23 September, 2019

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Economics And Elections

By Tisaranee Gunasekara

“When the social contract is abrogated, when trust between a government and its citizens fails, disillusionment, disengagement or worse follows.” – Joseph Stiglitz (The Price of Inequality)

Most Lankans do not earn enough to make ends meet, according to government statistics.

53% of the urban population, 73% of the rural population and 81% of the estate population do not receive the minimum income necessary to pay for food and other basic needs, according to the Department of Census and Statistics.

Mahinda and Basil“A family of four in the urban sector needed an income of Rs. 59,000 for their monthly food and other basic requirements, while a family of four in the rural sector needed Rs. 37,560 and a family of four in the estate sector Rs. 29,000.”[i] And the absolute majority of families in all three sectors do not earn this minimum monthly income.

Obviously the fancy projects so beloved by the Ruling Siblings, from Arcade Independence to Lotus Towers, have no relevance whatsoever to the actual lives and needs of most Lankans.

A hungry man cannot be convinced that his stomach is full. But he can be made to believe that his hunger is a temporary condition. In the past the Siblings did manage to convince a large segment of the populace (probably a majority) that economic deliverance is just round the next bend.

No more. As the CPA surveys demonstrated, hope of economic betterment has eroded sharply between 2011 and 2013 – not just among Tamils and Muslims but also among Sinhalese.

In 2011, 70% of Sinhalese thought the general economic situation will improve in the next two years. In 2013 only 38.5% of Sinhalese thought the general economic situation will improve in the coming two years[ii]. A decrease of 45% in just two years amounts to a radical change in public perception. A change which can impact, perhaps even decisively, on politics, especially electoral-politics.

There is a yawning gap between what most Lankans want the government to prioritise and the actual Rajapaksa priorities. According to the CPA Survey, a majority of Lankans think the government should focus on cost-of-living, poverty and education issues. Fancy infrastructure projects and beautification programmes are not a priority for the Sinhalese either, who want the government to focus on cost-of-living (58.5%), health (33.1%) and reducing poverty (33%).

How can people not lose hope given this chasm between what they want the government to do and what the government is actually doing?

The prospect of a dimmer future is not just a matter of conjecture but also of hard facts. According to a confidential report by a ministerial subcommittee, revenue as a percentage of the GDP has been declining over the years. In 2011 revenue was 14.3% of the GDP; in 2012 it declined to 13%[iii]; an even sharper decline happened in 2013, when the ratio fell to just 11%.

The regime’s grandiose revenue estimates for 2015 are thus nothing but pie in the sky, ‘unrealistic and unachievable.’

The Committee also warns against that cornerstone of Rajapaksa economics – excessive reliance on indirect taxes: “It is not prudent to continue our over-reliance on indirect taxes and must rely instead on a direct tax effort. We must ease taxing of goods for consumption and services regardless of the people’s income levels and avoid placing burdens on the poorer households”[iv]. The Committee has opposed another Rajapaksa habit – that of giving generous tax exemptions to favoured investors. Most pertinently, the Committee has warned that over time “neither savings, investments nor revenue have increased other than generating a higher rate of consumption.”

In a nutshell, the Rajapaksas prepare budgets based on non-existent revenue; they give concessions to the rich while imposing unbearable burdens on the poor and the middle classes; their over-reliance on indirect taxation is pushing prices – especially of essentials – up; consumption, be it governmental or popular, is based not on earnings but on debt.

Not only is the regime wasting the country’s meagre income on unproductive, wasteful and unnecessary ventures; it is also encouraging the people (especially the middle classes) to adopt an equally unsustainable living pattern. We have a country, a government and a people ensconced in a borrow-and-spend bubble.

Bubbles do not last. This is probably the main rational reason for early national elections.

Last time national elections were held early, so that the Rajapaksas could benefit fully from the rosy afterglow of victory. This time the main (non-superstitious) reason for early elections would be economics, the fear that in two years, the façade would have cracked too much and illusions would be in shorter supply than necessary.

Wrong Economics; Economic Wrongs

Gotabaya Rajapaksa prides himself on his efficiency. Facts and figures tell quite another story. According to a report presented to parliament by the Auditor General, the UDA has been making loses since 2006. By 2011, the UDA’s accumulated losses amounted to over Rs. 1,230 million (1.23 billion rupees).

