14 December 2014 06:35 pm Views - 3359
There appears to be a certain misunderstanding within the Maithripala Sirisena camp about why Sri Lanka needs a political change.
The country needs a political change, not for economic reasons (Rajapaksa is good at it), but for democratic reasons, and for that matter, for the reasons of good governance, accountability and respect for human rights.
The common Opposition candidate has given all the good promises to uphold democracy, but, if he fails to have a grasp on the intricacies of economy, his good promises, assuming that he delivers on them, would end up in the drain.
He should not upset the economic apple cart. His forthcoming four-page manifesto, which is to be released on December 18, promises, among other many good things, to cut down petrol price to Rs. 50 a litre, bring down prices of other petroleum products, double the Samurdhi benefits, write off loans given to the Public Sector employees.
Nothing wrong with them, except for they cannot be implemented without having a dent on the economy.
This year, after incurring losses in successive years, the Ceylon Petroleum Corporation (CPC) made a profit of Rs. 2 billion. CPC incurred Rs. 94 billion (1.4 per cent of the Gross Domestic Product) in losses in 2011, Rs. 95 billion in 2012 and Rs. 6 billion in 2013, by selling fuel at subsidised prices to the State owned institutions. The Opposition leader, Ranil Wickremesinghe himself earlier alleged that every Sri Lankan is indebted to the tune of Rs. 12,500 due to the CPC losses. Four State institutions - CPC, the Ceylon Electricity Board, SriLankan Airlines and Mihin Lanka account for 98 per cent of the losses of State institutions, according to the Parliamentary Committee on Public Enterprises (COPE).
Surely, the Opposition candidate has not calculated the economic cost of his promises—and also their long term implications. He is provoking the voracious appetite Sri Lankans have for subsidies.
This is a country that toppled governments for reducing the rice ration in the not-so-distant-past.
In the first place, even taking into account the 40 per cent dip in oil price in the world market since June, the government cannot sell oil at Rs. 50 a litre without subsidising it.
Therefore, the government would have to resort to the dangerous past practice, which saw fuel subsidies, among a wide range of other subsidies, eating away a significant portion of the government revenue, forcing successive governments to divert vast sums of money from investment to consumption. That is why our infrastructure is in such a poor condition. Such expenses also constrained the government from investing in more economically and socially important areas, such as education and health.
Second, Sri Lankans have not asked for petrol at Rs. 50. Therefore, Sirisena should not reignite a disastrous cycle of dependency, which cursed this country during a greater part of its independence.
Once put in place, it is extremely difficult to dismantle a culture of subsidies. India and Indonesia, which struggle to get rid of their crippling fuel subsides, are a case in point.
Third, despite the shortcoming of our political structure, the role of successive governments since the Independence as a distributor of public good has been commendable.
Very few countries in the developing world could claim to have extensive Welfare State such as ours.
That we fail to take note of it, itself is proof of the extent the system has been taken for granted.
Of course, our Welfare State can be further optimised in areas it lags behind, such as the disparity in the distribution of resources in education, health, or modernising those key sectors.
But it should not be burdened with bloated subsidies- which have neither economic nor welfare logic- beyond the limits that are financially viable to sustain it.
Mr. Sirisena may be trying to do that.
Perhaps he should allow the UNP, a party that has good economic managers, to handle the economy and focus himself on delivering his promises on democracy.
Assuming that he is an honourable man, who would stick to his word, he can abolish the Executive Presidency, for which he is expected to give a timetable in his December 18 manifesto (or prune its abusive powers), set up Independent Commissions, ensure Judiciary Independence, uphold media freedom and the dignity of the common man and reform the existing nepotistic political-economic structure.
He could also serve as an arbitrator or a moderating factor of the urge for absolutism of a future government.
Mr. Sirisena, obviously come from the political old school; of which members, despite having constrained themselves in the exercise of the State power for personal benefit (unlike their modern- day counterparts), place a greater emphasis on the role of subsidies. However, the effectiveness and in fact, the necessity of a good deal of subsides have progressively diminished with the gradual increase of the GDP per capita and the reduction of poverty. (One should question the logic of why one- third of Sri Lankan families are drawing Samurdhi, when the official poverty rate is around 6 per cent. That, in fact prevents the most vulnerable of people from being supported by the government)
The incumbent government is obviously corrupt, nepotistic, and autocratic and its inner circle has got rich, courtesy public money. But, at the same time, they have been good economic managers.
They have kept the economic growth over 7 per cent since the end of the war and transformed the country’s infrastructure landscape.
In fact, the State- led infrastructure development account for a substantial share of the economic growth. Government’s mega projects are over–priced, lack transparency and accountability, but absolute benefits that Sri Lanka would have from its infrastructure drive overweigh the relative cost that stem from corruption and other irregularities.
Why Rajapaksa should go is not primarily because of economic reasons. He is good at it, and in fact, he is far better than his predecessors, including the UNP, in getting things done.
Sri Lanka wants him out because he trampled on democracy and turned the country into his and his family’s personal fiefdom and harbours dangerous dynastic ambitions.
Maithripala Sirisena should undo the damage that President Rajapaksa inflicted on Asia’s oldest democracy and resurrect it.
Doing that is not an excuse to undo Rajapaksa’s economic performance. Any hint of such would make Maithripla a less viable Presidential candidate.