The budget tight rope

As in the case of most budget proposals presented in this country, Budget 2009 too has drawn the customary bouquets and brickbats. But in this neo-liberal age, presenting an Appropriation Bill which would measure up to the expectations of all sections of our polity would not prove to be an enviable task. Besides, there are the ever-spiralling defence and national security requirements of this country which need to be satisfied and meeting the perceived needs of all in these circumstances, we need to concede, could be an exacting undertaking. However, governments would do well to remember that the ‘head’ may not always ‘understand the agony of the stomach’ and meeting the pressing needs of the people in the short and medium terms is as important as long-gestation plans in national development and attempted economic autonomy.

Before we go any further, we believe it would be in the fitness of things to comment positively on President Mahinda Rajapaksa’s efforts to present some extracts of the budget proposals in Parliament in the Tamil language. The cynic could tend to view this gesture as a purely symbolic move which is bereft of much substance but it need hardly be said that in this conflict-ridden land even symbolic gestures could be profoundly important. Nation-building, the crucial but botched job left over from February 4,1948, cannot be conceived apart from national integration measures and moves by Heads of State and government in this country to even symbolically bestow recognition on the languages and cultures of minority communities, we regard as steps in the correct direction. May these symbolic gestures be followed by substantive moves to fully realize nation-building, is our earnest wish.

Incidentally, we notice that the public would be obliged to pay a one percent tax, under the head of ‘nation building’, under the 2009 Budget. No thinking person could grumble about this requirement but we hope real and not merely symbolic progress would be made in the realm of nation-building from now on. For, correctly conceived, nation-building is all about welding the country’s communities into one, indivisible nation.

Getting down to the rice and curry issues in the budget proposals, we notice that a commendable effort has been made by the state to place emphasis on what may be called autonomous economic development. This is the full thrust of moves to increase the import cess on, for instance, fruits and vegetables and to also initiate increases in corresponding levies by 50 percent in respect of such items as, sarees, sarongs, ready-made garments, chocolates and biscuits. The hope is that this would spur local production of such goods.

Once again, no-one could perceive import substitution development strategies to be inherently misconceived or wrong but we hope such plans would be implemented and made to bear fruit in at least the medium term because public patience is likely to wear thin in the event of such approaches back-firing and not yielding the required results in time. The ‘queues and quotas’ era of the early and mid seventies remains an abomination in the country’s collective psyche. Since 1977, when the free market system was allowed to explosively emerge on the national stage, the local consumer has attuned his taste buds to a multiplicity of essential and inessential imports, and getting him to brace for too many import controls could prove bruising for governments. Therefore, indigenous productivity needs to be phenomenally improved if these import substitution plans are to be made to bear fruit. The haunting question is whether the government could make this happen.

Quite understandably, increases in import duties on a number of essentials, such as, wheat flour, milk, sugar and even salt, are having the average consumer very worried. One of the biggest posers for particularly the less affluent among us is whether the Rs.1,000 increase in the CoL allowance and the Rs. 560 payment for pensioners, although welcome, could offset the looming price increases in a wide range of essential commodities, now that imports of these requirements would prove costlier.

The middle class is likely to look somewhat kindly on the proposal to modestly ease income tax payments at the lower end,but would it be a palliative for anticipated, wide-ranging price rises, now that the global economy is in deep recession and there is certainly no guarantee that Sri Lanka would be spared the shocks of knock-on price rises?

The man of the street cannot be faulted for seeing this budget as an attempt by the state to ‘take away with one hand what it is giving with the other’, considering that the relief promised in VAT payments and the reduction in fuel prices are likely to be neutralized by a number of other charges, like the ports and airport levy.

But as long as the country’s defence requirements continue to dizzily soar and Cabinets continue to grow to mind-boggling proportion, with a corresponding ballooning of the state sector, budget balancing in a decidedly pro-people fashion would prove a highly exacting task. The budget deficit currently stands at Rs. 337 billion and it requires no special expertise to figure out that our alarmingly growing defence budget combined with our mega-sized government machinery are contributing significantly to our economic woes.

Accordingly, it is clear that the conflict must be brought to a close if the people are to be provided some respite from their current agonies, although there is no guarantee that the greed of our politicians for the ’good life’ could be assuaged even if a semblance of peace is restored. The Military vs Political solution debate continues to rage but it is all too clear that Sri Lanka is continuing to live and feud bloodily well beyond its means.

The President has, rightly, called on the LTTE to down arms and enter the negotiating process. We hope his call will be heeded but there is no getting away from the need for the state to clearly indicate that it is keen on not only bringing peace but in delivering a reconciliation package which all parties to the conflict would find to be acceptable and sensitive to their sense of self-respect.

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