What a load of hot air, in a fiscally
conservative budget that has NO GROWTH written all over it. In the
international environment, when we have at most two more years left before
world interest rates rise by 400 basis points, and we as a country will go
bankrupt unless we renegotiate for the long term before that, we will have to tighten our belts and face recessions.
We should have
gone all out for a growth budget, not throwing caution to the wind. Unlike much
of Rajapakse policies that did not contribute to sustainable growth based
public investments, for which we are dearly paying a HUGE price today, we could
do something more to stimulate demand and achieve sustainable development. SDGs.
So instead of wasting Rs500M on 50
electric buses, because China would have given 100 free anyway, we should have
invested US$10M immediately in getting down some solar panels from China, at
knockdown rates, (before prices rise again, when the glut clears up) and told people that they would be given a subsidy of 50% of the
cost (no NBT, PAL, VAT please on import) as soon as their solar plants using
these panels are operational. Of course this figure is peanuts, and can be increased, with demand, as the payback is a no brainer, because we will not have to build power stations that urgently.
Just a thought, why are we talking about an oil refinery in Hambantota, when by 2040 we expect to be all electric? We should direct this US$2B investment in renewable instead (I know the CEB lobby wont allow it, but to hell with them, they are part of the problem!)
You can bet your house that within 6
months all these solar panels will be put to good use, with a saving of 200MW daily on the National Grid, because of private investment in Solar. This AMAZINGLY QUICK
return on investment will win an international award for far sighted policies. NO
BRIBES, NO CORRUPTION IN SOURCING, as the prices at which they are imported
will be publicized in detail!
With the improvement in Battery technology, just ask Elon Musk, in time, this solar energy can be stored and used at night to balance the power needs too.
This will stimulate the Solar Energy
business so fast, that others will immediately see the benefit of converting,
and stimulate the Economy AUTOMATICALLY as this investment will be the catalyst
that people need. Now why is a Government with advisers like Deshal de Mel, and
Anushka Wijesinghe, not making these decisions? This alone, a simple investment
of US$10M, which in 6months will have a payback of US$5M for a true cost of
only US$5M, spur the economy by 2% to growth due to the knock – on effects, is
the cheapest way to spend that money and worth 2000 Electric Buses. This money
is PEANUT compared to the spend!
So who are the intellectually challenged
people deciding what a budget should have? Shame shame shame for coming up with
such a lame and pathetic budget, and worse that our pundits living in Colombo
have even commended it, which shows the level of knowledge they have and concern
they have for the Country.
We have a HUGE aspirational problem of
YOUTH. They want jobs that pay more than on offer. You cannot have a lame slow
growth budget & expect everything will be hunky dory, it WONT. You don’t
have to lose your pants by borrowing, invest money that is wasted, like cutting
down on the Ministers perks, President’s Office allocation, just to finance
this growth. This is just one of a hundred such ideas I have that can easily
lead to the needed 10% growth we as yet never had, and we need it before the
time runs out in two years when world rates rise.
13 comments:
Renewable energy has a quick payback as the environmental benefit cannot be measured in rupees and cents. So I understand that there is a company ready to roll out an electric vehicle in Sri Lanka, but is bogged down in red tape, as the Bajaj people have prevented it getting off the ground by paying of the decision makers not to allow this to go ahead.
Override objections, given more incentives and start by allowing electric three wheeler construction in Sri Lanka IMMEDIATELY as they are so harmful to the environment at present. Just look at the air quality in Kandy, for an example, it is a problem mainly exacerbated by three wheelers.
Don't forget going to pay homage at the temple of the tooth is guaranteed to shorten your life, unless we go all electric starting with the Kandy City.
I attended a seminar where the Governor of the CBSL was talking about collecting funds to redeem the debts coming due, in the end much of it will have to be refinanced. IF that is the case and the interest rate scenario in 2 years is going to be very different to the windfall rates now, it is best to raise funds now, and repay some of the loans falling due, by repurchasing them now and not wait years when things will be harder.
There is just no thinking on these lines, just the traditional means. There are ways and means to benefit, which if you think of the problem as if it is your business you will make better choices.
Our leaders know whatever decision they make, someone else pays, so they don't make the best decision on behalf of the people, they only make that which is least likely to hurt their careers which they hope will last for generations of their kith and kin.
The desperate need of the hour is true leadership and bold decision making. Anyone older than 40 cannot make such. Only younger ones, to whom everything that is decided upon now will be the beneficiary or victim of today's policies, so let them make the decisions that affect their futures for a change. Its their future, they will be more careful than the present generation of leaders, who will all have passed on when their decisions are felt.
Too right. How can allocating Rs500M for fifty electric buses, and a small duty incentive for all electric small cars, be called an environmentally conscious (Haritha) budget? There has to be some thing more substantial, that will wake people up, and do something.
