2 December, 2020

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Budget 2021: A Reversion To JR Jayewardene Policies Of 1940s?

By W A Wijewardena –

Dr. W.A Wijewardena

Development budgets that do not deliver development

Budget 2021, presented to Parliament by Prime Minister and Finance Minister Mahinda Rajapaksa last week, has been hailed as a ‘prosperity budget’, ‘development budget’ or ‘growth budget’ by many. All Chambers, including the 181-year-old Ceylon Chamber of Commerce or CCC, welcomed it as an attempt at taking Sri Lanka to the next level of development.

CCC specifically called it ‘business-friendly, production-oriented and demonstrative of policy continuity’. This policy continuity appellation given to the budget 2021 is disputable since it is a complete departure from the policy package adopted by the previous Government that relied on a more liberal, open, and globalised economic policy package. Hence, the acclaimed policy continuity will start from 2021 and go on as long as the present administration will be in power.

JR’s ghost in budgeting too

But the examination of the vision, mission and content of the budget 2021 reveals that it is not different from what the first Finance Minister JR Jayewardene, popularly known as JR, recommended to Ceylon National Congress in 1939 as suitable economic policies to be adopted after independence and what he actually implemented through the first six budgets of independent Ceylon as its Minister of Finance.

Budgets to give something for everyone

However, the preparation of a budget is not an easy task since it has to satisfy diverse interest groups. Recognising this difficulty, State Minister Ajith Nivard Cabraal in a recent webinar on the budget expressed his satisfaction that it is an ‘evenly-poised budget’. I am inclined to agree with him since the budget 2021 has something for everyone. But the budgets presented by JR too possessed the same qualities.

JR, the fan of Keynes

JR had been influenced by the 20th century’s most influential economist John Maynard Keynes, according to his biographers, KM de Silva and Howard Wriggins. Keynes published his main thesis on economic policy in 1936 under the title ‘General Theory of Employment, Interest and Money’ which is commonly known as General Theory. According to the two biographers, JR had read General Theory immediately after it was published and become instantly a fan of Keynes. This has happened before the development and spread of the body of economics now known as ‘Keynesian Economics’.

Keynes had diagnosed that developed countries go into temporary recessions because the whole output produced is not consumed by people. Hence, the economic system goes down generating unemployment and finally economic recession. To overcome this, Keynes suggested that government can create a demand for the output by having budget deficits, most often funded out of newly printed money. The new demand will lead to the production of output over the time in amounts greater than the original amount of financing by the government, called the multiplier effect on the output.

Keynes proposed his theory for a developed economy with no foreign transactions. Those economies had an installed capacity and therefore could produce new output at short notice when the new demand was created by the government. Since there were no foreign transactions, there was no possibility for the money to leak out from the economy.

But what was propagated and what JR too had understood was that it was the easy and quick way for an undeveloped country to become a developed country. In this model, the state control of the economy at every level was the pre-requirement. And JR had absorbed that into his system faithfully.

JR’s policy package in 1939

This was evident from a policy package proposed by a Policy Committee of which JR was the author and key intellectual to Ceylon National Congress in 1939 for adoption when Ceylon would gain independence from Britain. What was proposed in the policy package and the vision, mission, and the content of Gota’s budget 2021 are more or less the same.

JR in 1939: Everything should be in the hands of the State

The JR package had proposed that in the future social development of Ceylon, protection should be given to the ‘indigenous population’ as against foreigners.

He had proposed to ensure food security by increasing food production by implementing five measures. They were extensive farming by opening new areas for food production, intensive farming by adopting scientific methods for cultivation, granting subsidies to farmers, protecting farmers by controlling imports via tariffs, total prohibition of the import of specified food items that can be cultivated in Sri Lanka. This was to be strengthened by the State control of the production and distribution of agricultural produce. This is exactly what Gota’s Budget 2021 also has suggested.

JR: Land should be acquired by the State

JR’s land policy in the policy package is similar to what the present government is also following. He had suggested that land should be acquired for public use from private individuals by paying compensation. Then, to prevent the fragmentation of land, alienation of private lands below a certain extent should be prohibited. When land above a specified extent is being sold in the open market, he had suggested that the State should buy it for public use.

With respect to industry, it had been suggested that all key industries should be state-owned. What this meant was that heavy industries like iron and steel, chemicals, fertilisers, etc. should be operated by the State. The private sector can do bakery industry or soap industry.

A further suggestion had been for the State to take over the business of importing essential commodities. All public transport services, namely, railway, omnibus, air and by sea, should also be state-owned.

JR: No foreign workers

Regarding the use of foreign workers, JR had suggested that it should be completely prohibited. This is something which even the professionals are agitating today and accepted by the present Government as a policy. Adding to the list of state-owned activities, JR had suggested that all elementary adult, industrial and vocational education should be provided by the State.

Practicing Keynesianism 

What this meant was that JR was a state-led growth maniac in his early political career due to the influence of Keynes. To provide all these services, revenue should be generated through taxation. The policy of colonial rulers was to keep the expenditure within revenue so that the system was that of balanced budgeting. Therefore, there was no room for deficit budgets in the colonial era. JR criticised this policy when he presented his first budget in 1947.

His criticism was that when the country had adopted balanced budgeting, all programs for social and economic development have to be abandoned if there were no funding sources. It was unfair by an emerging newly independent nation which had a lot aspirations to become a nation of worth. Therefore, there was nothing wrong in going for deficit budgeting and it was also in line with Keynesian thinking. That was the birth of deficit budgeting in Sri Lanka which had been followed by all successive Finance Ministers, except M.D.H. Jayawardena in 1954 and 1955. These deficit budgets were justified on the ground that they were intended to serve the poor and create a more harmonious and prosperous society.

A full employment and development budget that failed to deliver either one

In the same way Gota’s Government has branded budget 2021 as a ‘budget of prosperity and splendour’, JR also designated all his budgets starting from 1947 as ‘full-employment and development’ budgets. The goal to attain full-employment was taken from post-war Britain that had followed full-employment as a goal though the UK was at full-employment level in 1946 with an unemployment rate of only 2%. But JR’s Ceylon did not have reliable data for the unemployment rate since the census conducted in 1946 did not enumerate that number.

However, going by the number of people seeking jobs by registering themselves in the Employment Exchange, a mechanism to divert the job seekers to potential employers, the rate happened to be only 1% of the labour force. Hence, both the UK and JR had this full-employment target as a vision to be followed by successive governments. The UK, to its credit, maintained the full-employment target till 1974 by keeping the unemployment rate below 4% of the labour force. But the successive governments in Ceylon were not so fortunate because within years, the unemployment rate had accelerated to a level above the threshold of full employment at 4%. By 1963, the rate increased to 8% and remained above the threshold of full employment throughout except in 2012 when it receded to 4% only for one year. Thus, JR’s wish of having full employment in the Sri Lankan economy had only been a dream unrealised. Since full employment is an important criterion of assessing the quality of development, ex post, none of the budgets in the past had qualified to be called ‘development-oriented budgets’ though they had been hailed to be so ex ante by many.

