The Way Ahead For The Next Government On The Economy

By R.M.B Senanayake -December 8, 2014

R.M.B. Senanayake

The two main contenders for the Presidency have paid their deposits and the campaign will now get into high gear. They may present their manifestos for the future. The economy has not figured much in the debate so far.

Living standards

The economy has been growing reasonably even if one discounts the exaggerated figures trotted out by the authorities for 2014. But although the statistics have not yet disclosed the economy may be slackening. But what made it grow. The growth was not driven by exports although exports have grown last year. We earlier had an average yearly growth rate of 6% and it has definitely increased. But the quality of growth is as important as the magnitude. Have the living standards of the ordinary man- the farmer and the urban worker improved? The much touted Per capita income of $4000 is misleading. Firstly it refers to nominal income and not real income. Secondly it is converted to dollars at an over-valued Exchange Rate. A statistician it has been said is one who says I ate half a chicken when I ate a full chicken because my neighbor ate nothing and the per capita consumption was half a chicken. Similarly our per capita income figures do not really represent the incomes of the poorer segments since it is an average. A better measure is from the Household Expenditure Survey which reflects an income about half such value. Although the poverty figures have come down drastically they are based on a poverty level determined by the Statistics Department. But with continuous inflation even if it is low, the real incomes get eroded and the poverty minimum has to be revised upwards.

The price of rice is too high. There is malnutrition among mothers and children. The poor depend on the government health care system and it has eroded because of a lack of budgetary allocations to maintain the expenditure in real terms. The educational standards in the government schools which are patronized by the less affluent people, has deteriorated again because of the insufficiency of budgetary allocations. The quality of education in schools depends on the quality of the teachers. But teachers are appointed and transferred on their political affiliation and not on their competence or the needs of the schools. Unqualified teachers are appointed on political patronage and the teachers with political influence decide where they want to be posted for service instead of on the need for teachers in the backward schools. The quality of university education has suffered because the Universities are not allowed to manage them. Instead the Minister and his minions decide on matters of university administration. The Minister decides on the numbers to be admitted to the universities- a practice unheard of elsewhere in the world. The Minister seems to be interfering even in matters of university curriculum a matter handled by a special university official called a Provost. The universities have no freedom to manage their affairs. Meanwhile the Government is permitting the establishment of private universities for the affluent while messing up the State university system. So the children of the less affluent will suffer in the competitive race for jobs.Read More