Juggling with many balls
Editorial-November 22, 2015
There has been a mixed reaction to the government’s maiden budget Finance Minister Ravi Karunanayake presented in Parliament on Friday. The government calls it progressive, but the joint Opposition and the JVP have torn it to shreds.
The Budget 2016, on the positive side, seeks to offer something for everybody. Prices of eleven commodities including gas, and kerosene have been brought down; funds have been increased for research and development, PAYE tax free threshold has been raised to Rs. 2.4 mn per annum; the private sector has been urged to effect a pay hike; undergrads are to be given interest free loans to buy laptop computers; new hospitals are to be built; a call has been made for introducing a five-day week work culture; the education sector is to get more funds; relief has been given to senior citizens; 1980 July strikers are to get Rs. 250,000 each by way of compensation and stamp duty on credit cards for local purchases and the withholding tax on interest have been abolished. These relief measures are certainly welcome. But, it is too early to say whether they will translate into votes at the upcoming local government polls .
On the negative side, the government has proposed to exit either partially or fully from investments in ventures like Lanka Hospital, Mobitel, Grand Oriental Hotel, Hilton etc. It has also decided to introduce a contributory pension scheme for the state sector employees to be recruited from next year. These moves will be grist to the mill of the joint Opposition which has warned of a government move to hand over the expressways to the private sector. Besides selling off family silver, the government is now planning to dispose of brass, copper and steel items (‘lying in the form of scrap’ at ministries and departments)! Farmers are protesting against the guaranteed price for paddy, which they consider low, and the replacement of subsidised fertiliser with a cash grant. The proposal to remove tax on the leasing of land to foreigners etc has raised many an eyebrow. It is also doubtful that schoolchildren will get new uniforms if vouchers are issued to poor parents in penury.
Although the prices of some commodities have been reduced the question is whether they will be freely available at the specified prices except gas and kerosene. If is feared that the proposal for a private sector pay hike will lead to the curtailment of welfare measures and other benefits.
The government decision to abolish the duty-free vehicle scheme for public officials as well as MPs has been hailed as a sensible move in some quarters. But, the members of the present Parliament are believed to have already got their duty free vehicles. Will the government tell the public whether any of the MPs elected or appointed last August will be affected by this particular proposal?
The Finance Minister said the present government had inherited a rupee which had been overvalued due to the economic mismanagement under the Rajapaksa government. But, in justification of the government decision to revise the exposure of government securities for non residents from 12.5 per cent to 10 per cent he said he wanted to provide Sri Lankans with the opportunity to invest more in government securities and help ‘mitigate fluctuations in exchange rate due to sudden withdrawal of funds by non-residents as witnessed in the recent past creating an undue strain on the reserves’. Will the government explain why there were sudden withdrawals?
The rupee devaluation has stood the Sri Lankan exporters in good stead and the government has requested them to bring as much as USD 3 bn they are keeping overseas without letting ‘Mother Lanka’ down. Isn’t the government being naïve?
The government’s declaration that it won’t go ahead with its grand plan to amalgamate the EPF and ETF without the consent of the trade unions and other stakeholders is to be appreciated. But, whether it will remove the two funds from the Central Bank has been left unsaid. The Finance Minister said on Friday that the government had initiated a process to review laws in respect of EPF and ETF among other things. Workers and their unions ought to take cognizance of these proposed reviews!
A proposal has been made to install a traffic encoder free of charge in every registered vehicle in the country purportedly to help manage traffic better, deter theft and improve security. But, will this be the first step towards introducing a road tax.
The proposal to increase the number of police stations in the country from 428 to 600 has puzzled many. Even the Rajapaksa government which was accused of running a police state could manage with 428! The government should explain why it has decided to do so.
Making the budget work is like juggling with many balls. The onerous task before the Finance Minister is to keep all the balls in the air. Each ball dropped will cost the government dear politically.