Thursday, February 11, 2010

Economists suggest that the fiscal policy requires precise macroeconomic policy

Economists suggest that the fiscal policy requires precise macroeconomic policy measures and cannot be realised without increasing revenue collection, going slow on the public sector and stimulating productivity. Rajapaksa, to his credit, has been able to uphold positive economic growth. However, it largely came from soaring government spending on the war and the public sector. The International Monetary Fund (IMF) wants Colombo to drastically bring down its budget deficit. IMF has warned Lanka that it may suspend its programme leading to withdrawal of overseas money in government securities and an expected demotion in sovereign credit rating.

However, in the agriculture sector, Rajapaksa has done some wonders. He has encouraged production of food items that were earlier imported from India and Pakistan. It is not for nothing that the rural electorate has backed him solidly. Similar measures in urban areas can bring much needed change.

Constitutional change will be put on the backburner. The executive presidency that makes one Sri Lankan virtually a constitutional monarch is something that disturbs every constitutional expert. There are also very dim chances of 17th Amendment getting implemented that would have appointed the four independent commissions for the police, public service, judiciary and elections.

“Rajapaksa has rather been very open about the executive presidency system. He will modify it a bit but the post remains,” says S.I. Keethaponcalan, a senior political scientist at the Colombo University. “The system does not want you to work independently. The President needs to work with the Parliament in tandem. All these years, they been working alone and that is something that is outside the constitution,” he said.

A key area of interest for India will be the foreign policy where it has been left high and dry following strengthening of bonds between the island nation and China. Hambantota is where China is building a $1 billion port that it plans to use as a refueling and docking station for its navy, as it patrols the Indian Ocean and protects China’s supplies of Gulf oil. “The concern of India is unfounded. Also, they have only themselves to blame, for the initial offer was made to New Delhi where India’s bureaucracy kept it languishing, similar to some of the other projects which Colombo had proposed to them,” justifies Kalyananda Godage, a politico-economic expert.

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Source :
IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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