And when the UDA makes a profit, it does so the Rajapaksa way, via sleight-of-hand. Again, according to the AG’s Report, “Even though the Authority had realised a profit before tax of Rs.242 million in 2011, the profit was due to a receipt of Rs.532 million from the General Treasury….”[v] In other words though the UDA claimed to have made a profit in 2011, in actuality, it made a massive loss of Rs.290 million!

Then there is the Mattala Rajapaksa International Airport; in May its total earning was Rs. 16,185/-; not profit; but income[vi]! Incidentally one wonders how many litres of water are spent per day on maintaining this loss-making colossus while ordinary people and animals of Hambantota and Moneragala are tormented by acute thirst.

Despite the precarious state of governmental revenue, the Rajapaksas gave another signature tax break this month – to casinos. “…12% Value Added Taxes and 2% Nation Building Tax charged on existing casinos were removed and replaced with a mere 5% gaming revenue.”[vii] An understandable largesse, given that most of the exiting casino owners are Rajapaksa acolytes, including Dhammika Perera, businessman and Secretary to the Ministry of Transport.

The deficit caused by sky-rocketing expenditure and plummeting revenue is bridged by borrowing, mostly from China. Sri Lanka has received “an estimated $4billion worth of loans, grants and aid…. Nearly 70 percent of Sri Lanka’s infrastructural projects….are being funded by Chinese banks.”[viii] Most Chinese funds come not as grants/aid but as loans – meaning higher interests and stringent conditionalities, including political ones. This will worsen relations with Delhi, with PM Modi taking a tougher line on ethnic and fishing issues to punish the Rajapaksas for their dependence on Beijing. Rajapaksa economics is creating a vicious circle in the arena of foreign relations as well.

As the efficacy of razzle-dazzle to sustain false hopes fades, the Rajapaksas will embrace ethno-religious racism with increasing vigour. Imaginary enemies, from resurrected Tigers and Jihadists to Catholic Action and Western conspiracies, will be used to frighten Sinhala-Buddhists into clinging to the Kurrakkan shawl.

Moneragala is a test case. It hints at the lengths the Rajapaksas will go to, to maintain familial power and prestige. The greater the economic malaise, the more lethal the election violence; 2015 will be far bloodier than 2010.


[i] Question Time reveals colossal waster pf public funds while masses struggle – Chandani Kirinde – The Sunday Times – 27.7.2014

[iii] The Island – 10.6.2013

[iv] Light on revenue: Cabinet subcommittee says 2015 revenue targets undrealistic and unachievable – Sandun Jayasekara – Daily Mirror – August 23

[v]The UDA not just makes losses; it also breaks the law with impunity. For instance, “The Auditor General also noted that even though the Authority had been informed by the Attorney General in writing that the UDA was not authorised to establish a company for managing rest houses, the Authority had established a company named UGA Rest House, exceeding its legal powers. The company had been renamed as Lanka Rest House Company with effect from Nov.15 2010.”

http://sundaytimes.lk/140427/news/uda-losses-since-2006-total-rs-1230-million-auditor-general-93978.html

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Latest comments

  • 4
    10

    hahahahahaaaaaa….

    What did the CPA survey/ study find in 2006, 2007, 2008 & 2009.?..

    • 5
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      .
      Hey Sumane….. good news for you. Your Dalit MaRa’s son going to marry a Vellala Kandyan girl from Ratwatte family.

      :-)

      • 0
        3

        Aratai,

        Here is the real good news ,

        Our Dalit Prema is going to hitch his Sinhala Buddhist caravan from the village to the Colombo Elite, Christian , Vellala Road Train.

        How cool is that.

        But Managala , the main gunfighter of the Trail Boss and the herd. has already bailed out or taken Sabatical.,

        But the Heavy Hitter Christian Karu , the trustee of the Galleon Dosh is still contemplating !!!!

        And guess what , even your real Vellala mates seems to be in a bit of bother by this new reconciliation between the Vellala and non Vellala factions of the party of the Intelligentsia.

        Old fox Sambandan seems to have been pushed out too and his seat given to one Senathiraja.

        Is Senathiraja a Vellala name ?..Probably my native mate may help me here…..

      • 1
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        Couldn’t have said it better ‘aratai’ ha ha ha Dalit MaRa – How appropriate. [Edited out]

        Sumana – Attack ‘aratai’ man, don’t attack Preme. He’s dead and gone. He too had MaRa’s pissuwa.

  • 8
    2

    I determined that I should not believe any statistics unless they are from our Hon. Ajith Nivard Cabral, Governor, Central Bank and Co-owner of Golden Pyramid Scheme.