JR: State must control prices, interest rates and investments

Armed with Keynesian ideology to the teeth, JR did not trust the operation of the free market system for generating social welfare for all. Therefore, in his budget for 1947, he emphasised the need for expanding the state into many areas of the economy claiming that it is the responsibility of the state to ‘ensure high and stable level of employment’.

What he meant was that there are economic fluctuations from time to time which the free market economy could not avoid. When the economy moved down, many workers lost their jobs and along with it, their livelihood too. The solution was to invest a larger part of the present income to enable the workers in the future to earn their wages at a stable level. According to his budget, that is another responsibility of the state. This can be achieved only by expanding the Government activity in the economy.

Hence, he suggested in the same budget that ‘the state must control prices and interest rates, and if necessary, it should influence private investment as well as the capital expenditure of local authorities’. Gota’s Government is doing exactly what JR had proposed in 1947 by controlling prices, interest rates and influencing private investments into areas which it believes to be the priority areas. The whole gamut of supply side incentives Gota’s budget 2021 has proposed by way of subsidies, tax holidays and direct support from state institutions has been in line with this JR philosophy of state role in the economy.

Expansion of the State sector by borrowing

As promised in his budgets, JR expanded the Government expenditure by borrowing from the market. In the colonial period from 1939 to 1946, the average annual current expenditure was just Rs. 237 million. In the seven years during which JR was the Finance Minister from 1947 to 1953, the current annual expenditure on average shot up to Rs. 742 million. So, the State sector and the budget was expanded following the Keynesian prescription. All successive Finance Ministers had followed JR and just done it in ever-increasing amounts.

How did JR did this? By increasing borrowings. During the colonial time from 1939 to 1946, the average annual borrowings amounted to Rs. 24 million. But JR set a record by increasing average borrowings by more than six times to Rs. 153 million. He had borrowed a total of Rs. 698 million during this period. But close to a half of those borrowings amounting Rs. 310 million had been made from the newly established Central Bank on a net basis. The narrowly defined money supply had increased from end-1949 to end-1953 by Rs 178 million. The slow growth in money supply has been due to the decline in the net foreign assets of the banking system during this period by Rs. 301 million. But the Government by borrowing huge amounts from the central bank had become the main expansionary factor of money supply. So, Keynesian economics had really worked on JR and all other Finance Ministers since then.

When markets behave oddly, no solution from Keynesianism

But JR had to face reality at the end. Though he managed to expand the state sector by borrowing, principally from the Central Bank, the promised economic development and full employment slipped through his fingers. Economic growth which amounted to 6.2% in 1951 fell to 1.9% in 1953. The economy and the budget went into trouble when tea prices fell and rice prices rocketed causing a severe bleeding of foreign reserves. JR was forced to propose to Cabinet the abolition of the rice subsidy that had been established during the war times to ensure food security. There was no Keynesian remedy when an economy was hit by such a real shock.

His attempt at getting $ 50 million from US government as an emergency funding line was unsuccessful. The only solution lied in belt-tightening, a policy that went against Keynesian economics and was in sympathy with what is now known as neoliberalism. But it got itself into a political turmoil forcing both the Prime Minister and JR to resign from the respective portfolios.

Gota being guided by modern monetary theory

Gota’s budget, presented some seven decades later, has followed JR’s ideology on budgeting, state expansion and the use of Central Bank money to finance the budget deficit. Given the current gloomy economic situation, he has no choice. For him, resources are scarce relative to mounting expenses. Because of the economic slump caused by the prolonged COVID-19 pandemic, the space available for raising taxes is also limited. The only way out is to get the Central Bank to finance it as was done by JR in late 1940s and early 1950s.

But this time, the ideology is provided not by Keynesian economics but by a new version of it called modern monetary theory or MMT. The advocates of MMT argue that people will not die even if the inflation rate is at a high level, say at around 15%. But if the Government does not spend money into their hands, they would certainly die. Since human life is more important than low inflation, governments should get the central banks to print money and finance the required expenditure programs to enable the country to wade through difficult period.

The present situation faced by the country is certainly a qualifier for it, the advocates argue. But it conflicts with the monetary theory or MT being followed by central banks. This is specifically so with the flexible inflation targeting being adopted by the Central Bank of Sri Lanka as its monetary policy framework. Under this framework, inflation would be maintained at a predetermined single digit level but the advocates of MMT want the Central Bank to abandon it. Voicing this aloud, Budget 2021 has announced that ‘the Central Bank should have a new perspective on the monetary policy regarding money and liquidity management’.

Failure of development budgets

All budgets presented in the past had been called development budgets by their authors. Others, specifically Chambers, had joined them in endorsing that claim. But there had not been any attempt at appraising whether they really delivered development to the country. To the contrary, those so-called development budgets had failed to generate the minimum growth of 8% on a sustained basis to enable Sri Lanka to become a rich country within a generation. Where had these budgets gone wrong? They had failed to put a cap on consumption, divert resources to needy and relevant investments and finally, create a business-friendly environment to enable private initiatives to take root and deliver growth. But they had been good at giving something to everyone.

JR’s ghost in politics as well as in economics

The 20th Amendment to the Constitution enacted recently is being criticised on the ground that it is a reversion to JR era of all-powerful executive presidency. But the budget 2021 also demonstrates that a similar reversion has taken place in the budgetary policy as well.

*The writer, a former Deputy Governor of the Central Bank of Sri Lanka, can be reached at waw1949@gmail.com

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Latest comments

  • 14
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    Don’t compare Cambridge educated JR with totally uneducated Rajapaksas.

    • 8
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      Cambridge my ass

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        a14455 / November 23, 2020

        You please try to get edcuated from your brother. I really dont think you the kind of asskissers of Rajapakshes would have the little knowledge to grasp the little.

        • 2
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          Well, why don’t you get some education from someone?

          1 you are unable to write a coherent sentence on your own
          2 you have no idea of what the facts are

          Either of which should disqualify your idiot comments. but on CT they would much rather go after the true Sri Lankans.

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            a14455 / November 24, 2020

            Quote
            The 20th Amendment to the Constitution enacted recently is being criticised on the ground that it is a reversion to JR era of all-powerful executive presidency
            Unquote

            Newly passed 20A would not do any good to the nation but to Rajapakshe family. Basta.
            .

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        a14455 / November 23, 2020

        Typical Pohottuw mentality.

        They would never respect any facts. Today having heard the great speech made by Harin Fernando in the parliament I thought POHOTTUWA donkeys and their supporters are the cancer of this nation. May curse be with you !

