Since 1948, we have been planning for economic prosperity, but six decades have gone by without a semblance of anything to claim as our own.
India has superseded all Asian countries and has reached a pinnacle of an economic power and it has even more potential to be a super power. It would be of interest for our leaders to study the Indian miracle which made mammoth strides in economic development and learn something from that experience.
Economic planning first began during the 1930s when India was under British Raj and thereafter a Planning Commission was established which produced five year economic plans for the country. As far as Sri Lanka is concerned, we never had such long-term planning and what we had was long-term interests in consolidating party politics. Corruption and nepotism has taken root in unprecedented proportions.
In 2001 Sri Lanka faced bankruptcy with a massive debt burden exceeding 101% of the GDP and country was under a war risk premium when LTTE attacked the Bandaranaike International Airport and the Port of Colombo.
The 30-year protracted civil conflict, which culminated in the annihilation of LTTE, also contributed to destroying the social fabric of Sri Lanka. Since the victory over LTTE, nothing has been done to take advantage of the peace dividend, but the country seems also to be on a collision course with the world powers.
Diplomacy has failed miserably and we have forgotten the goodwill of Western powers that have helped us in numerous ways. Sri Lanka is a tiny nation of only 20 million with huge debt burden and cannot under any circumstances behave like other regional powers like Venezuela, Iran or North Korea. We have also failed to garner support from the European Union to retain the GSP+ let alone other important economic issues.
We have been borrowing foreign loans for various projects but nothing constructive seems to have derived from the projects which have been funded by loans to justify the repayment.
In the end foreign loans will further fuel the economic downturn if results are not achieved from the very projects for which the loan is utilised. In some cases loans have not been fully utilised while in other money had been misappropriated. Yet again, the need to arrest corruption must be of paramount importance.
Agricultural developments have been neglected since 1977 when the JRJ Government introduced open economic policies, but no one could blame the JRJ Government at the time in view of the tremendous economic hardships endured by the people of Sri Lanka owing to unpopular and short-sighted policies adopted by the United Front Government under late Prime Minister Sirimavo Bandaranaike.
Massive projects under Mahaweli development schemes were meant to bring economic benefits. Research is long overdue as to whether we have fully derived the benefits of infrastructure created under the Mahaweli scheme.
The country’s resources
Let’s look at the country’s resources. The real wealth of the country is its water resources, certainly not the black gold produced mostly in the Arab world. We should be exporting fruits and vegetables to the whole world by having in place massive agricultural programmes. Pakistan, Bangladesh and India have developed rural economies and are tapping export markets. We have plenty of water absorbed by the Indian Ocean freely and are oblivious to the fact that this island is blessed with plenty of fishery resources. The Trincomalee harbour is a deep water port. If all energies had been directed to develop the Port of Trincomalee, it would have been a formidable challenge to other ports in the Asian region. Trincomalee should be declared an economic zone with proper infrastructure to attract foreign investments.
Late Lalith Athulathmudali (former Minister of Shipping and Trade) had a grand plan to create a Shipping Exchange/Registry along the lines of Panama and Liberia. Now that the situation has stabilised, it would perhaps be opportune to resurrect this idea.
Trincomalee is ideally suited for shipping-related industry such as ship breaking (a thriving industry in Pakistan, Bangladesh and India) and lay up/off of ships when not in use. Ship owners worldwide could utilise the port to lay up/off ships until the owner secures a new contract of carriage. Geographic conditions of the port are ideally suited for this purpose.
In view of the ethnic imbalance in the Eastern Province, it would be relevant to have a fresh look at the district and provincial demarcations and land allocations needs to be rationalised for economic development. Foreign investors could be attracted for investments in agricultural development in the region.
A World Bank report titled ‘Sri Lanka: Priorities for Agricultural and Rural Development’ has identified four development issues:
1. Weakness in strategy and policy
2. Heavy public sector regulatory interventions in commodity and input/factor markets.
3. Weak delivery of services in rural areas
4. Destructive impact of civil conflict and tsunami.
The report also identifies the lack of clarity in the roles and responsibilities of central government agencies and provincial councils (many responsibilities have been devolved to Provincial Councils under the 13th Amendment to the constitution).
Agricultural development has taken a backseat since economy was liberalised in 1977. The JRJ Government resorted to open economic policies in view of the massive mandate it received from the people of Sri Lanka.
The economy had been in the doldrums under the United Front government led by late Sirimavo Bandaranaike. Open economic policies only helped the industries of the free trade zones and there was a marked exodus of people from rural areas in search of employment in the Western Province.
The JVP had an ambitious plan to develop the agricultural tanks which had been neglected for years. It is time this is looked into once again. The unemployment rate has once again reached a pinnacle, with no solution in sight; the reason being that vocational training and education and roots of unemployment must be jointly addressed.
Rural credit schemes (Grameen finance) are extremely popular in Bangladesh and India and we too must address our rate of suicide among farmers by articulating new strategies in rural credit.
Grameen Foundation’s initiative came from Prof. Muhammed Younus and the Grameen Foundation saw “he gap in service and resources as an opportunity to create an intermediary — an innovative approach to supporting the growth of MFIs.
In 2008, Grameen Foundation, IFMR Trust, and Citicorp Finance India Limited formed Grameen Capital India Ltd. (GCI). Its mission is to tap affordable capital for MFIs through ground-breaking financing initiatives.
By opening doors to affordable capital, MFIs and other poverty-focused organisations are now able to grow and serve more of India’s poor, especially women. GCI’s success has surpassed expectations. In less than two years, it has generated more than $100 million in financing for Indian MFIs which will fund more than 800,000 microloans for poor people that country.
(The writer is a freelance journalist and a political lobbying/government relations consultant. He is the author of ‘Political Diplomacy & Lobbying’ and ‘Political Theology for Atheists in America’.)