Economics and politics in the period ahead

Economics and politics are inter-related. Actually they are indivisible and organically linked. In a sense, economics is the concentrated form of politics.

In the relation between the two politics takes priority for every economic decision is a political one. Though economists may argue that they are apolitical or politics is not their concern, every decision of theirs is political. For example, take the decision to have a guaranteed price for rice or the decision to subsidise fertilizers given to the farming community. Each such decision is basically political and is aimed at serving a particular clientele. The clientele differs with the politics of the administration. For example, the UNF Government of Ranil Wickremesinghe decided to give an amnesty to tax evaders which cost the country billions of tax revenue. It was a political decision to favour the rich at the expense of the poor.

If one considers the past 30 years or so one could see that most economic decisions were tied to the political goal of fighting terrorism. It was the political priority that decided economic imperatives. For example, whatever the incentives that were given to foreign investors they were not enthusiastic to invest in a big way due to the war that prevailed in the country and the risks it entailed for investors. That means the political climate is very important to attract foreign investments so needed for development.

With the dawn of peace and the vanquishing of the LTTE the investment climate has changed qualitatively for the better. In the period ahead what one must do is to secure this climate for development. Here continuity matters.

Economic development needs political stability. It's the relative political stability that helped in the war against terrorism. The voters at the forthcoming Presidential polls will have to decide who among the candidates could ensure political stability. Naturally, only a candidate with a clear policy and a strong political organisation (party) to back him could guarantee such stability. For example, could the NDF candidate who claims to be independent of political parties, assure such stability? It is a moot point given the contradictory politics and economics of his disparate allies whose politics range from pseudo-Marxism to arch-Conservative neo-Liberalism.

The Executive President must not only have the backing of a strong political organisation, he should also have the political maturity, practical experience and diplomatic dexterity to charter the ship of State through both calm and storm weather.

Sri Lanka has seen development in the post independence era though it was not substantial or adequate. Much of this development was skewed. The Western Province had a rate of growth proportionately larger than the rest of provinces taken together. It was only during the Mahinda Rajapaksa administration that a concerted effort was made to alter this imbalance. It rightly understood that the backward provinces needed more attention and higher resources to correct the imbalance. Most development work undertaken by the Government including the construction of ports, airports, power plants and reservoirs were in the peripheral areas. The poverty alleviation program carried by it has already produced results. A substantial reduction has been recorded in the number of persons living under the poverty line. Estate areas were singled out for improvement in the quality of life with new physical and social infrastructure projects being undertaken.

The end of the war was associated with new priorities in development. The North and the East had to be reconstructed, the internally displaced had to be rehabilitated and new livelihoods provided for them. This gigantic task was undertaken under two programs -the Eastern Reawakening and the Northern Spring. Both are proceeding at a pace and much has been accomplished during the short period after liberating the provinces from the terrorist hold.

All this required not only economic decisions but political decisions too. The latter was the basis for the former. During the forthcoming elections the voters have to ponder what would happen to these admirable projects if continuity is lost. They are too big tasks to be entrusted to amateurs or confused undecided hesitant and beleaguered candidates.

Sri Lanka is at a turning point in its post-independence history. The decision on January 26 will decide which way it would take in the immediate future. Will it take a path towards rapid development that would benefit the vast multitude of the poor and not so poor or will it tread along the customary disastrous neo-liberal path to the benefit of a handful of local and international mudalalis and bankers at the expense of the man in the street.

The decision is with the voters.