    • 19
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      Dear friends, as news items make it clear, people are suffering today in colombo.they have nothing to eat. Rajapakshe may not be even watching them. All these were made clear to them, but for their stupidities they got caught 😎😎😎Yes Rajapakshe s can only be compared with Mobutto, Mugabe or Gadafi. All these would nt be info for his supporters. If people I mean the masses, so it be.😎🤔😎

    • 21
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      As usual making stupid inaccurate comments
      This racist who openly stated ” If I starve the Tamils the Sinhalese will be happy”
      never went to Cambridge but attended the Law College in Colombo. Hated Tamils but was of recent South Indian Tamil descent. Was born and raised as an Anglican and like most Sinhalese politicians converted to Buddhism for Polotics. One of the biggest racist who was one of the major causes of the civil war

      https://en.wikipedia.org/wiki/J._R._Jayewardene

      • 3
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        How come? LTTE leader was injured while experimenting with bombs in 1972 (when he was 18). Duraiappah was killed by the same person in 1975. JR was not the president. How can he be responsible for a war that had already started when he assumed power in 1977?

        Did the world believe losers’ claims? Or was he given a tremendous welcome from the White House to Havana? From Japan to Europe? Answers please.

        • 6
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          There was no LTTE in 1972 or 1975 , they only appeared after the 1983 anti Tamil pogrom , that was orchestrated by the UNP government led by JR Jayewardene. Stop posting lies and fabrications

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            LTTE or not Tamil terrorism was there. Who bombed the Air Ceylon plane in 1978? Aliens? Who killed 13 soldiers on July 17 in 1983 that triggered to riot? Aliens? Who killed Durraiapph? Who was caught transporting weapons in Mannar in 1976? Aliens?

            • 4
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              Tamil terrorism? What do you call your state sponsored genocide, war crimes , ethnic cleansing and pogroms on the island’s Tamils. Ahimsa and acts of kindness?

              • 3
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                Don’t run away from it. Please answer.

                Who bombed the Air Ceylon civilian plane in 1978?
                Who killed 13 soldiers on July 17 in 1983 more than a week before the riot?
                Who killed Durraiapph in 1975?
                Who was caught transporting weapons in Mannar in 1976?
                Who did 1977 Black August against Sinhalese in the north?

                Try doing these in Canada and see if the reaction would be any different.

              • 0
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                This comment was removed by a moderator because it didn’t abide by our Comment policy.

                For more detail see our Comment policy https://www.colombotelegraph.com/index.php/comments-policy-2

              • 1
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                Siva Sankaran Sharma,
                It is because of kindheartedness of Sinhalayo Tamils who were brought to Sinhale by colonial rulers got citizenship in this country. Instead of been grateful to Sinhalayo, these people turned against Sinhalayo to grab part of their country. You think by putting the blame on Sri Lanka Government, Sri Lanka Armed Forces and Sinhalayo LTTE terrorists who massacred Sinhalayo for three decades can clean their blood soaked hands.

                • 3
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                  Eagle shit, The Tamils (original inhabitants of this country) were so generous to accept the kallathoni Vijaya and his thugs when they illegally arrived here after being thrown into the sea by his father. Your fu…g mahawansa crab will tell some other twisted fake story. Tell me how many sinhala civilians were killed by the LTTE compared with your thuggish, rapist, uneducated forces killing, raping, and stealing the Tamil properties?

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                    Tamils are a relatively recent immigrant community.

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                      PP,
                      If they are so recent, how come they are more closely related to up-country Sinhalese than to Indian Tamils. Do you need to be told who the coastal Sinhalese are related to ?

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            SSS
            “There was no LTTE in 1972 or 1975 , they only appeared after the 1983 anti Tamil pogrom:”
            The second part is incorrect.
            https://www.britannica.com/topic/Tamil-Tigers
            among others gives the date as 1976.
            *
            Gatam is as usual wrong again.

        • 5
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          Gatam Tamil militancy may have started in 1972 due to the policies of the then Srimavo government in the 1970s against the Tamil people , especially the Tamil youth EG. Standardization . However this was just a fringe movement with no support from the larger Tamil population , who considered these people nuts and a nuisance . It was the actions of the JR government from 1977, especially after the 1983 anti Tamil pogrom, and his deliberate inaction to curb the Sinhalese looters and rioters and then adding insult to injury by coming on to the national Television and stating if I starve the Tamils the Sinhalese will be happy. More or less endorsing his racist views, the state’s view of the Tamils and Sinhalese racism.

          • 5
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            The deliberate burning of the Jaffna Library by the Sri Lankan armed forces under the supervision of certain Government ministers, the banning of the elected representatives of the Tamils the TULF and denying the Tamil people a voice, the actions of Hawkish racist ministers like Cyril Matthew, Lalith Athulathmudali and Gamini Dissanaicke, made the Tamils realize that they have no other hope or way to gain their rights in a peaceful democratic way and will have to fight for their just rights to safe guard themselves, their language culture heritage and their homeland. It was from this time , what was until then a fringe element became mainstream and got the support of more more than 90% of the Tamil people in the island , as they were forced to and had no other way . All other avenues had failed. JR and his government saw to this. He was the one who deliberately started the rift between island’s Tamils and Muslim Tamils. At his request Muslim politicians organized Muslim thugs and criminals to burn loot and kill Tamils and their belongings down south and in the east at his request Minister Mohammed sent Muslim thugs from Colombo and other parts of the South to Kalmunai in the east , to start problems between the Tamils and Muslims .

            • 2
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              The Jaffna PUBLIC library was burnt by the LTTE.

              • 3
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                Little Willy another Mahavamsa style revisionist history , that the Sinhalese are very good at.. Now claiming everything in the ancient Tamil north and east as Sinhalese , including Tamil history and achievements. Why should the LTTE or the Tamils burn their own buildings and libraries ? Please stop posting outright lies and making a fool of yourself

                https://en.wikipedia.org/wiki/Burning_of_Jaffna_Public_Library

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                  “Tamil north and east”???

                  Such attitudes are the root cause of war. But I’m open to the idea of Tamil Elam and Sinhala Only Elam equitably and peacefully (as much as possible) created by dividing SL. Muslims should also have their choice.

                  Whatever that started in 1948, 1956, 1970s or 1983 ended in victory for SL. So the winners of 2009 do not agree with me.

                  If the losers of 2009 also do not agree with me, it is their greed which condemns them to live under anti-Tamil arbitrary rule, discrimination, genocide, standardization, riots, deprivation, war crimes, colonization, deceit, military rape, etc.. Simply disgusting stuff SL is known to Tamils. Your choice.

                  Compromise and get your Tamil Elam where you can decide your destiny not anti-Tamils. Surely they cannot be as bad as 1948 to 2020 fools who ruled SL!!
                  No compromise – no solution.

