The latest report by the Finance Commission has recommended that the Central Government should have more control over the capital expenditure of provinces to align them with national development strategies. Would this be a realistic goal for Sri Lanka?
The latest data bundle from the Central Bank shows that the GDP growth of the Southern Province is actually lesser than the growth of the Central and Uva Provinces despite the Government funnelling billions of rupees into the port and other development projects in Hambantota.
Growth of the Western Province also lagged behind the country figure of 14.8% and it was joined by the North Western Province (third richest) up by 11.94% to Rs. 225,000 and Uva, where the per capita income improved by 13% to Rs. 190,000. Understandably, as a direct result of the post-war rebound, the per capita income of the Northern Province grew at the fastest pace of 22.9% from a low base to Rs. 161,000, whilst the relatively richer Eastern Province saw its figure grow by 16.4% to Rs. 212,000. The Central Province’s per capita income grew by 16.8% to Rs. 208,000.
In 2010 the GDP at current prices grew by 15.9%, and reached Rs. 5,602 billion with a per capita income of Rs. 271,259, equivalent to US$ 2,399. The Western Province made the highest contribution to GDP in 2010. However, its share in GDP reduced to 45.1% from 45.8% in 2009. As in 2009, the Southern Province provided the second highest contribution, which was 10.7%, an increase compared to 10.5% in 2009.
The Central Province provided the third highest contribution, maintaining its relative position compared to 2009 and managing to increase its GDP contribution to 10.0% in 2010. However, the contribution of the North Western Province declined to 9.4% in 2010 from 9.6% in 2009. The contributions to GDP from Northern, Eastern, North Central and Sabaragamuwa Provinces increased in 2010 while that of the Uva Province was unchanged.
It is clear that there is a large gap between the Western Province, which in very simple terms means that the Provincial Councils have not done their job. The idea of having a decentralised system means that provinces achieve their growth by engaging in competition with each other – an aspect that has been forgotten in the scramble towards corruption and wastage backed by political involvement and apathy.
Encouraging results-oriented development planning may not necessarily be the answer, as Hambantota has shown. Even though there is much support from the highest quarters to develop the region, it has not resulted in a significant increase of per capita income for the people. The mismatch between the large development projects and their influence in upgrading the living standards of the poor shows that, at times, a centralised development policy might not have the best results for the poor.
The solution is more basic. Corruption at provincial level cannot be replaced with corruption at Central Government level. Whether development goals are directed from the centre or provinces will matter little unless good governance, transparency and efficient management are introduced.
The development projects should be justified based on facts and not the random whims of politicians out to bolster their power base by funnelling money to their electorates. The projects must be well planned and executed and not prey to rocky surprises that result in millions more wasted on what could have been another constructive venture. These universal procedures are what Sri Lanka needs and what will decide the future.