Sri Lanka opposition promises sweeping handouts to win votes
Dec 19, 2014 11:18 AM GMT+0530 | 1 Comment(s)
EconomyNext - Sri Lanka's opposition coalition has promised sweeping handouts to win the favour of different sections of voters in the run-up to next month's presidential poll, according to its manifesto released Friday.
The subsidies in a 100 day program include a 3,500-rupee interim allowance for pensioners until salary their anomalies are corrected and a 5,000 rupees in February as part of a 10,000-rupee increment to state workers.
Fuel retail prices will be reduced by reducing taxes which now earn the state 40 billion rupees a year while the price of a household gas cylinder will be brought down by 300 rupees.
According to a 100-day programme distributed at the release of the manifesto, the opposition promised to reduce taxes on 10 essential goods if it wins the January 8, 2015 presidential poll but assured domestic producers their interests would also be protected.
President Mahinda Rajapaksa is challenged in the poll by a defector from his own ranks, former health minister Maithripala Sirisena who will contest as the common candidate of a newly unified opposition.
Senior citizens with deposits in state banks will get 15 percent interest for the first one million rupees while 'Samurdhi' recipients of welfare will have benefits raised up to a maximum of 200 percent.
Mothers of new-born children will be given 20,000 rupees for food.
The opposition said the guaranteed price of paddy will be raised to 50 rupees a kilo, potatoes 80 rupees, green tea leaf 80-90 rupees and rubber 350 rupees a kilo, as commodity prices collapse due to a strengthening US dollar.
The price of milk bought from dairy farmers will be raised by 10 rupees to 60 rupees a litre and 50 percent of farmers' loans will be written off, the 100-day programme document said.
Non-resident foreign currency deposits will get 2.5 percent more interest while penal interest on up to 200,000 rupees of gold loans will be written off.
The opposition also promised free internet and Wi-Fi hotspots in major cities.
It did not say how these 'sops' or benefits would be funded. In the past subsidies which expanded state spending suddenly has either pushed up domestic interest rates due to higher borrowing or weakened the currency and generate inflation, when they were financed by printed money or both.
In 1951 a money printing central bank was set up giving the elected ruling class a tool to give subsidies, print money generate inflation and currency depreciation and blame it on the trade deficit, riding a wave of post World War II Mercantilist teaching that edged out classical economic analysis.