Thursday, January 29, 2015

yaha palanaya = irresponsible budget

it seems ranil's backdoor government thinks yaha palanaya means irresponsibility. 

its so called mini budget is proof of this. basically it is 
  • lots of reduced(controlled) prices and giveaways,
  • lots of taxes on profit making businesses, especially in growth sectors like telecoms, media, and banks, & alleged wealthy. in other words taxing those who make an economy a sustainable success.
  • lots of one-off taxes (this is very definition of irresponsible budgeting).
  • and lots of absurd slanders against former government (as in saying 7b usd was lost from losing gsp+ ?!).
some of this is illusion. for instance 25% tax on mobile reloads is removed, but with one time tax of rs 250m  imposed on mobile operators, result eventually will be nil, and paid by consumers. and 5b to be gained by container scanning from september? lol. if there are importers who getaway without paying duties by non declaring actual goods in containers, they will be smart enough to change their tactics by september.   

ranil's unp, contrary to delusions held by some of its supporters, is not for free market capitalism or liberal democracy. in fact if you look at its propaganda, while it still hypocritically spouts about democracy and good governance, it has long given up free market capitalism, even as propaganda.

in opposition to all slanders,vomited during this budget presentation, and during last election and since, here are some undeniable facts about mahinda's economic management, 
  • reduced national debt as percentage of gdp from over 100% in 2004 to around 70%. this in spite of massive infrastructure development(through loans) and war.
  • reduced inflation to lower single digits, mainly by steadily reducing budget deficits.
  • steady increase in inward remittances and investments, to the point of running a current account surplus. steady reduction in trade deficit. resulting in sri lankan foreign reserves increasing close to 10b usd.
  • doing away with lots of controls and regulations.  
  • main irresponsible thing he did was the expansion of government workforce and its pay. this fault continued in this budget by his slanderers.  
this sort of irresponsible budget by ranil, will ruin all the good mahinda did. following can be safely predicted.
  • inflation will rise during latter part of year.
  • either shortages(+black markets) of those reduced price items, or more likely non enforcement of those reduced prices outside of sathosa after election.
  • drop in investment, probably a halt to increase in inward remittances.
  • depreciation of rupee, or if central bank fruitlessly resists that, a drop in foreign reserves. thus throwing away the opportunity given by low oil prices, to increase current account surplus, reduce trade deficit, and increase reserves.
  • a very different budget for next year, if a prudent government is in power, or totally unnecessary economic ruin in 2016, if government (whoever gets elected) remain irresponsible like this.

all this was unnecessary. these giveaways are not going to have much effect on beneficiary voters in post april election. while those who suffer directly from it will be too few to change the result. unless ill consequences of budget are felt earlier than i anticipate, this budget will have not much effect on election. it will be decided on other matters.  


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2 comments:

Sendic Danister said...

I totally agree with all the point you raise. Togetherwith that, if you could make a comparision why 8000billion prcident exp.vote come down to 300billion, it will be great. My appendom to your explanation is given.

This is the most short sighted budget in the Sri Lankan history. They repeatedly said, previous government has destroyed the national economy. So how they can offer so much concessions. If they are correct either they need to increase taxes significantly, cut or stop all development works which previous government started, borrow money from local banks on high interest rates (since all these concession under the recurrent expenses not capital). Are they trying to make another Greek Economy here. We hope some kind of economic conservativeness from UNP. What are they doing here? They just target only coming election not the country. First spread gossip now play with country economy for the political gain. God bless Sri Lanka.

Any attempt to control local banks while borrowing significantly will result collapsing the financial system. Please Ranil open your eyes and try to do some thing. Otherwise your western friend will not come to salvage Sri Lanka. You are going to make the same mistake which your uncle JR did when opening the national economy

Can you plaes some deatil account

sittingnut said...

sendic danister
thanks for comment .

i can't makeout meaning in your 1st para. pl clarify.

i agree with rest. though i have long given up expecting ranil's unp to act with what in current west are called "conservative" economic polices.

time permitting, i will go in to details in a later post.