    Look at those Statistics. monthly income of 59000/- needed for urban family with 4 members and Rs. 37560/- needed by rural sector family for 4 members family while Rs. 29000/- needed for Estate Sector Family. Actually in my opinion those Statistics are direct Insult for Hon. Bandula Gunawardana, the greatest Economist ever produced by mother Lanka. He may be so far failed as Education minister as he couldn’t prepare a 5th year scholarship examination paper without errors but the theory he found that 4 persons family needed only Rs. 2500/- per month was the greatest theory and it is valid until today.

    Statistics, criticism’s and Profit/Loss in UDA, Mattala, Magampura and other Rajapaksha Projects will not hold any ground after completing “Nelum Kuluna” as hungry people can eat “Nelum Pokuna” piece by piece as it is biggest Kuluna and enough for all people in Sri Lanka.

  • 2
    1

    This looks as if Kopikade Gajan started to share the view to others.

    This man is the leader of current day srilanka. [Edited out] have ruined the nation to this day- as no any SA leaders ever did to each country.

  • 5
    2

    Tisaranee Gunasekara,

    “Then there is the Mattala Rajapaksa International Airport; in May its total earning was Rs. 16,185/-; not profit; but income[vi]!”

    In financial terminology earning and profits are the same: It ought to be; ……Rs. 16,185/- is revenue not profit;…..

  • 10
    3

    When a ruling junta with no proper education or expertise in finance and economics what can you expect?

    What they are projecting as economic miracle is “boru show”. They think they are following Singapore – far from it – Singapore employed/employs the best brains in their Economic Development Board, and they have achieved true miracle in half a century. Mind you Sri Lanka never had a statesman, from D S Senanayake to Rajapakse, with vision and dedication in nation building and achieving prosperity. They are all cheap politicians.

    All the Sinhalese politicians did was divide the society along ethnic and religious lines and stay in power: This trend continues uninterrupted.

    The result after six decades from independence is deterioration of a prosperous economy left behind by Britain. I remember brand new cars were selling for Rs 6000/ when I was a small boy. Now as you say misgovernment over the years has brought hunger and misery for the vast majority of the people.

    Sri Lankan people are paying for all sins the opportunist political leaders they voted in power. Most probably they will continue to do the same thing – like frogs in a stinking well!

    • 2
      6

      After all the ‘Quantitative Easing’ over the years a decent second hand car costs Rs 6 million. Then again, had the Sinhala leadership agreed to 50% representation in Parliament for the 12% Tamils prior to independence, Sri Lankan economy today would presumably be booming.

      • 9
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        Ram Jeyasinghe

        It is not 12% or 74% that matters stupid, it is the capable brains that lead and do the planning and the hard work that can deliver the goods to the people of the country that matters.

        A Sinhalese like you never think like that: In the myopic vision you have you see only Sinhala Buddhists and others to be despised, never mind even if your people starve.

        It’s a pity that god created masochistic people like you for the masses of Sri Lanka to suffer.

        If the North-East is given sensible autonomy, they will show you how meritocracy like in Singapore will thrive there, and even provide Sinhalese from the South with lucrative jobs instead of sending your women to work like slaves in the middle East for a pittance

        You may not know but this is what Buddha said: You are what you think. All that we are arises with our thoughts. With our thoughts we make the world.

        You think negatively and you end up with a miserable world around you. That’s what has happened to Sri Lanka with opportunist Sinhalese politicians at the helm.

        • 2
          4

          The comments describe T. Gunasekera, your heroine.

          • 2
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            You unwittingly confirm that you are a Sinhalese!

            • 0
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              You confirm that you are pure LTTE. Looking down on the Sinhala people and the yearning, nay the demand for a third of the landmass for exclusive use gives you away. My comment was to show that it was the pre-independence Tamil leadership that demanded the society be broken up along ethnic lines.

  • 2
    4

    TG:
    If not for Jaffna Tam`ill`s SL is now a developed country.

    ” Sri Lanka has received “an estimated $4billion worth of loans, grants and aid… GDP$60 billion” (85% still due)

    The Chinese have yet to open their purse which is generally $10 billion.

    Siemens US did not advertise skilled labour for 6 months even though the need was urgent but awaited the return of the veterans- who are skilled and disciplined.

    Even today The Vietnamese Veterans have ant industries helped by the Chinese to sub contact to them the manufacture parts for gears, couplings etc. on a permanent basis.

