Defining growth

GROWING income disparity, corruption, lack of good governance and democracy as well as the impotence of Parliament was extensively dwelt on during an interview given by reputed economist Harsha de Silva recently.

Discussing a range of development challenges, he criticised the Government for its policies and insisted that “crony capitalism” is here to stay unless the powers that be get their act together and admit shortcomings that are deeply rooted within the governance system. De Silva was detailed in his analysis, dismissing any political agendas as his motivation and insisting that his only goal is to assist the people by constructively criticising the Government.

Putting aside the contention of who has made these criticisms, it is worthwhile to take the key message of what he is trying to convey and decide whether it is justified. The first point that he made was the growing gap between the rich and poor. Pointing out that while a select number of individuals are making billions on the stock market or through massive corruption, thanks to the development drive of the Government the common man is forced to pay exorbitant taxes. All essential items of food, housing, healthcare and education is subjected to price hikes, but the Government does not have a capital gains tax and has done little to clamp down on the blatant corruption rampant within its ranks.

He stated that in a report by Prof. A.D.V. de S. Indraratna, President of the Sri Lanka Economics Association, he points out an incident about a 70 kilometre road where a particular VIP asked for Rs. 1 million per kilometre. “That is the kind of grand corruption that is taking place and on page 82 of that report he calculates the cost of corruption on the economy and estimates it to be 8.7 per cent of GDP for that particular year. If you look at a 50 billion dollar economy, you are talking of US$ 5 billion a year.”

Another point that he reiterated was the very real danger Sri Lanka is in by getting caught in a “debt trap,” where the entire GDP would be insufficient to repay the loans taken for massive billion dollar projects. This would mean that not only would the people have to suffer under increased taxes, they would also not be able to use the infrastructure that they have paid for so dearly.

Losing on multidimensional levels, the common man will become even more entrapped in a system that does not believe in checks and balances for accountability and is ruled not by laws but the will of powerful individuals. It is clear that the future of Sri Lanka will be decided by the expenditure of the Government; therefore it is important that it is done in a pragmatic and honest manner.  

Taking Parliament as an example, de Silva emphasised how certain MPs have more power than ministers simply based on their family connections – a point that is further highlighted by a report over the weekend on how tractors donated to the resettled by the International Red Cross (ICRC) were in reality handed over to those preferred by a minister rather than the list finalised by the organisation.

On Monday morning, Fisheries Minister Rajitha Senaratne admitted at a press conference that the Dikovita Harbour, which is currently under construction, is at the centre of a massive corruption scandal with most of the allocated € 53 million being wasted. Placing the blame on his predecessor, he acknowledged that payments to the foreign company had been stopped by him and that four other harbours were being developed under a budget of Euro 41 million, showing the level of wastage. Undoubtedly, bigger projects would provide higher numbers of corruption. These issues rarely make it out into the limelight and even when they do, they are pointedly ignored. 

“Growth is growth,” but the means must justify the ends, otherwise sustainability will become the next dream for Sri Lanka.