Environment friendly policies can be growth intensive if done properly. Just see that in the UK they have stopped their wind farms because they are producing more electricity than needed. Don't you wish we had that luck? Only the CEB Engineers and relevant Govt. servants who rake in a fortune from illicit contracts and kickbacks will be upset.
The old lot live in Australia with their loot, why do we continue to allow this nonsense?
The US2B refinery should have been built 10 years ago, when access to funds was easier and cheaper. By now it would have been paid back and our import bill would be so much lower, instead of having to import refined petrol etc for 6million plus polluting vehicles today.
There is no use building a refinery now as 25% will go on commissions, and it will take 10 years to build. Spending this on renewable instead will give a better return on investment, which after all is who every cent spent by the Government should be evaluated to benefit the public, not a few people as it does now
The Solar Industry will oppose cheap panels as they are making a killing on them, even though they will have to supply all the other equipment like inverters, but this should be resisted for the greater good, and in the end good for them too, but they want to make money now, not over the long term. The lack of long term vision is what has and is stifling growth and sustainable development in SL.
After all sustainable means for the long-term survival durr.
Surely in such a low international interest rate environment, this is a lifetime chance for SL to grow at double digits. You only have to look at India and China for the way they are going about it. Time to take a leaf of their book, and improve the abysmal productivity record of SL and direct our energies in improving productivity. The benefit then is higher wages, and then they can attract the labor that is currently going overseas or just refuse to work as the pay is too small.
When high interest rate returns Sri Lanka could have negative growth rates, and the social unrest, unthinkable.
Better still give it free if the person or company plug into the grid in 4 months, the speed with which the private sector in SL will take up the challenge will surprise the comatose in parliament. they don't understand that time is money and they are good at wasting it.
Who is the Govt trying to fool? No FDI will come from it. Neither will exports increase, both essential for high growth. Ironically, foreigners may buy local bonds, because rates are much higher, as long as they can sell and repatriate their funds before the rupee collapses. It is the strength of the rupee they will look at but not into long term investment in industry for growth.
If the real estate bubble bursts first, SL will fall into recession, so risk is high. Its speculation and no where else for High Networth people to park their money. If they dont invest in industry or tourism, how can you expect foreigners to come and invest?
The strategy must be to get this local money that is going to real estate into productive investment. No incentives in budget to entice them to move their money, in fact even less due to the new Inland Revenue Act that is a further damper on growth. So to that extent it is an IMF budget and not one suitable for SL future.
Politics determines policies that let power remain in parliament, while the public are played out and the people are powerless to pass the baton to a patriotic professional person to perform the required paradigm shift.
Cost of Mannar Wind Farm for 100MW was US$120M then must be much more now, so no brainer just give away US$50M of solar panels on condition of putting in private power into the grid, and immediate low cost power will be the result. After all CEB will not pay for extra electricity they generate, so win win for them too!
https://en.wikipedia.org/wiki/Mannar_Island_Wind_Farm
I am bowled over by the response, and I would like to make a comment on an issue that was raised, by an eminent person who told me that as budgets go, there is some very important shifts of thinking that can change the dynamics in Sri Lanka's favor.
For example for the first time, without losing control (50%) the largest asset that the state owns and arguably worth a combined US$5B are the Bank of Ceylon, Peoples Bank and NSB and the government has mentioned its intention that in order to raise capital in line with the Basel III requirements, they have expressed an interest in selling some shares and increase the capital base of those banks, thats an excellent start in reducing their stranglehold which will no doubt be used by the opposition groups as selling the family silver!
However it is a courageous start and credit goes to the FM and his team. However I still stand my by original premise that it is not enough, bearing in mind the small window of opportunity we have and which will be closed shortly, that we have NOT taken advantage of. It is sad that the Govt has wasted so many years since they came to power to make the needed changes, which they could have done immediately, but there is no point crying over spilled milk there.
Where is the needed WOW factor to spur growth?
It is time that the people really understand that giving the Govt Servants a 10K pay raise and reducing the price of fuel has cost the economy dear. There would have been an extra 1000Billion to spend, repay loans or pursue growth strategies, to say nothing of the impact to the economy.
So no matter the mistakes of the previous regime, this regime too must be held accountable for making foolish and opportunistic decisions that have made the people poorer. In a full employment economy where everyone who wants to work can now find work, it is grossly irresponsible to make Public Service more attractive, which is what the pay raise did. That is simply unconscionable.
It is time some hard decisions are made to evaluate public service and cut about 300K jobs immediately while promising that they can be recruited in the private sector, as long as they are willing to work. Most of the surplus staff in public service dont do anything for their paychek so getting people who dont know what work is to actually contribute to the economy is difficult, but a step that must be taken if the economy is to grow. We have reached the classic barrier, where we either improve productivity, or shift state to private sector labor force in order to fill the one million vacancies today. The PM should stop talking about I million jobs as they are already there, with no takers. Something India and Bangladesh would envy, and we are NOT making any attempt to address this issue.
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