    The same goes on in Bombay today(manufacture spares for shipping, heavy vehicles) with the help of the catholic church like what father Ignatius tried but was stopped by the Buddhist.

    This is what the soldiers should be doing than growing vegetables. The Sihala soldiers should form little communities than look for seva vanita gifts.
    Get the backup now that there is a defence attache from China. Watch Chinese news/TV for ant industry and how they have become no 1 world exporter.

    Appe ratte not a racist joke.

  • 7
    1

    Tisaranee; facts, statistics, numbers, pie-in-the-sky. All good and ship-shape. Alas, the electoral reality is that MR holds the trump card. After all, he is the only one who can claim to have the proven political will, and success, to bring peace to a unitary Sri Lanka, and keep it. Our economic woes, he will claim, are ultimately surmountable, in time. He will also point out that NONE of those seeking to best him have any reliable plan for keeping the hard won peace. He will claim, and who will disagree with any authority, that the LTTE are waiting for the earliest opportunity to come back. The core Rajapakse supporters understand that and will give him the benefit of any doubt.

    Those of us seeking to bring about change have an uphill (but not insurmountable) task. Another crucial factor is that there is much at stake – for the Rajapakse dynasty and their sycophants – so you can be sure that they will play every dirty trick in the book (and invent a few of their own too) to keep power.

    Times are tough, and going to get tougher. There is much work to be done; even as I write there is much talking going on this weekend but the usual suspects are still going around in circles.

    • 1
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      “He will claim, and who will disagree with any authority, that the LTTE are waiting for the earliest opportunity to come back.”

      right on Target.
      Here we go : similarities to all those diaspora pukes.

      Rajafucksa,Wiggie Pack Up and Go.!

      If, for instance, you put in a Malay officer who’s very religious and who has family ties in Malaysia in charge of a machine gun unit, that’s a very tricky business. We’ve got to know his background… I’m saying these things because they are real, and if I don’t think that, and I think even if today the Prime Minister doesn’t think carefully about this, I and my family could have a tragedy. SM Lee Kuan Yew, Straits Times, September 19, 1999 on Malays in the Singapore Armed Forces

      • 1
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        Again, it is your intelligence level giving up on you. Isn’t that Lee is saying, if you have an Indian coolly laborer in the estate you eat free rice otherwise, if you field a Mahawamsa Modaya in the field DS is twisting his own leg and kicking butt. I am sure, you are not the one to get Lee’s point. None but a fool like you can not remember that Lee separated his country from the Malays, instead of feeding them bringing free rice from the moon. Machismo gained by the free rice made to guys to kick your own butt. Go back and read what Thiru has been trying to teach you.

        • 0
          0

          Mallaiyuran or is it muniyandi the pund**andi?

          “None but a fool like you can”

          Tattoo to Tooth Ratio.

          Pungi Bajao, Lungi Bhagao (“Blow the flute, and drive the lungis or away”)

          Have you ever heard of Mandarin?? lǎowài (paradeshi)

          This is what LKY does to stupid lungies who think they are capable our minds.
          1)Look, Jeyaretnam can’t win the infighting. I’ll tell you why. WE are in charge. Every government ministry and department is under our control. And in the infighting, he will go down for the count every time… I will make him crawl on his bended knees, and beg for mercy.
          2)Put it this way. As long as Jeyaretnam [Workers’ Party leader] stands for what he stands for — a thoroughly destructive force for me — we will knock him. There are two ways of playing this. One, a you attack the policies; two, you attack the system. Jeyaretnam was attacking the system, he brought the Chief Justice into it. If I want to fix you, do I need the Chief Justice to fix you? Everybody knows that in my bag I have a hatchet, and a very sharp one. You take me on, I take my hatchet, we meet in the cul-de-sac. That’s the way I had to survive in the past. That’s the way the communists tackled me. He brought the Chief Justice into the political arena. He brought my only friend in university into our quarrel. How dare he!
          SM Lee Kuan Yew, The Man & His Ideas, 1997

          Do you get now how WE think.No Mother India, Just Hindia which will send Jaffna Tam`ill`s to the Seabed like Bin Larden.

          • 0
            0

            Are you writing how the Tamils should have dealt with Karuna, Hakeem?

  • 1
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    Statistics, statistics, damn statistics.

    People have difficulty understanding statistics and that’s why corrupt politicians hide behind statistics to continue robbing people’s money.

  • 5
    1

    That picture says it all.
    Two teenage Brothers laughing with glee at how they are taking the People for a ride!

