Economics And Elections

| by
Tisaranee Gunasekara
When the social contract is abrogated, when trust between a government and its
citizens fails, disillusionment, disengagement or worse follows.
!ose"h #tiglitz $The %rice of &ne'uality(
$ August )*, +,*-, .olombo, #ri /anka Guardian( 0ost /ankans do not earn enough to
make ends meet, according to government statistics.
1)2 of the urban "o"ulation, 3)2 of the rural "o"ulation and 4*2 of the estate
"o"ulation do not receive the minimum income necessary to "ay for food and other
basic needs, according to the 5e"artment of .ensus and #tatistics.
A family of four in the urban sector needed an income of 6s. 17,,,, for their monthly
food and other basic re'uirements, while a family of four in the rural sector needed 6s.
)3,18, and a family of four in the estate sector 6s. +7,,,,. And the absolute ma9ority
of families in all three sectors do not earn this minimum monthly income.
:bviously the fancy "ro9ects so beloved by the 6uling #iblings, from Arcade
&nde"endence to /otus Towers, have no relevance whatsoever to the actual lives and
needs of most /ankans.
A hungry man cannot be convinced that his stomach is full. ;ut he can be made to
believe that his hunger is a tem"orary condition. &n the "ast the #iblings did manage to
convince a large segment of the "o"ulace $"robably a ma9ority( that economic
deliverance is 9ust round the ne<t bend.
=o more. As the .%A surveys demonstrated, ho"e of economic betterment has eroded
shar"ly between +,** and +,*) > not 9ust among Tamils and 0uslims but also among
#inhalese.
&n +,**, 3,2 of #inhalese thought the general economic situation will im"rove in the
ne<t two years. &n +,*) only )4.12 of #inhalese thought the general economic
situation will im"rove in the coming two years . A decrease of -12 in 9ust two years
amounts to a radical change in "ublic "erce"tion. A change which can im"act, "erha"s
even decisively, on "olitics, es"ecially electoral?"olitics.
There is a yawning ga" between what most /ankans want the government to "rioritise
and the actual 6a9a"aksa "riorities. According to the .%A #urvey, a ma9ority of
/ankans think the government should focus on cost?of?living, "overty and education
issues. @ancy infrastructure "ro9ects and beautification "rogrammes are not a "riority
for the #inhalese either, who want the government to focus on cost?of?living $14.12(,
health $)).*2( and reducing "overty $))2(.
Aow can "eo"le not lose ho"e given this chasm between what they want the
government to do and what the government is actually doingB
The "ros"ect of a dimmer future is not 9ust a matter of con9ecture but also of hard
facts. According to a confidential re"ort by a ministerial subcommittee, revenue as a
"ercentage of the G5% has been declining over the years. &n +,** revenue was *-.)2 of
the G5%C in +,*+ it declined to *)2 C an even shar"er decline ha""ened in +,*), when
the ratio fell to 9ust **2.
The regimeDs grandiose revenue estimates for +,*1 are thus nothing but "ie in the sky,
Eunrealistic and unachievable.D
The .ommittee also warns against that cornerstone of 6a9a"aksa economics ?
e<cessive reliance on indirect ta<esF G&t is not "rudent to continue our over?reliance on
indirect ta<es and must rely instead on a direct ta< effort. We must ease ta<ing of
goods for consum"tion and services regardless of the "eo"leDs income levels and avoid
"lacing burdens on the "oorer households . The .ommittee has o""osed another
6a9a"aksa habit ? that of giving generous ta< e<em"tions to favoured investors. 0ost
"ertinently, the .ommittee has warned that over time Gneither savings, investments
nor revenue have increased other than generating a higher rate of consum"tion.
&n a nutshell, the 6a9a"aksas "re"are budgets based on non?e<istent revenueC they give
concessions to the rich while im"osing unbearable burdens on the "oor and the middle
classesC their over?reliance on indirect ta<ation is "ushing "rices > es"ecially of
essentials > u"C consum"tion, be it governmental or "o"ular, is based not on earnings
but on debt.
=ot only is the regime wasting the countryDs meagre income on un"roductive, wasteful
and unnecessary venturesC it is also encouraging the "eo"le $es"ecially the middle
classes( to ado"t an e'ually unsustainable living "attern. We have a country, a
government and a "eo"le ensconced in a borrow?and?s"end bubble.
;ubbles do not last. This is "robably the main rational reason for early national
elections.
/ast time national elections were held early, so that the 6a9a"aksas could benefit fully
from the rosy afterglow of victory. This time the main $non?su"erstitious( reason for
early elections would be economics, the fear that in two years, the faHade would have
cracked too much and illusions would be in shorter su""ly than necessary.