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                  Rohan25/Siva Sankaran Sarma, Everything ancient in this island is Sinhalese. That is not a claim. It is a fact, even as per your own Tamil literary works from Tamilnadu, and even the Yaalpana Vaipava Malai. What achievements do the Tamils have here? Except for numerous brutal violent invasions that caused so much destruction, including the ancient Sinhalese capital of Anuradhapura? How many Sinhalese libraries and manuscripts have the Tamils and then the Portuguese, Dutch and the British burnt? Do we see Sinhalese sitting and writing about them? Why? Because the Sinhalese have no intentions or need to use any of those atrocities to make a case for national identity. Tamils on the other hand, fabricate stories to make a national identity, the basis of which is demonising the Sinhalese. Poor immigrant Tamils, who will never succeed in their quest for an indigenous identity, even if you kill all the Sinhalese.
                  “Why should the LTTE burn the library”? Prabhakaran would have burnt anything or anybody if he can blame it on the innocent Sinhalese people. The whole Tamil case/cause is solely about demonising the Sinhalese. This is due to the absence of any historical validity for the Tamil cause/case.
                  https://www.colombotelegraph.com/index.php/who-burnt-the-jaffna-library/

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                    Jaffna Library: The fact of the matter is that the Jaffna public library was a government building and all its expenses, including the salaries for the some 14 employees were paid by the government. No government is going to burn its own building. And the other thing is that there was nothing of historical importance in the public library. Tamils do not possess any ancient literature outside of Tamilnadu. This is a known fact among historians. But after the library fire, Tamils started claiming that the Sinhalese have burnt the library to burn historically important ancient Tamil ola-leaf manuscripts. How sick… !? There was not a single
                    ola-leaf manuscript ancient or modern in that library. If there were, why haven’t anybody heard about them, or seen them? What are their names and contents? Already in 1931 the Ceylon Historical Manuscript Commission was established to copy and preserve the thousands of old/ancient manuscripts. None of those manuscripts were in Tamil. No manuscripts of historical importance were kept in public libraries, without preserving capabilities. The commissioner was Mudaliyar C. Rasanayagam, a Tamil fundamentalist. Rasanayagam already in 1926 in his book “Ancient Jaffna” had acknowledged the absence of any ancient Tamil literature here.

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                      There should be an international inquiry into these vicious Tamil claims about Sinhalese coming all the way from the south to burn the Jaffna public library! Really 99.99999999% of the Sinhalese do not even know about existence of this pathetic library. This entire story about the library fire has all the elements of a false flag operation. The LTTE had been on an arson spree for weeks prior to the library fire, but this particular fire is supposed to be done by the Sinhalese who had been especially flown to Jaffna? Right after the fire, everybody knew that it was done by the LTTE, but soon the story changed, helped on the way with the Sinhalese party politics. UNP and SLFP trying to get the Tamil vote, making allegations against each other. Named people like Gamini Disanayaka and Lalith Athulathmudali are implicated in these vicious allegations. Legal action should be sought against Tamils who propagate this lie about Sinhalese burning the library. Also, there should be an inquiry about what was lost in the fire. Tamils can get an international humiliation for all their bogus claims of losing ancient ola-leaf manuscripts, which all scholars know the Jaffna Tamils never possessed.

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                    Little Willy/Gatam both waste of time as keep on repeating the same lies again and again and posting untruths.

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                  Mudaliyar C. Rasanayagam in his book “Ancient Jaffna” (1926) says:
                  In order to reconstruct the history of Jaffna from its earliest times, it becomes necessary to examine critically our ancient traditions in the light of contemporary documents, and in the absence of any local literature and inscriptions, to search for further information in the literature and chronicles of other countries. In this respect Mahavansa is most useful. It is a Court chronicle containing the annals of the Ceylon kings, and its writers who most probably regarded the Tamils as a horde of cruel marauders pass over both them and their efforts in silence, except when they made themselves too unpleasant to go unnoticed. ”
                   
                  “….. His authorities were certain earlier writings such as the Kailaya Malai, Vaiya Padal, Pararajasekaran Ula and Raja Murai (Royal Chronicles), the oldest of which was certainly not earlier than the 14th or the 15th century A D.

                   
                  As said already mentioned above, all scholars of history know that the Tamils in Lanka didn’t possess any ancient literature. How come suddenly after the Jaffna public library fire, suddenly there are claims of losing ancient ola-leaf manuscripts?

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                    P.P,
                    “Tamils in Lanka didn’t possess any ancient literature. How come..”
                    Ok, Tamils have no written ancient records. The Sinhalese have.( Let’s for the moment ignore stories of lions cohabiting with human women and the Buddha visiting 3 times).
                    Even India doesn’t have a comprehensive record of its civilization, but archaeologists have found evidence of a much greater one than ours. We have nothing, zilch, beyond 300 BC. Even the British, who are widely claimed by local pundits to have been living in trees when we were building stupas, have 5500 year-old stone houses !
                    The absence of a written record proves nothing. Even its existence (Mahavamsa) raises more questions than answers.

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                      This is not a discussion about what the presence or absence of written records proves. The point here is that the Tamils are claiming that they had ancient manuscripts in the Jaffna public library, which the Sinhalese intentionally burnt. Hope you can differentiate the two.

                      BTW Tamils have absolutely no literature produced here, prior to 14-15th century A.D. That too is only a couple of works. While the Tamil literature is known to be one of the oldest, like the Sinhalese. So both ancient Sinhalese and ancient Tamils posses vast literary records, while the Tamils who are supposed to have been here from time immemorial do not have anything. 14th – 15th century is the time when the Tamils started migrating here. Even after that, the nature of the settlement was not one of literature producing society. But a trading or working settlement which hadn’t properly set roots here, but was producing to either send back to the homeland Tamilnadu, or living day to day with their roots in Tamilnadu. Now claiming to be original inhabitant. Its really comical.

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                    Sinhalese racists love to quote what Mudaliar Rasanayagam stated and quote it out of context , just like the way quote professor Indrapala.
                    One of the most quoted, but miscited history books in Sri Lanka for the past two decades was Mudaliyar C.Rasanayagam’s work entitled Ancient Jaffna, being a research into the History of Jaffna from very early times to the Portuguese Period. This 390-page book was published in 1926, by Everymans Publishers Ltd, Madras. Due to its cited controversial opinion that ‘the Sinhalese had occupied Jaffna before the Tamils’, it gained popularity among upstart historians as well as racially-biased journalists and politicians.

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                      The controversial opinion about the presence of Sinhalese in ancient Jaffna appears in the last few pages of the book. In p.384, Rasanayagam mentions,
                      “That Jaffna was occupied by the Sinhalese earlier than by the Tamils is seen not only in the place names of Jaffna but also in some of the habits and customs of the people. The system of branding cattle with the communal brand by which not only the caste but also the position and the family of the owner could be traced was peculiarly Sinhalese.”
                      Before castigating Rasanayagam as an anti-Tamil (or pro-Sinhalese) historian, one should try to understand what he had meant by the use of the word ‘Sinhalese’. In pages prior to the chapter in which this controversial opinion appears, Rasanayagam defines the races of Sri Lanka and how they evolved. Many up-start historians and (intellectually challenged) politicians of Sri Lanka failed to read the entire work, before citing Rasanayagam.
                      Between pages 176 and 180, the author analyses the evidences related to the earliest languages spoken by the people of Ceylon. Twelve excerpts are given below to show whom Rasanayagam considered as ‘Sinhalese’ [Italics are mine.]