  • 4
    0

    Tisaranee, thank you for your enlightening articles. Its time to stop going after the King. Stupid Andare’s will back him ( not so stupid because these parasites are looked after with the taxes imposed on common man’s potatoes, brinjals and cadmium filled rice. Why don’t you expose the so called public servants paid by taxes to people acting like Governtments servants paid by President’s pocket, such as Secretaries to Treasury (Butler PB), Prime Minister (Amare) and great Peoples Bank Gamini.

  • 5
    0

    It is the People’s fault!

    If we want to remain ignorant of facts,
    If we choose not to vote,
    If we want instant gratification,
    If we desire everything just for ourselves,
    If we do not educate ourselves,

    Then, facts to do not matter
    Then, statistics can be anything we want them to be,
    Then, the media can lie about everything and it will not change anything,
    Then, politicians can say black is white,

    Because, we allowed this to happen.

    Someone said, you get leadership that you deserve if you do not vote!
    It is always someone else’s fault.
    When, will we ALL admit, we are at fault?

    • 1
      1

      Upul,
      Everyone’s vote counts. If you can’t be bothered to vote, then you deserve the Government you get!

      Voting should be made compulsory, with a hefty fine if you don’t vote.
      Stops people using your vote, to illegally add to the total of their favourite.
      Think about it.

  • 0
    2

    Lanka has an asymmetrical distribution of opportunity, and the main area of focus should be on overt and covert corruption. The former is manifest in the multitude of despicable schemes that those who wield power engage in, and the populace should definitely respond to that in no uncertain terms at all elections. The latter is even more insidious, with craft Moslem fundamentalist converging to fleece the Sinhala masses with Shylockian means and drain the last economic drop of blood off them and also poison the vulnerable Sinhalese with addictive drugs imported by them. They would love to see the Rajapakssa being thrown out so that in the ensuing chaos they can thrive even more, as they have been doing over many years, and with a vengeance since around 1983, when they filled most of the vacuum left by Dravidian businessmen who were evicted.

    The Sinhalese should teach the Rajapaksas a lesson, but should not go so far as to completely depose them. The weak eunuchs who would come from the UNP and other parties and the dangerous rise of a resurgent and militant JVP, is not the answer to their problems. They should try to reform the Rajapaksas and perhaps even oust Mahinda and replace him with Gotabhaya. The latter is after all the main architect of the victory over LTTE, and the former seem to have lost his tryst with destiny, if he cannot control the corruption that is evident in Lanka.

    In any case the country has no immediate threat but the threat in the horizon is fanatic Islam, with young Moslems looking to use their economic power to subjugate and destroy Sinhalese culture and replace it with a fanatical, anti-western and anti_Israeli thorn in the side of India. By 2030 for India Lanka will be worse than Pakistan as a resurgent Moslem foe with a Moslem President aligning with all the fanatical Islamic radicals and terrorists in the world. Just check the fecundity of Moslems in Lanka with over 4 children per family vs. 1 or 2 at most for most Sinhalese and Tamil. 2020 will be a turning point and by 2030 the country will have a Moslem majority in age group under 40. The death of the Lanka non-Moslem majority and rise if Islam will be the greatest threat to India than even Pakistan.

  • 0
    3

    People are poor because government is wasting all the money on Tamil only north!

    Premadasa was different. Better.

    • 1
      3

      Could tell him get out of the North. (Then the very first think is you will be cut off of your pay)

  • 2
    1

    This government has moved so far to the right that the UNP is now more moderate and to the left of the UPFA. This governement is so corrupt that the corruption of the former UNP regimes pales into insignificance. This government is so incompetent that it stands alone having broken all records of stupidity. And yet it survives. If it thinks that an early election can get it out of trouble. That this will win them another election so they can survive, they have not seen nothing yet. The trouble lying ahead is epic. May god save the poor inhabitants of this island.

  • 1
    1

    Their support of casinos and motor racing and the level of nepotism and corruption are good reasons to vote the Rajapaksas out of office. But I think the investment from China is mostly welcome.

  • 0
    0

    Tisaranee,

    Many thanks for your many mindquake articles. The government does not think, nor plan they just imagine. A case in point is that scoundrel Subramaniam Swamy. Any organisation checks out the people they invite or hire, but in Swamy’s case imagination alone was enough….

    How he has managed to fool the Rajapaksa’s is to his credit, But then id doesn;t take much to fool fools.

    Hameed

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