Cameron Stole The CHOGM And The Budget Before A Crisis

By Ahilan Kadirgamar -November 24, 2013 |

Ahilan Kadirgamar

The 2014 Budget unveiled by the President is a Budget for everyone. It addresses infrastructure, health, education, business, banking, agriculture, fisheries, housing, pensions and anything and everything everyone wants. It is for this reason that it is confusing and difficult to criticise. What is the economic policy vision and strategy and what are the priorities in the Budget?

This article analyses the 2014 Budget as a continuation of the open economic policies since 1977, and particularly, a reinforcement of the accelerating neoliberal policy trajectory after the war ended in 2009. It discusses policy priorities by revealing the scale of investments in urban construction and infrastructure. It critiques the lack of redistribution and increasing inequalities promoted by tax policy. It analyses the process of financialisation supported by this Budget in order to understand the dynamics that could create an economic crisis.

Bowing to Pressures

The Rajapaksa regime has mastered electoral politics. And more, the regime has been able to take the wind out of every mounting struggle. Political parties are broken and their members are bought over. Militant struggles are appeased with hand outs. Even as the regime becomes more and more authoritarian and arrogant, it has not lost sense of the pulse on the ground. It is the Budget most of all that reflects the populist grounding of this regime.

Even as it has stolen the UNP’s neoliberal vision – thereby disarming the opposition of an economic critique – it has also appeased many of the trade unions and sections of the rural masses through hand outs. Indeed, the regime boasts the full spectrum of political parties under its fold from the Sinhala Buddhist Nationalist Right to the bankrupt Old Left. The regime works with the confidence that if it can buy parliamentarians for a pittance, it can buy the masses for even less. It expanded the Cabinet and provided ministries with little powers for patronage, and similarly, it has expanded the Budget with subsidies and hand-outs for the population. Just as political power has been entrenched within the authoritarian regime, wealth creation for the financial elite and the dispossession of the lower classes accelerate with the neoliberal transformation.

So, what is in the Budget that is attractive to the larger population? Public servants and pensioners are getting a cost of living allowance. The pension scheme for farmers, which was abandoned a few years ago, has been reinitiated, albeit with the age of qualification now at 63. University lecturers, who were credited with putting together the second longest strike in the history of the country last year, will be given a raise next year. Hostels are being built for university students and labs for secondary schools. There is going to be greater investment in healthcare, vocational training, SLTB buses and rural roads. The questionable major fertilizer subsidy will continue and even a subsidy for government field officers to purchase motorcycles.

Contrary to most claims, Government spending as a percentage of GDP is only 20 %, and compared to other countries, quite low. State sector salaries and allowances are Rs. 390 billion, pensions amount to Rs. 125 billion, fertilizer subsidy, pharmaceutical drugs and welfare transfers are Rs. 100 billion. The point here is that the populist measures that include salary increases and subsidies are not determining the trajectory of our economy.

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