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                      (4) “Elu, in its imperfect state, could not stand the onslaught of Tamil, Pali and Sanskrit. The first of these languages was introduced into Ceylon at various times by invaders and immigrants. The latter two came in through the introduction of Buddhism.”
                      (5) “Vijaya and his followers could not have introduced into the island, a new language and imposed it upon the people. They and their descendants would have adopted the language previously spoken in the island.”
                      (6) “There would have been an amalgamation of the original language with Tamil and the language of the few Kalinga immigrants who arrived in the island, by the time Buddhism was introduced.”
                      (7) “Upon the introduction of copious Pali and Sanskrit works, a new language came into existence, with a ground work of Elu and Tamil and a superstructure of Pali and Sanskrit.”
                      (8) “While the process of forming the Sinhalese nation was going on by the continual mixture of the Yakkhas, Nagas, the Tamils and the Kalingas, the Sinhalese language too was growing and expanding.”

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                      (1) “The name Lanka, applied to Ceylon, had not the remotest connection with its people or with the language spoken by them. The name Ilam which was also given to Ceylon, has some affinity with its earlier language Elu. The island must have been called Ilam because Elu was spoken there; or perhaps the language was called Elu because it was spoke in Ilam. The name Ilam was undoubtedly given to Ceylon by the Tamils, her neighbors.” [I presume he meant the South Indian Tamils.]
                      (2) “As Ceylon afterwards became famous for its gold and its toddy, the word ‘Ilam’ later became a Tamil word to designate gold or toddy metronymically.” As Ceylon afterwards became famous for its gold and its toddy, the word ‘Ilam’ later became a Tamil word to designate gold or toddy metronomically.”
                      (3) “Elu was only a spoken dialect and had not reached a state of development sufficient to produce any literature in that language. Tamil was, therefore, the Court language. The poets, kings and pundits cultivated it for literary purposes. Tamil continued to be the Court language of Ceylon kings for several centuries. Even after the adoption of Sinhalese in Court, Tamil was not despised as Tamil poets and pundits often flocked to the court of a learned Sinhalese king.”

                    • 0
                      0

                      So languages wait until they are grown up enough to be used? LMAO Tamils and their dumb theories…. Can you please explain this very interesting process of languages waiting to grow up?
                       
                      Tamil theories are totally idiotic. They just can’t get things right or make anything tally, because the ultimate purpose of their claims is a total lie. So we have one and the same person, like SSS saying totally contradictory things. Example:
                      In one place SSS claims that “Elu is Tamil” and then he totally agrees that “Elu, in its imperfect state, could not stand the onslaught of Tamil….”!! SSS does not see the contradiction in the two claims. Namely, in the latter statement Elu and Tamil are distinguished as two different languages, while in the former it is claimed as one and the same language. The most comical here is that Elu has nothing to do with Tamil at all, but Tamils just write these nonsensical theories.

              • 2
                0

                Who killed Rajiv Gandhi?
                Who killed 2 TULF leaders?
                Who killed Kadirgamar?
                Who killed Fernandopulle?
                Who killed Thambimuttu?
                Who killed Duraiappah?
                Who killed Bastianpillai?
                Who killed Uma Maheswaran?
                Who killed Rajini Rajasingham?

              • 1
                2

                Punchi Point,
                How lucky you are, – You witnessed a history making event.
                You must have seen Prabhakaran directing operations. I missed him in the crowd. The glare was too much!

            • 5
              4

              Rohan25,
              Policies of the Governments after British left did not have a negative impact on the whole Tamil community in this country. Some policies had a negative impact only on Malabar Vellala Tamils who enjoyed a privileged position in the colonial Administration.
              What happened in Sinhale was similar to the situation in South Africa where minority white Afrikans ruled the majority black Africans. In Sinhale, minority Vellala Tamils ruled Sinhala majority with British and they wanted to maintain the status quo which was not acceptable to Sinhalayo who are the Native people in the country.
              “Standardization.” You think it was fair for Vellala Tamils to occupy more than 60% of the places in Medical College, Engineering and Science Faculties. Standardization and quota system benefitted Tamils who lived outside Yapanaya and Sinhalayo who lived in areas where educational facilities were poor. Those policies had a negative impact on Sinhalayo who lived in cities. So, do not talk nonsense!

              • 4
                0

                Eagle,
                If Sinhalayo are so smart, why is most of the country’s income produced by Tamils and Muslims? Even after standardisation?
                Are Sinhalayo only good at strutting around in fancy uniforms or being brigadiers who can’t count?

                • 0
                  0

                  Do you have the data for your claims? Show us what data you are using to claim “most of the country’s income produced by Tamils and Muslims?”
                   
                  Also, how much do you think Tamil terrorism has cost since independence? Not to mention prior to independence. First the demand for Tamil to be made official – that was a costly affair, and it costs millions to implement such a two-language policy. Then the so-called Satyagrahas – blocking entrances outside government offices in Colombo and shouting anti-Sinhalese slogans demanding that the language in the offices should be Tamil! Some Satyagrahas…. That was nothing but terrorism. No work done either. Just fighting about what language the offices should be run, in the middle of Colombo. The language obsession of the Tamils is the root cause of all destruction here. Its a sickness. Language is just something you use to communicate. Learning a bit of Sinhalese to communicate would not hurt any Tamil at all, but would have enabled Tamils to prosper and even be the leaders of the country. But, no…. Tamil stupidity and egocentric claims have divided this country and destroyed everything for everyone.

                  • 1
                    0

                    PP,
                    “Do you have the data for your claims? “
                    Well, by now you should know that I don’t make unfounded claims, unlike some people who think this country runs on Sinhala business ability.
                    You can’t be so ignorant as to not know that the tea industry depends on Tamil labour.
                    Also you can check the ownership of the country’s biggest exporters ( tea, garments). Mostly Muslim or other minorities, including Akbar bros. Adamexpo.
                    Brandix, Hirdaramanis, and MAS produce the vast majority of exports to the US. But they don’t make a song and dance about it unlike the potty little Sinhala Buddhist “industrialists” who can’t even export biscuits properly.
                    Can you show one Sinhala Buddhist outfit that is as successful as Abans?
                    If you genuinely didn’t know all the above, let it be an education. Glad to be of help!

                    • 1
                      1

                      P.P,
                      “We didn’t ask these Plantation Tamils to come here.”
                      Just the sort of hate-filled comment one would expect from a “Sinhala Buddhist”.
                      Has it never occurred to you that these plantation workers are the reason you even exist? What was the reason that the population went from a few million to 20 million? Increased state income, which paid for better health care, infrastructure, job creation, education, etc. It was the poor workers who created all this wealth. If they didn’t do it, neither you nor your great-great grandparents would have survived to display this sort of ingratitude

          • 3
            2

            How about 1977 Black August in Jaffna that chased away the entire Sinhala population in Jaffna?
            How about 1990 Black August in Jaffna that chased away the entire Muslim population in Jaffna?

            Tamil looters robbed their belongings including land. Sinhalese and Muslims won the war. When will they get their land back?