Wrong EconomicsC Economic Wrongs
Gotabhaya 6a9a"aksa "rides himself on his efficiency. @acts and figures tell 'uite
another story. According to a re"ort "resented to "arliament by the Auditor General,
the I5A has been making loses since +,,8. ;y +,**, the I5ADs accumulated losses
amounted to over 6s. *,+), million $*.+) billion ru"ees(.
And when the I5A makes a "rofit, it does so the 6a9a"aksa way, via sleight?of?hand.
Again, according to the AGDs 6e"ort, GEven though the Authority had realised a "rofit
before ta< of 6s.+-+ million in +,**, the "rofit was due to a recei"t of 6s.1)+ million
from the General TreasuryJ. &n other words though the I5A claimed to have made a
"rofit in +,**, in actuality, it made a massive loss of 6s.+7, millionK
Then there is the 0attala 6a9a"aksa &nternational Air"ortC in 0ay its total earning was
6s. *8,*41L?C not "rofitC but income K &ncidentally one wonders how many litres of
water are s"ent "er day on maintaining this loss?making colossus while ordinary
"eo"le and animals of Aambantota and 0oneragala are tormented by acute thirst.
5es"ite the "recarious state of governmental revenue, the 6a9a"aksas gave another
signature ta< break this month > to casinos. GJ*+2 Malue Added Ta<es and +2 =ation
;uilding Ta< charged on e<isting casinos were removed and re"laced with a mere 12
gaming revenue. An understandable largesse, given that most of the e<iting casino
owners are 6a9a"aksa acolytes, including 5hammika %erera, businessman and
#ecretary to the 0inistry of Trans"ort.
The deficit caused by sky?rocketing e<"enditure and "lummeting revenue is bridged by
borrowing, mostly from .hina. #ri /anka has received Gan estimated N-billion worth of
loans, grants and aidJ. =early 3, "ercent of #ri /ankaDs infrastructural "ro9ectsJ.are
being funded by .hinese banks. 0ost .hinese funds come not as grantsLaid but as
loans > meaning higher interests and stringent conditionalities, including "olitical
ones. This will worsen relations with 5elhi, with %0 0odi taking a tougher line on
ethnic and fishing issues to "unish the 6a9a"aksas for their de"endence on ;ei9ing.
6a9a"aksa economics is creating a vicious circle in the arena of foreign relations as
well.
As the efficacy of razzle?dazzle to sustain false ho"es fades, the 6a9a"aksas will
embrace ethno?religious racism with increasing vigour. &maginary enemies, from
resurrected Tigers and !ihadists to .atholic Action and Western cons"iracies, will be
used to frighten #inhala?;uddhists into clinging to the Ourrakkan shawl.
0oneragala is a test case. &t hints at the lengths the 6a9a"aksas will go to, to maintain
familial "ower and "restige. The greater the economic malaise, the more lethal the
election violenceC +,*1 will be far bloodier than +,*,.
6eferencesC
*. Puestion Time reveals colossal waster "f "ublic funds while masses struggle >
.handani Oirinde > The #unday Times > +3.3.+,*-
2. htt"FLLwww.scribd.comLdocL*4+1731+7LTo"?line?survey?results?5emocracy?in?
"ost?war?#ri?/anka
). The &sland > *,.8.+,*)
-. /ight on revenueF .abinet subcommittee says +,*1 revenue targets undrealistic
and unachievable ? #andun !ayasekara > 5aily 0irror ? August +)
1. The I5A not 9ust makes lossesC it also breaks the law with im"unity. @or
instance, GThe Auditor General also noted that even though the Authority had
been informed by the Attorney General in writing that the I5A was not
authorised to establish a com"any for managing rest houses, the Authority had
established a com"any named IGA 6est Aouse, e<ceeding its legal "owers. The
com"any had been renamed as /anka 6est Aouse .om"any with effect from
=ov.*1 +,*,.
6. htt"FLLsundaytimes.lkL*-,-+3LnewsLuda?losses?since?+,,8?total?rs?*+),?
million?auditor?general?7)734.html
7. htt"FLLlankacnews.comLenglishLnewsLmay?income?rs?*8*41L
8. htt"FLLwww.ceylontoday.lkL++?3*+34?news?detail?good?for?casinos.html
9. htt"FLLwww.al9azeera.comLinde"thLfeaturesL+,*-L,4Lsri?lanka?economy?
reliance?china?infrastructure?+,*-4+18)-114741*.html
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