The Appropriations Bill for 2017 is on the table in the House of Parliament, the assembly of our elected representatives. This is the estimate, by the Government, of its intended expenditure for the ensuing year and, on Thursday (10th), Finance Minister Ravi Karunanayaka, in his second Budget Speech in office, will tell us how the Government will find the money to meet this expenditure and manage the national exchequer during 2017.
Sri Lankans of several generations are now familiar with the occasion of the Budget Day in Parliament having experienced, for some decades, widespread news media coverage of the event and, also, in the build-up to it and its aftermath. People are thus familiar with what happens and what might happen.
Many decades ago, when Sri Lanka was yet an impoverished, underdeveloped country, with high basic food costs, scarce commodities and services and, high unemployment, the National Budget was a political highpoint in the year. People worried over and feared the possibility of higher food costs or to pay more for various essential services and social needs such as health and basic education. In those difficult years, come the Budget, speculation would be high about price rises and sudden changes in the availability of important goods and services – depending on import policy and duty hikes.
Then, governments began to change the tempo of the Budget process for both political and economic reasons. To minimise anticipatory goods hoarding and stocks and monetary speculation, instead of sudden price increases or policy changes on Budget Day, Governments now resort to a form of ‘creeping’ changes: fiscal and others measures intended for the forthcoming Budget would be implemented step by step, gradually, in the weeks before Budget Day.
This also helps the Government politically because there is no combined weight suddenly imposed on the populace or on sensitive socio-economic sectors as it would happen if all measures are announced on Budget Day itself. When such impacts are slightly spread out, then they are less felt and, indeed, a little less noticed. Hence, negative political reactions are diluted, even if marginally.
Today, as Sri Lankans enjoy the prosperity and comforts of ‘middle-income country’ status, the impact of Budgets are felt somewhat differently than in our poorer past. Far more people worry about prices of cars, smart phones, IT products, home-building, even holiday travel costs, as a much bigger middle class that is also better off than 20-30 years ago, enjoys the abundance of goods and services as never before.
Even if good health care is not fully available to all citizens, the basic care offered free by the State is better in terms of quality options while there is now a very wide range of private health care services on offer, if at a price. In education, too, the choice of schools and curriculum has multiplied many times over with a range of quality on offer, if, also, at a price.
And the fear of economic futures is much less since most Sri Lankans have gainful employment and an income stability that cushions sudden cost shocks. Unemployment, today, is only about 4.5 per cent of the labour force unlike the double digit figures less than two decades ago. High youth unemployment figures actually indicate that young people are delaying their choices of livelihood avenues – a luxury not enjoyed earlier. Household and family consumption is high and covers a wide range of things far beyond very basic needs. Economic policy will no longer cause severe malnutrition or semi-starvation, as it once did.
Nevertheless, most Sri Lankans are not rich enough to be entirely worry-free in anticipating the Budget. While even middle classes worry over things that are less ‘basic’, their interest, as consumers, in a wide range of goods and services means that any frustration on their part has a political impact which no government can ignore.
At the same time, our overburdened Finance Minister must worry about the effect of Budget decisions on specific economic and socio-economic sectors. Local manufacturers wait expectantly for monetary, tax and import policy changes that would help them consolidate this country’s industrial base. With over a quarter of the labour force now in industry, manufacturer success, in addition to boosting the economy overall, means more employment, better wages and better work conditions for our working class.
Meanwhile, the country’s farmers – once the bulk of the population and now barely a quarter of it - are worried about high costs of agri-inputs and wait to see if the new Budget will add to their debt burden. The tourism industry, big and small, knows they are already on a roll but worry about inflation and foreign exchange rates that could lower tourist spending. Exchange values are also a concern for exporters who could lose when the local currency strengthens.
There are also mollycoddled segments like State sector employees who not only have a guaranteed fat pension to look forward to but, also, enjoy tax-free incomes unlike the rest of the equally hardworking population. Will income tax policy be reversed to bring the State sector back into its grasp after many decades of this ‘tax-holiday’? This is a challenge that successive governments have avoided given the politicians propensity to play the vote banks and also have a pliant cadre of ‘government servants’. Larger labour force policies need to come into play here in order that the rest of the labour force remains motivated and productive. A major reason that many young people delay their livelihood choice in the hope of a ‘government job’ is due this unfair favouring of the State sector. This, in turn, distorts both labour mobilisation in crucial economic sectors as well as labour productivity.
Thus, the Government as well as Parliament has a vast complex of needs, interests and possible opportunities to heed to in the forthcoming weeks as the people’s representatives debate Mr. Karunanayaka’s proposals starting next Thursday. Ultimately, the national Budget, while favouring selected key sectors in one way or another, should benefit the nation as a whole in the long term, if not in the short term.P 6 Leader.