            • 2
              0

              How but stop lying and deliberately posting inaccurate facts. There were hardly any Sinhalese in Jaffna . Just a few bakers and no one chased them away . They just packed up and left . For your information they never owned any properties or lands to rob. The Muslim population were chased away from the north and due to their own spying activities for the Sri Lankan armed forces and storing arms provided by the armed forces . Who asked them to this and why were they storing up arms ? To fight against whom? Obvious to join the armed forces and fight and ethnically cleanse Tamil villages , just like what happened in the eastern province and down south. The LTTE caught them on time, until then no one illtreated them and they were considered part of the northern Tamils. The Muslim population in the entire north numbered only around 65000 the most and most of them were dirt poor and hardly had any possession’s and lands to loot. Now falsely claiming they had lots of land possessions and their numbers inflated to a 200000 -300000 by certain Muslim organization and politicians to deliberately Islamize large parts of the north , just like the east and steal Tamil land. They think the Tamils are now weak , so can steal their lands with the help of Sinhalese government and certain Islamic nations, using fake history and trumped up statistics.

    • 12
      1

      G
      Yet another miserable ‘gundu’ from you.
      *
      Jayewardene entered the University College, Colombo in 1926 pursuing the Advocate’s course, reading English, Latin, Logic and Economics for two years, after which he entered Ceylon Law College in 1928.
      Some mention Royal College & Bishop’s College. (I am not sure if it was the latter here he learned that a man cannot be changed into a woman ans vice versa).

      • 3
        6

        So??? How does that compare with Rajapaksas??

        • 5
          0

          What has any comparison to do with yet another of your fabrications?

      • 4
        9

        In comparison to uneducated and uncultured Rajapaksas, JRJ was a gentleman and a statesman. We salute you JR!

        • 1
          4

          This comment was removed by a moderator because it didn’t abide by our Comment policy.

          For more detail see our Comment policy https://www.colombotelegraph.com/index.php/comments-policy-2

        • 7
          2

          Gentlemen and statesmen do not use race/religion and racist/religious hatred for political benefits, organize anti Tamil pogroms and then come on TV and make hate speeches. Learn from the New Zealand Prime minister Jacintha Arden . How she behaved during the mosque attack and brought her people together , gave solace to country’s Muslim population . She is only a lady and a stateswoman. From the time of independence , Sri Lanka has never had a statesperson as a leader . They have all used race and religion , as a tool to divide the people, for their own political gain and are still doing so and the country is goes to the dogs

          • 1
            0

            Siva Sankaran Sharma,
            So you agree that Tamil politicians who used anti-Sinhala racism as the main tool for their political activities from the time Sinhale gained Independence were/are not gentlemen and statesmen.
            Good that finally you accepted the bitter truth.

            “Gentlemen and statesmen do not use race/religion and racist/religious hatred for political benefits,”

        • 1
          1

          In comparison to them does not mean much. Does it?

          • 1
            0

            So daft!

            • 0
              0

              G
              Being daft: a quality in with you are matchless, as you have amply demonstrated in these pages.

    • 6
      2

      JRJ was an international Leader. So were Mrs B and CBK.
      .
      If CBK was not the president at the time ISLAND was hit by Tsunami in 2004, I know it very well, no western world would donate that much to srilanka.
      Rajakashes are CARICATURE figures of CHINA. Mahinda Rajaakshes and Gotabaya are no better to Afican Leaders whose naivity were instrumental in getting them caught by CHINESE debt trap – but feeding them germ into them as ” Developments”.
      :
      If MAHINDA RAJAPAKSHE was educated to the degree of JRJ and other leaders, no Mattala Airport, Hambanthota Harbour or any other white elephant projects would have ruined this country. Road and Construction were necessary as is the case with any like minded countries in Africa, but was it essential MATTALA airport, Hambantota habour or the like fund wasting white elephants ? No Mahinda Rajakashe s BIRD brain never forsaw the loads of DEBTs woudl boomerang on the tiny economy, but he and his his goons betrayed the nation. And the fact is that the bugger thought he could compete with Bandaranayakas… that is what each and every white elephant projects were named after MAHINDA RAJAPAKSHE:::::: these buggers would never learn it…. today each and every citizen is believed to be a debtor for 7 lacks of rupees.

      • 3
        1

        Was CBK so close to the US?
        Then why did the US prefer Ranil to her?

        • 2
          2

          CBK was not close neither to the US nor to China. I thought EA under CBK govt/under late Mr Kadirgarmar was the best.
          .
          And not to forget, those R & D- so called development projects were discussed with China under her govt. As is usual to MR, he grabed the credit. He is used to credit without any shame. … even today I heard of the kind of issues in the parliament – that was all about rubber factory in Kaluthara… which was started by Good governance govt.
          .
          People have fully forgotten, that CBK ruled the nation at the time the long held CIVIL war was at its heights. I thought democrats supporters her govt (CLINTON administration).

          • 1
            0

            The US adopted a strong anti-China line much after Clinton, which has little to with Clinton but that China had overtaken the US in trade and diplomatic relations in crucial Third World countries, and was a formidable challenge to the global economic dominance of the US.
            Let us be clear that US foreign policy has nothing to do with democracy or human rights.
            Its preference for the UNP lasted until it learned rather belatedly in the mid 2010s that the UNP was a political dead duck, which many realized by 2003 when CBK effortlessly dismissed the government with virtually no public protest.

        • 0
          0

          ” Then why did the US prefer Ranil to her? “
          I missed the sentence in Leelagemalli’s comment that “US is so close CBK than Ranil”. Why shouldn’t it be so? Still let us go other one.

          ” Then why did the US prefer Ranil to her? “
          Did US told you so? When? Who that US is, you mean?
          You sounds like jealous of CK because US like her than Ranil. Please remember, CBK is daughter of the world’s greatest goddess Siri Ma O.

          Rubish!
          Always put words in others’ mouth, with reading thier comments.

    • 5
      1

      We are not astrologists, nor are we fortunetellers, but we at least 50% of the srilaknen population predicted it well as to why Rajapakshes grabed power.

      That was to take the prevailing law and order of the country on to their hands. Not for the national safety issues, not for improve the economy but only for that matter, even if our punnakku eaters did not get it then.

      That was to get free from all the alleged high crimes filed against them; no matter loads of evidence collected were prima facie and each and everyone of them should be charged with imprisonments that can last many many years.

      1) As of today – Yoshitha Rajaakshes is free from his CRIME investigations
      2) Lalith WEERATHUNGA and Palpota ARE TODAY free from any further charges, even if they were proved to have abused state funds amounting over 600 millions of tax payers funds, – wasted for silredi campaign, but pretending for filling their pockets.

    • 0
      0

      Jayawardana always follows the USA. He wants to massacre the entire TAMILS who living in Colombo same way how the USA wiped out Red Indians from the USA

  • 16
    11

    Cambridge and JR ? Anyway ,these universities do not produce supermen . There are many old boys of top universities behind bars, particularly as high flying defrauders of third world countries. It is easy for them, because those open mouthed idiots in third world countries think a guy spending three years at a European university becomes a superman !

