A development oriented budget
ADDRESS: I wish to congratulate the President and the
Government as the budget is formulated on the policies based on "Mahinda
Chintana" which focuses special attention on agricultural and rural
development, infrastructure, social welfare and economic growth.
It is a people's budget which seeks to spur economic development and
achieve Millennium Development Goals (MDG) over a ten year horizon
development framework 2006-2016. It is a blueprint for economic and
social change and eradicates poverty through economic empowerment.
An analysis of the budget proposals reveal that the government had
laid heavy emphasis on infrastructure development without which economic
resurgence would not be feasible. In this respect the government's mega
infrastructure initiative called "Randora" has been accorded priority.
This program seeks to implement the Puttlam coal power plant,
Trincomalee Coal power plant, Kerawelapitiya Power plant and related
infrastructure to transform all fuel based plants to generate LNG based
Other major projects lined up under this special effort are the early
completion of the four lane southern expressway and the expansion of the
Colombo Port capacity and the construction of a new port, the second
international airport at Weerawila and an international convention
The government has also committed itself to building a northern
expressway and several other main roads and bridges in districts in the
North and East. Consequently Trincomalee will emerge as an important and
strategic investment and tourism zone.
The government is also actively pursuing the reconstruction of the
tsunami affected coastal highway from Katukurunda to Pottuvil and
several highways to connect major townships.
All these activities would create additional employment
opportunities, raise the income levels of the people in the respective
areas and create business opportunities in several sectors. The
development of a second international airport in the south will solve
The South is famous as a tourist attraction. The second international
airport will attract tourists in large numbers to the south. It will
also function as an alternate airport in Sri Lanka as there is only one
International airport at present.
This clearly demonstrates that the government's policies are not
short termed, but geared to develop the entire country over a period of
10 years which is necessary if we are to face a competitive world.
It is to be noted at this juncture that the Mahinda Chintana which
was placed before the people at the Presidential Election 2005 spelt out
the policies and programmes of the UPFA government towards building a
disciplined society, an affectionate family, to provide employment both
local and foreign and also to strengthen the Samurdhi programme to
enhance the empowerment of the people for effective eradication of
poverty. Consequently the proposals in the vision are being implemented
by the concerned government ministries and departments progressively.
In this respect top priority has been given by the government for
rural infrastructure development programmes such as "Maga Naguma",
dahasak Maha Wav, new irrigation schemes and electrification programmes.
So far the government has spent Rs. 12,000 million which is the highest
ever for rural infrastructure.
The government biggest contribution by way of expenditure so far
benefiting mainly the farmers and rural folk engaged in livelihood
agricultural production had been the fertilizer subsidy of Rs. 11,000
million and paddy purchases of Rs. 2900 million.
Besides this the government has also given a subsidy to
pharmaceuticals of Rs. 8000 million, and assistance to schoolchildren of
Rs. 3600 million.
These programmes directly help the farmers and average citizen of the
country which had been a long felt need to stimulate production and
reduce poverty and unemployment.
The post tsunami construction activities had been pursued with 62,000
houses having been completed and about 43,000 still under construction.
The total expenditure for post tsunami activities accounted to Rs. 9200
The economic policies adopted by the government for the last three
years have begun to bear beneficial results.
The agriculture sector has brought encouraging results. Local rice
production has begun to exceed the domestic demand. Export of rice will
be a possibility soon if only we could improve our quality and make the
cost of production competitive.
The unemployment rate has come down to an all time low of 6.5%. No
government has achieved this rate so far. This is due to the fact that
the government has provided employment in the public sector and had
promoted the private sector which controls 90% of the job market.
More than 3000 graduates have been found employment in the public
sector. Another 8000 vacant positions have been identified and the
government proposes to give area specified appointments in 2007.
The government has also taken steps to train skilled personnel for
foreign employment which means that Sri Lankans will get better salaries
in the foreign job market in the range of Rs. 50,000 (US $ 500) within
the next three years.
As a preliminary step the minimum stipulated salary for employment
abroad next year will be fixed at Rs. 25,000 (US $ 250)
The government also had to take a series of other measures. Foreign
investment is essential for development of this country.
Several measures have been undertaken by the BOI to attract foreign
investment. Sri Lanka missions are being restructured and strengthened
to promote investment trade, foreign employment, and other economic
Consequently foreign investment is likely to exceed US $ 600 million
this year. Our tourist potentials are immense. The tourism industry is
being developed giving adequate opportunities to the regions and with
people's participation. Tourism earnings are expected to exceed US $ 400
The budget contains a series of proposals which would ultimately
benefit all sections of society. One of the most important proposals is
the "Krushi Navodaya Programme" which will empower the small farmers by
providing access to agricultural inputs at an affordable cost.
About 50,000 farmer families per year are targeted to benefit. Small
farmers will be entitled to loan amounts ranging from Rs. 10,000 to Rs.
Exemptions have been made from VAT on heavy fuel oil, Furnace oil,
and electricity to regain competitiveness, which are lost fast due to
Duty and VAT are exempted for replacement of buses by operators who
already have a route permit. This will enable an improved bus service to
the public. VAT and customs duties will be exempted for machinery
imported for modernization of tea, rubber and coconut processing
The VAT rate on supply of jewellery is proposed to be reduced to 5%.
Vat on high tech medical equipment has been reduced to 5%. The VAT on
the supply of prawns will be exempted to benefit the large number of
small farmers engaged in prawn farming.
The VAT and duty on importation of cattle, buffaloes, goats, and
other animals will be exempted to boost livestock farming.
The government has proposed to encourage the Small and Medium
Enterprises (SME) sector which could be described as the backbone to our
industrial production. Rs. 13,295 million is to be allocated at a
concessionary rate of interest for a host of SME enterprises.
The government has also proposed to reduce the Economic Service
Charges (ESC) in respect of all textiles, apparel manufacturers and
trading houses to 0.1% in order to boost Sri Lanka's apparel industry
and exports would reach US $ 5 billion by 2010.
VAT and import duty will be exempted for all material imported for
processing and related industries to enable the leather industry to
enter the global market trade.
The government has also proposed to revive 30-40 closed factories and
provide about 10,000 job opportunities.
I hope that the people and political parties in the country will
strengthen the hand of the President and the government to solve the
long drawn North/East conflict and usher in a prosperous era.