By Sumanasiri Liyanage –
A couple of weeks ago, the Prime Minister, Ranil Wickremesinghe, tabled in the Parliament the recommendations of the steering committee on constitutional reforms. Prior to that six committee reports were tabled. It is good that all these documents in all three languages are now available in the web so that people who are interested in the subject can consult them. This article by any means does aim at a comprehensive analysis of these reports although such an effort would be extremely important as these documents would be the basis of the future supreme law of the island. So far the discussion has revolved round two issues, namely. (1) is this a unitary or federal constitution? and (2) will the changes introduced into the Article 9 of the present constitution water down the constitutional status of the Buddhism? The subject that I intend to discuss in this article is of course linked with the first issue. However, the level and degree of devolution, does not affect directly the basic argument of the present article. Here, my intention is to examine the nexus between devolution and development. First, I shall discuss, at somewhat abstract level, the impact of devolved state structure on economic development. In the second part of the article, the relevant constitutional proposals would be examined in relation to the government economic perspective document, V2025 that was released sometime back at a big ceremony at the BMICH.
I should emphasize my definition of economic development closely follows Dudley Sears’s well-known definition of development. It includes (1) a reasonable rate of growth; and (2) the reduction of poverty, unemployment and inequality from its existing levels. I would add to the list a third element, the maintenance of ecological balance at a reasonable level.
Decentralized/ devolved / federal state structure would impact on economic development in four ways. First, the setting up of a multiple tier state structure would invariably increase total government expenditure as new governmental units need staff recruitment, infrastructure, and payments and fringe benefits for newly added peoples’ representatives. As a well known public finance economist, Prof Ursula Hicks had pointed out ‘a single unitary constitution would almost certainly be cheaper to run’. However, the adoption of federal/ quasi-federal/ devolved state structure is a decision based primarily on non-economic considerations. Hence Prof Hicks adds: “The choice of a non-unitary constitution is evidence that the citizens of one area are not prepared to treat their co-citizens in another area entirely all fours with themselves, although at the same time they are willing to pool such fundamental public responsibilities as defence and external relations.”
The additional fiscal burden emanating from new state structures may be compensated at least partly by increasing governmental revenue if the provincial states are more effective in revenue collection than the central administration is. Similarly, the provincial governments may be cost-effective in case of program implementation especially due to proximity factor.
Secondly, it has been generally agreed that matters ought to be handled by the smallest, lowest or least centralized competent authority so that needs and aspirations of respective communities will receive due respect in decision-making. In other words, decisions should be taken at a local level if possible, rather than by a central authority. This principle of subsidiarity allows peoples’ direct engagement in decision-making on subjects that affects their life. Thus decision-making and responsibility go together.
Thirdly, as VitoTanzi has argued, “a decentralized system can become a surrogate for competition, bringing to the public sector some of the allocative benefits that a competitive markets brings to the private sector”. Hence, It may have positive impact on economic development as people can compare different economic policies adopted by respective local administration.
Finally, Decentralized/ devolved / federal state structure would help reducing regional economic disparities by minimizing center and urban bias in economic decision-making. However, to what extent these four principles would impact on economic development has to be examined by either analyzing the performance of the existing provincial council system or looking at the place and importance given to the proposed state structures in the new economic plan. This requires not abstract theorizing but the concrete analysis of the concrete situation.
Constitutional Proposals and V2025
Recently the Sirisena-Wickremesinghe government has released its V2025 document that outlines how the government proposes to manage the Sri Lankan economy in the next 8 years (2018- 2015). It is interesting to note that this is the fourth economic perspective document in the last 32 months period. Similarly the Prime Minister has tabled Steering Committee proposals on the new constitution. The proposed state structure in the new constitution would appear as in Figure 1. It appears there would be four or three tier state structure.
Figure 1 – The Proposed State Structure
It is necessary note that the prime minister is not only the chairman of the steering committee on constitutional proposals but also the minister of economic development. However, the funny and hilarious thing is there is not link at all between the two documents. In other words, how the proposed state structure is used in the implementation of the V2025 economic plan is not specified. The Chapter 2 of the V2025 does not list the non-devolution as a constraint of economic growth. New approach to growth is summarized in Chapter 4 in which the following legal reforms are proposed:
We will introduce supportive legal reforms. In particular the new Inland Revenue Act, Foreign Exchange Act, Voluntary Disclosures of Income Act, State Land Bank Act, Anti Dumping Act, State Commercial Enterprises Act, Ports and Airports Act, Ruhunu Economic Development Corporation Act, Lands (Special Provisions) Act, Sustainable Development Act, Liability Management Act, and National Debt Office Act will considerably improve the business-friendly environment.
No reference to the proposed state structure or how it would become a part of the “new approach to growth”. Once again Chapter 6 of the V2025 that entitles “strengthening the growth framework” does not have a reference as to how the intergovernmental relations would be a part of this framework. The irony is it discusses private-public partnership but not the center-provincial partnership. In Chapter 7 we find the following statement. “The Government will establish major economic development zones such as Ruhuna & Wayamba and mega projects of urban development. Megapolis project”. It is very clear that there no linkage between these mega projects and the provincial councils. In other words the same mechanism that existed under the last regime in which center plays the the sole and critical role will remain unchanged. The words using Ruhuna & Wayamba make it clear that the people who drafted V2025 did not have any idea about the constitutional proposals.
The only place where we can see a link between V2025 and the constitutional proposals is its reference to Grama Rajya. V2025 states:
“We will implement the Grama Rajya (GR) concept. GR is our proposal to address gaps in people’s participation in Government and development. GR will enable local communities to become stakeholders in the development of their community, and integrate local projects with mainstream development agendas. The main objectives of GR centre around the socioeconomic and cultural development of localities, social well-being, shared ownership of social economic goods, and alignment of local development with national development goals. GR will create a space in which people participation in Local Government can function within the country’s larger macroeconomic framework.
– We will create 2,500 units across Sri Lanka to operationalise GR. The creation of these units will consider factors such as economic convergence and viability, social cohesion, geographical layout, for the purpose of creating a citizen-demand driven mechanism.
– We will form a National Grama Rajya Commission (NGRC) and Regional Grama Rajya Committees (RGRC) to support, facilitate and regulate the operation of GRs. A General Body (GB) of representatives from areas under a GR will be formed including representatives from recognised organisations which have been in operation for more than three years and are acceptable to NGRC, among others.”
Besides this inconsistency between the economic plan and the proposed economic structure it can be said that V2025 is a weak document based on totally unrealistic foundation and flawed theoretical framework. However, what is equally clear is it fails to understand the nexus between the state structure and the economic plan. This shows either total ignorance in the part of policy makers or their objectives to deceive people of all communities with broken promises.
This is the text of the talk delivered at the seminar organized by the Bar Association of Sri Lanka in Polonnaruwa and Matale on October 7 and 8.
The writer is a retired teacher and his email is: email@example.com