New vistas for development | Daily News
PM presents Budget 2021:

New vistas for development

Prime Minister Mahinda Rajapaksa presenting the Budget 2021 as Finance Minister in Parliament yesterday. (Picture by Parliament Media)
Prime Minister Mahinda Rajapaksa presenting the Budget 2021 as Finance Minister in Parliament yesterday. (Picture by Parliament Media)

Prime Minister Mahinda Rajapaksa in his capacity as the Minister of Finance yesterday presented to Parliament the Government’s budget proposals for 2021 mainly targeting people - centric development, economic development and welfare of the people.

The proposals included solid measures to ensure fiscal consolidation to reduce the deficit, simplified tax policy and relief and give a firm push to revive the economy.

The Government also allocated Rs 18,000 million additional provisions to combat COVID-19 and also announced more relief measures for affected individuals, business enterprises and those spearheading the State COVID-19 response.

The estimated Government Revenue for 2021 is Rs. 1,961 billion. The total Government expenditure is Rs. 3,525 billion and as such the difference between the revenue and the expenditure is Rs. 1,564 billion. The Government plans to maintain the budget gap at 9 percent of the GDP since the private investments which amounted to 32.3 percent of the GDP in 2014 has decreased up to 27.6 percent in 2019 and since it is required to provide a robust start by the Government to revive the economic growth which had stagnated recently.

It also proposes to allocate Rs. 2678 billion for public service expenditure in the current fiscal year 2021 and to obtain loans subject to a limit of Rs. 2900 billion within or outside Sri Lanka.

The Prime Minister said that as stated in “Vistas of Prosperity and Splendour”, the Government simplified the tax policy from January 2020 to better facilitate tax payers and to make the tax administration more efficient. “One of the main factors, of reviving the economy and supporting the businesses to thrive, is a consistent tax policy for the next 5 years. I propose to maintain the VAT unchanged at 8 percent, for businesses with a turnover of more than Rs. 25 million per month engaged in the import and manufacture of goods or provision of services, except in the case of banking, financial and insurance sectors.”

The Prime Minister’s budget also included plans for a national expressway network, extending Colombo’s Marine Drive to Moratuwa, a three year programme to develop road infrastructure in all districts and expanding the Colombo- Kelani Valley rail network.

In his Budget speech the Prime Minister noted that the planned annual utilisation of foreign loans as agreed with the World Bank, Asian Development Bank and Japan International Cooperation Agency alone amounts to approximately USD 1,400 million. “In addition, it is expected to obtain bilateral development loans of approximately USD 400 million. Since most of these projects have very little import content and requirement, I believe this measure will also have a positive impact on foreign currency management.”

Announcing more relief to Samurdhi benefit recipients, the Premier proposed to open a Samurdhi Life Savings Account for each beneficiary.

Touching on the tourism sector affected due to the Covid-19 pandemic, he said, it had the potential to grow to provide over 10 billion US dollars annually and the government will give its fullest support to reach that level. He also announced measures to develop domestic tourism while noting that this could save around 1.5 billion US dollar annually spent on foreign travel by Sri Lankans.

Under the topic of national security, through the 2021 budget, the government has proposed large allocations to improve the military and ensure national security. “We must combat the drug menace and must eliminate our country from being a becoming a hub for international illicit drug trade,” he said. In addition, a sum of Rs. 750 million has been allocated through the 2021 Budget proposal for the welfare of disabled, retired veterans and families of the soldiers who died on the line of duty.

Addressing a long standing anomaly he announced measure to amend the Employees’ Provident Fund Act to expand the retirement age for both men and women up to 60 years.

In addition, the government has proposed to establish a special Tax Appeals Court under the budget proposal for the financial year 2021.This will facilitate the resolution of tax appeals without delays, Prime Minister Mahinda Rajapaksa said.

Yesterday’s budget presented by Prime Minister Mahinda Rajapaksa is considered to be the 75th budget report in the history of the country and the record for presenting the highest number of budgets in the history of Parliament is held by former Finance Minister Ronnie de Mel who presented 12 budgets. Prime Minister Mahinda Rajapaksa has presented the second highest number of budgets while former President and Finance Minister J.R.Jayewardene has presented the third highest number of budgets (09).

The Prime Minister arrived at the Parliament complex to present his 11th budget proposal yesterday, amidst the cheers of the government parliamentary group.

The Budget speech commenced at 1.45 pm and the Prime Minister took almost two and a half hours till 4.50 pm.The second reading debate of the budget will be held from today (18th) to Saturday (21st)