    Gandhi, Lenin, Marx. Mao, Mandela, Einstein did not go to Oxford or Cambridge. An education is only a training, maybe it stops at year 25. From then, until a person is about 80 what does he do ? Bewitch the fools in the home country ! What is deep in his genes cannot be changed by Cambridge( Note , Mahendran)

    Any way , Mr Wijewardena ,you say JR read and followed Keynes, the famous economist. This is just a way of saying it , which is very common in Sri Lankan writing. How well did JR understand Keynes? Was JR capable of reading any philosopher and grasping the thinking ? I do not think so . Reading something is one thing. But understanding it perfectly is another. Half baked people deciding about the qualities of another half baked person! Sri Lanka has not produced a single academic writer/thinker of international stature.

    • 6
      1

      DS
      The fellow is a con man.
      Check his claims (it is easy on the Internet) before responding.

      • 8
        4

        If Deepthi Silva has never heard of Ananda Coomaraswamy or Cyril Ponnamperuma, it is more a reflection on his own education than theirs. Granted, they were both Ceylonese, not Sri Lankans.

    • 12
      1

      “Cambridge and JR ? Anyway ,these universities do not produce supermen.”
      Very true as with any Uni or organisation for that matter, especially now with just mass proliferation of learning institutes, there are misfits a plenty. But in the 1920s there were very few Unis and the standards of conduct and morality then were quite reasonable. Well we did not have any Unis till much later. One example of Mahendran (recent product) is not real justification. Hope your disdain of Camb or Oxfd Unis will not be to belittle SWRDB or Lakshman Kadir
      Though Lenin, Marx , and Einstein did not go to Cambridge or Oxford they went to Unis or Uni level institutes in their countries, while Gandhi attended University College, London which is a constituent college of University of London.
      Hope your disdain will not be addressed to SWRDB or Lakshman Kadir or Lalith Athulathmudali of Oxford fame..
      I think when Gatam used Cambridge educated, it was just to show the education levels in comparison and not the shrewdness in politics that has brought Rajapakses to the front.
      Of course we know the lowering of standards by Sirima in 1972 which enabled some to gain admission to even the “Low” College.

    • 8
      0

      Sri Lanka has not produced a single academic writer/thinker of international stature.

      Is the above a statement, a lament or a barb at JR or the writer.
      If the last two, it is not their fault.

    • 11
      1

      Reading something is one thing. But understanding it perfectly is another.
      Agreed.
      I just wonder if our Finance Minister understood everything (contents) perfectly when reading the budget speech of two and a half hours.
      Bravo.

      • 5
        1

        Ferryman
        .
        Incumbent minister of Finance would understand only his MEDAMULANA theories.
        :
        But he is the master in misleading the most stupid people across the country. Gullible people would never see it right. If they would have been asked to eat RATAHANAKOLA , they would line up to do so on one go. If Muruththettuwa Cheevaradhahriya or the like would be placed before on their ques it will be much easier. THat way, Rajakashes would stay manipulating the easy mind set of the country.
        Myths and untruths would not guide the majority of people. Even if they are caught for the second time, they would have no chance not to get caught on the 3rd time.

    • 4
      1

      deepthi silva: “Sri Lanka has not produced a single academic writer. thinker of international stature”. But do not overlook the “Academics” we have produced to be recruited and easily fit into a “Brigade of Slaves” of the corrupt politicians. Recently two of them were “Discharged” and declared “Innocent” of all the charges of “Misuse” Public Funds. These two were among many such “Academics” and “Professionals” in Public/Private sectors due to be “Discharged” sooner or later. One of them, viz the “Top” most Public Servant, after getting his “Freedom” said: “Now Public Servants need not fear”. We are proud to be the “Miracle of Asia”. Don’t you agree?

    • 2
      1

      Deepthi Silva,

      It is no right to take Mahindran as an example.

      There are whole lot of reports revealing lot that so called bond scam was still there until MR junta regime 01. Cabral handled it not allowing a legal entity within CB. Mafia boss together with POLONNARUWE donkey used BOND scam to destroy UNP. The losses estimated by SRILANKEN airline is 100 times more than ANY other losses, but Rajapakshes remain to be people lovers thanks to their myth ” Rajapakhe liberated srilanka from LTTErs”.
      For your note, I have add some infor about Gandhi below.
      :
      Gandhi was graudated from University of London
      In office
      1924–1925
      Preceded by Abul Kalam Azad
      Succeeded by Sarojini Naidu
      Born Mohandas Karamchand Gandhi
      2 October 1869
      Porbandar, Kathiawar Agency, Bombay Presidency, British India
      Died 30 January 1948 (aged 78)
      New Delhi, Dominion of India
      Cause of death Assassination (gunshot wounds)
      Monuments Raj Ghat,
      Gandhi Smriti
      Other names Mahatma Gandhi, Bapu ji, Gandhi ji, M. K. Gandhi
      Citizenship Indian
      Alma mater University College London[1]
      Inner Temple
      Occupation
      LawyerPoliticianActivistWriter
      Years active 1893–1948
      Era British Raj
      Known for Indian Independence Movement,
      Nonviolent resistance
      Notable work
      The Story of My Experiments with Truth
      Political party Indian National Congress
      Movement Indian independence movement
      Spouse(s) Kasturba Gandhi

      ​(m. 1883; died 1944)​
      Children
      HarilalManilalRamdasDevdas
      Parents
      Karamchand Gandhi (father)
      Putlibai Gandhi (mother)
      Signature

  • 3
    4

    This is only a power Hungry Budget. Having armed with 20A, Aanduwa want to do everything itself. Then, probably, it want the name it did it. From 2009, government are not able to settle on a policy whether they want to go on market economy or government controlled economy. Everything Keynes proposed was government stimulant to private economy. Lankawe governments, having abandoned their friendly dealing with the International organization and countries who can invest or lend in a fair terms, have surrendered to China. So for the loss of money, job, and sovereign lands, Lankawe did got only White Elephants, but no developments. Lankawe Aanduwas is just taking what China offering (or demanding to do), but not studying the problems, formulating solutions and calling international quotes for the projects. Current Rubber factory is as bad as handing over the Hangbangtota harbor.

    • 1
      0

      Mallaiyuran,
      “Lankawe governments, having abandoned their friendly dealing with the International organization and countries who can invest or lend in a fair terms, have surrendered to China.”

      Those so called friendly countries pushed Sri Lanka towards China by supporting separatist politicians and LTTE. It was China and Pakistan who provided arms and ammunition to defeat LTTE and restore peace that was denied to people in this country by LTTE Tamil terrorists that terrorized the people for three decades.
      ===
      “Lankawe Aanduwas is just taking what China offering (or demanding to do), but not studying the problems, formulating solutions and calling international quotes for the projects.”

      Sinhalayo did that and selected China because they are the best. If you do not know what Sinhalayo did please mind your business instead of jabbering nonsense.

  • 7
    1

    Well thought out, well analysed, well presented article proving that history, by and large, repeats itself, in final actions in slightly different formats.
    That inexorable universal cyclic pattern, no boundaries.
    Always there should be hope and patience, as change is inevitable in Nature.

