Editorial

Ranil’s Crown of Thorns

The astronomical statistics indicating losses and deficits in government income and expenditure last year, as revealed in the Central Bank report for the third quarter of last year, and the document released by the government on Monday, indicate the tortuous crown of thorns that has been placed on him.

Despite the rosy picture painted of the economy by former Deputy Minister of Finance, Prof. G.L.Peiris, in budget speeches - poor man he had to read out the speeches written out for him by President Kumaratunga as revealed by her - the economy is in shambles. Last year’s economic growth has been projected by the government document at - 0.5 per cent. A serious study should be conducted on the glowing statistics of the previous years, presented by state institutions, particularly on the reduction of the rate of unemployment and inflation.

According to the latest Central Bank report, last year’s economic debacle was mainly caused by perverse weather gods and the hostile international economic environment. Failure of the monsoons had resulted in low outputs in agriculture as well as power generation. To a certain extent this is correct, but the impact of adverse weather conditions could have been minimised such as by providing better marketing for agricultural produce which the People’s Alliance pledged to do in 1994 but failed all the way. There were numerous reports during this period of farmers, who had successfully cultivated their crops but were unable to sell their produce such as tomatoes, committing suicide.

The power crisis, top officials of the Electricity Board maintain, has not been caused by the failure of the monsoons but by the failure to implement the plan for power generation drawn up by the CEB and having new power plants installed at the required times.

There are tremendous challenges before the new government. Can the new government implement a system of marketing vegetables produced in the provinces? A solution to this problem has defied every government since Independence. It all depends whether the government is willing and capable of cracking down on the mudalalies of the Pettah vegetable market, who are interlocked with lorry transporters. This is a tough task because Pettah mudalalies are strong backers of the UNP.

There are innumerable bold decisions that Prime Minister Wickremasinghe will have to take risking adverse political consequences. The power crisis is the result of objections placed by the environmental lobbies on power generation projects such as the Upper Kotmale Hydro Power project and the objections of the Bishop of Chilaw, Rt. Rev. Frank Marcus Fernando, against the installation of the coal power plant at Norochcholai. Previous UNP governments were bold enough to overcome such objections to projects such as the Kandalama Hotel and the VOA transmitting station at Iranawila. All the fears and prejudices expressed against these projects by environmentalists as well a religious leaders of many faiths have now been disproved. The new UNF government will have to adopt the same bold policies as they did in the past and go ahead if they are to succeed.

Statistics presented by the government on Monday also indicate colossal losses incurred by public enterprises such as the Petroleum Corporation (Rs 21,500 mn), CEB (Rs 15,600 mn), CWE (Rs 8,320 mn) Railways and Postal Department (Rs 2,300 mn) and CTB (Rs 2,100 mn). While the Railways, Postal Department and the CWE have been making losses down the years, the Petroleum Corporation and CEB were mainstays of state revenue at the time the PA took over in 1994. The reasons for the CEB and Petroleum Corporation losses are known and what is called for is an immediate crackdown. The challenge will be to keep wheeler-dealers out and clean up these institutions of corrupt officials. They can no longer be used as state institutions providing political thugs for the ruling party.

The government should also adopt a sensible attitude in earning revenue. Excise taxes have dropped by Rs 3,404 mn because of policies adopted by the government. The stringent measures adopted against sale of cigarettes can be appreciated, but are they achieving the stated objectives? What has happened is that the state is losing a tremendous amount in the form of tobacco taxes while crude and cheap cigarettes are being put into the market by small-time entrepreneurs who do not pay any tax.

We have pointed out before the failure of the government to impose piety through government fiat on the sale of alcohol. It has reached such ridiculous proportions that sales from bars and liquor sales outlets were banned last Christmas Day without any Christian organisation calling for it. Ban on sales of liquor is being imposed by Excise department officials at their will and pleasure without even gazette notifications for every religious occasion and political event.

Meanwhile, moonshine dealers do a roaring tax-free business by selling rot gut liquor which is by far more injurious to health than liquor produced in accordance with regulations. How much the state loses in the form of excise revenue and treating kassipu victims free in government hospitals should be computed. Recently a trade chamber worked out that a colossal amount of revenue could be collected if illicit manufacture of liquor is taxed. The role of this illicit industry in criminalisation of politics is well known. It is well known that the infamous Al Capone of Chicago was finally nabbed not by police office but by Inland Revenue officers!

The new government should consider deploying excise and inland revenue officers not only against kassipu dealers but also whisky smugglers who provide more than an estimated 90 per cent of whisky consumed, at less than half the stipulated prices.

Mr. Ranil Wickremasinghe is known to be a man who does not play to the gallery. We do hope he adopts pragmatic and rational measures to pull the country out of the mess it is in. That is the only way he can rid himself of the Crown of Thorns the previous government and President Kumaratunga have bestowed on him.


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