on expenditure as well as on output basis and not from expenditure estimates alone.)

Then the statement about the Sampath Bank made by A is a figment of his imagination.

If he has read Section II.O of SU manifesto, he would not have been so naive as not to realise that SU opposes both nationalisation of the state banks and the growth of monopoly practice in the private banking sector, and most of all political interference and politicisation of the entire banking system.

Devaluation has been opposed by a large majority of people including the affluent urban consumer whose cause A seems to champion. Our currency has been fast depreciating owing to bad economic policies and bad economic management. With a trade-weighted floating exchange rate there would be no need to arbitrarily devalue the currency. On the other hand if there were a proper policy for export growth relatively to import expansion, it would be possible to have a relatively stable currency. SU has opposed ad hoc devaluations such as those undertaken under the pressure of international agencies and foreign governments.

SU has, however, not opposed devaluation just for bringing down the cost of living. It has spelt out quite clearly its economic policies and other direct measures for bringing down the cost of living (pp.9-15). Without reading or attempting to understand these pages, A is making wild allegations at SU in regard to protection of agriculture, to further his own ends.

The local producer faces heavy competition from the imports of foods from countries like India, foods produced under heavy subsidies. If Sri Lanka’s farmer is also given similar subsidies he should be able to compete with such imports. That is why we have proposed such subsidies and other measures to lower his upfront costs of production. The producer subsidies we have proposed are permissible within WTO rules, and are in any case temporary until the farmers become efficient and self-reliant with the implementation of the agricultural policies SU has recommended. SU has, on the other hand, not recommended any consumer subsidies as A has once again imagined. A should update his knowledge by reading the relevant sections of the WTO rules on agricultural subsidies and agricultural protection for developing countries.

Alternatively, until such time productivity increases with better input supplies and their management, and the farmer is able to compete in the open market, a guaranteed price and Government collection centres would be the answer. In this context, it must be admitted that domestic agriculture is protected in most countries including more open economies than ours. For example, in USA ground nuts, tobacco and dairy products are protected; in EU, wine, citrus fruits, dairy products, vegetable oils and tomatoes, and in Japan rice and beef.

Sri Lanka’s tariffs are bound at 50 % in the WTO. So Sri Lanka can increase its tariffs also to protect its domestic agriculture. A is more concerned with the high prices the urban consumer would have to pay, with guaranteed prices paid for local produce, than the poverty and deprivation the local farmer suffers even driving him to fast-unto-death or suicide. A guaranteed price as SU has proposed may not even raise the final consumer price but reduce the unconscionable profit margins of the intermediaries. Even if he has to pay a higher price, does it matter? It can be justified as a burden he has to bear in order to contribute to agricultural development.

A has again deliberately distorted facts when he says that SU wants to perpetuate the outmoded and worthless educational system with continuation of Sinhala as the medium of instruction even in the universities. What the SU has stated is that specifically school education shall remain in the medium of the mother tongue as it is now. If English is mandatorily allowed as a medium to some, it will be the Sinhala children who will be at a disadvantage. Only a person who is alien to our culture and heritage and who has completely lost touch with reality would say that school education given in the mother tongue is outmoded. He has only to look around and see the number of people in the top posts of our public administration including the Secretary to the Treasury who have been educated in the Sinhala medium not only at school but even for that matter at the university. Why are not the emerging economic giants such as China and Korea teaching their school children in English? The elitist and snobbish attitude of A is also quite evident from his opposition to free education when he states that" the policy of trying to make everybody middle class by using free education as the instrument is stupid from an economic point of view." (It is obvious whose progeny is studying abroad.)

This does not mean at all that SU is not very mindful of the importance of teaching English, Science and Computer Technology to all our children. It is seen in its recommendation IV (a) 1 on page20. SU is also quite aware of the employment opportunities in software development as seen in its recommendation 7 in the same Section.

The only correct thing A points out is that the war cannot go on without causing hardships to the people but there too, he does not question for a moment why it has gone on and on for more than 20 years under the UNP and PA Governments. SU has correctly understood the reasons for its continuation and pledges to finish it off very quickly, as a matter of topmost priority. Quite out of context here, A attempts to mislead the people, particularly our Christian supporters, that SU is for a theocratic state. SU dismisses

this with the contempt it deserves. SU recognises that Sri Lanka is a Sinhala Buddhist country and its state religion should be Buddhism, as any right thinking person would do, but it pledges to give due recognition to all other religions practiced in the country, as well.