  • 8
    1

    This is not going to be a concern for the moda sinhalayo majority who voted for this war criminal and his corrupt family who have literally looted billions of dollars from the taxpayers of this country.

    the moda sinhala majority will probably blame the Muslims saying they are the ones who are causing the crash in the economy (as stupid as this sounds keep in mind these are the same moda sinhala majority that though some Muslim doctor was giving ‘sterilization pills’ to moda sinhala women who husband’s were firing blanks) or that the diaspora is putting pressure on foreign governments to isolate sri lanka on the world stage though sanctions (sanctions at this point is a very real possibility as the moda sinhala government has stopped imports which goes against the very basic fundamentals of free trade and a global economy).

    There is no helping the moda sinhalayo majority. Find a way to exploit the moda sinhalayo (even to the point where you make them sell you the clothes on their dirty backs). Either you do it or someone from/connected to the ‘rulling family’ will.

  • 4
    1

    That he was a brilliant man cannot be disputed , but the havoc he unleashed on this nation in July 1983 shall never be forgotten.

  • 1
    11

    False allegations were made against the JR regime in the mid 1980s making stupid demands but how many materialised? None! Did the world believe those lies? No. A leader with foresight.

    JR was a great statesman who saved SL from shackles of communism and much more! Thank you JR for your yeoman service to SL. We need another like him today!

    • 3
      1

      GATHAM: “We need another like him today”. Yes. You have got “HIM” now, to FINISH the job from where your “leader with foresight” stopped.

  • 0
    0

    MMT is anything but modern. It is the old Socialist that has failed time and time again.

    Keynesian economics is pure bogus. Socialism in another guise.

    Business cycles are accurately explained in the Austrian business cycle theory.

    Only free markets, limited government and sound money (gold) can save Sri Lanka. Such methods are furthest from the mind of the people and government.

    What we are looking at is the abyss of hyperinflation, massive poverty and hunger, and a government which we cannot kick out, because it not a government, but rather a kingdom.

    Good luck Sri lanka!

    • 1
      1

      Has not the “Austrian business cycle theory” gone rather haywire since the last economic-cum-financial crisis?

      • 0
        0

        @SJ

        Austrian business cycle theory seeks to explain the cause of the economic recessions or depressions that the Western economies have had for many decades now. The last major one being in 2008 which nearly brought the US to its knees.

        The theory shows that when the economy of a country naturally grows there should be no reason for it to “bust”.

        The reason for the “bust” therefore is unnatural and facilitated by some force coming from outside the free market. This third external force is typically the central bank, which manipulates the economy by slashing interest rates to values below what is naturally set by the market.

        The interest rate is a measure of the resources held by society – i.e. a society that saves can afford a low interest rate as money is abundant. Conversely a society that does not save can ill afford to lose what savings it has and thus the interest rate climbs.

        The interest rate features in the decisions made by entrepreneurs. A low interest rate (suggesting money is abundant) causes entrepreneurs to take longer term loans leading to larger multi-year longer-term projects. Whereas high interest rates discourage such long term projects in favor of small projects.

        • 0
          0

          @SJ (the rest of my comment got cut off.. to continue)

          When the central bank lowers interest rates, either by printing money or adjusting bank reserve ratios, entrepreneurs invest in long term projects, resulting in a “boom” greater than what would naturally have been.

          But those projects are premised on the fact that the market can uphold the real-world resources necessary – something that an accurate interest rate would have yielded. But because the interest rate is inaccurate, the projects advance to a point where the resources experienced a crunch, resulting in the “bust”.

          With repeated intervention into the economy by the central bank, the economy weakens to the point where it utterly fails. In the US this is what is happening, and we can expect a major failure worse than 2008 in the near future.

  • 3
    0

    Dr. Wijewardane: While you are tracing the “History” of Budget Making, there is another “Budget” that is being “Actioned” even without passing through the Parliament. Today, “THAT” Budget is out. It has listed nearly 4700 items to be “TAXED” and the taxes range from “.05” to “23” percent. Why not invest your skills in Financial matters to analyze, “THAT” Budget, instead of wasting time on these “Archiach” documents produced by Ministers of Finance that are meant only for “CEREMONIAL” purposes?

  • 14
    0

    Hey look at this picture. It accurately reflects the poise and self-assured demeanor that JR always displayed while deliberately screwing the country’s democracy. His sense of entitlement was too big for a small country like Sri Lanka to withstand. No wonder he triggered the paranoid and equally egomaniacal Indira Gandhi with his “western tilt” in foreign policy and she decided to put him in his place. She launched India’s covert campaign to use the “Tamil Problem” to destabilize Sri Lanka. Tamil “boys” were given training in Guerrilla warfare by RAW in various parts of India in late 1970s. After 1983, India’s involvement became more overt and what started as isolated terrorist attacks by a few militant youth became full scale war against the Sri Lankan state. This was the strategy of “accelerated war” employed by India at the time to impose its will on its smaller neighbours. The rest is history as they say.

    • 3
      3

      Indira G had a big ego, but what makes her paranoid?
      Her Emergency Rule was a bad miscalculation, but she was clear and well focussed on who her enemies were.

  • 4
    0

    Yes a good suggestion.
    Since 1971 the gold standard was abolished and govts could print money not linked to a base.
    Then govts adopted a rule by decree as it were, through gazettes – “By the powers vested in me as minister of …. by…..”.
    All this in the name of prosperity for the country, but actually it only benefited the ruling elite by manipulation of these two artifices to suit their purposes.
    May be if used intelligently, the above can benefit the people.
    But unfortunately instead of having a Parliament which controls finance for the benefit of the country, we have a caricature of one which only serves the political parties and vested interests.
    So finally, it is the system of electing our representatives to the Parliament that should be addressed first, and rectified.
    We must change the monkey that wields the knife, (so it is used for intended purpose) and not the knife.

  • 2
    0

    Maxi Pad has become a master politics in Lankawe. MMDA was introduced by Father of the Nation, Don Stephen to control Muslim Women to get the men politicians support to “Muslim – Sinhala Government”. None of the Muslim Parties’ leaders talk about the conditions of that sector. Because controlling women is what the faith. But for Slap Party MPs and party changing Muslim leaders’ dead Muslims burial is important, that too faith. These guys all take money and tune political matters favorable to ruling Royals. Mass have no capacity to guess how these turned into political currency for Royals. Many times Ali Sabre said he was talking to government about the burial. But now swears he never gave any pressure to government from inside and if somebody proves it, he is ready to resign. Like this burial game of Muslim leaders, it is very hard to guess where this Maxi Pad politics is going, too. SJB promised free pad for school girls as they had trouble attending schools. Many categories of women who urgently need these have no means to get these. But Royals who opposed that idea now are taxing heavily the pads. (These are taxed in some US states, but in NY toilet tissue and maxi pad are not taxed). SBJ MP Rohini Kaviratne said the government is earning on females’ periods. Same for Royals!

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