{"id":120274,"date":"2021-11-13T16:04:10","date_gmt":"2021-11-13T23:04:10","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=120274"},"modified":"2021-11-13T16:04:10","modified_gmt":"2021-11-13T23:04:10","slug":"the-budget-and-the-concept-of-production-economy","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2021\/11\/13\/the-budget-and-the-concept-of-production-economy\/","title":{"rendered":"THE BUDGET AND THE CONCEPT OF PRODUCTION ECONOMY"},"content":{"rendered":"

BY EDWARD THEOPHILUS<\/strong><\/em><\/span><\/h2>\n\n\n

In Sri Lanka, the budget has been\ngiven the wrong impression to people that it is a way of decreasing or\nincreasing prices of consumables or otherwise providing various reliefs to proletarians.\nHowever, it has not come to a reality as people expect. This impression came to\npeople’s minds, as the many budgets after the independence have been used by\nthe government to either increase or decrease prices of goods and services\nsince the beginning of the parliament system. It seemed like a game and became\na talking point and many people at present are not concerned about the budget. <\/p>\n\n\n\n

The budget in other countries\nconsiders as a strategy of taxation management that affects increase or\ndecrease in take-home pay of the workforce, thereby it seems fluctuating prices\nof consumables and services. Academics consider the budget as a short-term plan\nthat details the government policy regarding various matters and in developed\ncountries, people expect personnel or corporate tax changes from a budget.<\/p>\n\n\n\n

The expectations of the public may\nhave differed from one country to another, and there are various theories\nassociated with the budget, which is an integral part of public financing. The\nbasic view of the budget is a practical plan to manage public finances, and it\nis short-term because the proposal submitted this year may be changed in the\nnext year. In Sri Lanka, people have a general impression about changes in\nconsumer prices with effect from the presentation of the budget proposal for\nthe second reading, and the indirect and direct tax policy presented by the\nminister of finance leads to the budget, may change giving benefits to the\npublic. It will lead to popularity among the public and it will open the way\nfor members of the parliament to talk and go the public. The other vital point\nis when Mr.Rone de Mel was the Minister of Finance rhetoric was the budget\ncannot reduce prices and the best option is to give opportunities to earn money\nto adapt to the cost of living. That idea has ended with hipper inflation in\nthe country as well as declining the foreign and domestic value of the monetary\nunit. <\/p>\n\n\n\n

The budget for 2022 contains several\npositive aspects and the change of retirement age to 65 years is a highly\npositive aspect and it would lead to attracting employees’ support to the\ngovernment in the public and private sectors. The policy might reduce or keep\nstable transfer payments. The minister expressed that keeping employees in\ncurrent work would not affect hiring young people to the workforce and it is a\npositive proposal. It also supports elderly employees to have a reasonably good\nlife.  <\/p>\n\n\n\n

The major issue in the budget\nproposals is what would be the help given to farmers and while talking about\nproduction economy, the major contributors to a production economy are farmers\nand industrialists, and the budget did not mention what kind of incentive will\nbe given to farmers and industrialists. That may be a vital question about the\npresented budget. Farmers and industrialists are a powerful part of the\nproduction economy and if the minister of finance planned to give help to them,\nthe budget would have a popular one among most people.<\/p>\n\n\n\n

From the point of view of\ninternational financial organizations, a budget should be lower spending, but\nincreasing or maintaining capital spending the budget would support economic\ndevelopment and I feel that if there was a proposal to encourage the savings\nlevel of the country, it would help to balance of payment adjustment process\nand to reduce the borrowing. Reduction of the government domestic borrowing\nencourages the banking and finance sector to enhance liquidity and provide\nfinance to various sectors of the economy from domestic savings.<\/p>\n\n\n\n

The minister of finance stated that\nhis aim is converting the economy of Sri Lanka into a production economy. What\nwould be strategies he supposed to use to achieve the purpose is not clear. He\nhas already stated that taxes for certain items would be increased and he never\nmentioned items because it will lead to a speculative shortage of traders. When\nconsidering a production economy agriculture, industry construction, services,\nand all others are included. The government should encourage import\nsubstitution and maintain the product quality of import substitutes that would support\nthe effort of making the production economy.<\/p>\n\n\n\n

The budget would have formulated a\nplan to make radical changes in public enterprises management, other words, it\nshould have formulated strategies to attract private capital to public enterprises.\nEspecially banking and finance sector is desperate for capital and the\ngovernment is not in a position to provide capital and it there was a proposal\nto attract at least 25% of capital from the private sector, the banking and finance\nsectors would have given strength and continue business and providing supports\nfor new business.  If such a strategy was\nused, the government spending massively reduced and the budget gap could have\nbeen eliminated and improve the foreign value of the monetary unit of Sri\nLanka. The trade unions and opposition might be concerned about such policy and\nit would have led to protest marches in Colombo. The best attack to trade\nunions from the budget was a decision to resolve the problems of teachers and\ntrade unions who show reluctance to express views on the budget. <\/p>\n\n\n\n

The Covid 19 pandemic negatively\ninfluenced many countries in the world and to recover Sri Lanka, it needs a medium-term\nplan, most probably five budget proposals might need to recover the loss of the\neconomy.<\/p>\n\n\n\n

The government needs to hang on to the\nconcept of the production economy. It is the way to recover the economy and\nopen opportunities for people.  The administration\nlevel could help the implementation of strategies for a production economy,\nreducing expenditure and the use of productive measures for quality services.<\/p>\n\n\n\n

The most popular measure of the\nbudget may be increasing the service requirement of parliament representatives\nto ten years. Many developed countries use getting back employees to workplaces\nthose who lost jobs during the Covid pandemic and such a short-term program\nwould have been introduced by the budget. <\/p>\n\n\n\n

The productivity of employees seems\nto lower because many employees during the working hours participate in protest\nand such employees should have suggested to given punishment and stop payments.\nThe enhancement of individual productivity of employees should have proposed to\ngive incentives.<\/p>\n\n\n\n

In the finance sector, it should have\nencouraged mergers and acquisitions to reduce the cost of firms and established\nan industrial development bank to provide long-term financing supports for the\nindustrial sector with the capital of private sector and less capital from the\ngovernment should have come to effective.   <\/p>\n","protected":false},"excerpt":{"rendered":"

BY EDWARD THEOPHILUS In Sri Lanka, the budget has been given the wrong impression to people that it is a way of decreasing or increasing prices of consumables or otherwise providing various reliefs to proletarians. However, it has not come to a reality as people expect. This impression came to people’s minds, as the many […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[124],"tags":[],"class_list":["post-120274","post","type-post","status-publish","format-standard","hentry","category-edward-theophilus"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/120274","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=120274"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/120274\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=120274"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=120274"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=120274"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}