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This is my Nation


Of coalition politics and passing Budgets

At present, the ruling United Peoples’ Freedom Alliance should not have any difficulty in having the Budget approved by Parliament because it does appear to have the required numbers to do so. But coalition politics is a funny game with many twists and turns and given the experiences of last year, the Alliance will surely leave no stone unturned to ensure this year’s Budget vote will be strife-free for the ruling party

President Mahinda Rajapaksa’s Budget for the year ahead, presented on Thursday while world interest was still focussed on the outcome of the presidential election in the United States, had no major surprises - just as much as the results of the American presidential poll didn’t.

The President - who in keeping with a tradition established by his predecessor Chandrika Kumaratunga also holds the Finance portfolio - had a difficult task on his hands. The global economy is in recession, the country is fighting a war and the masses were expecting as much relief as they could get.

Indeed, in the past few months, the general public had been fed on a steady diet of military successes in the North and expected to grin and bear the hardships that they had been subjected to, in the form of escalating prices of food, essential items and services. The Budget, everyone hoped, would bring some relief to the battered and beleaguered citizen.

Relief there was, but perhaps not on the scale everyone expected. The reduction of fuel prices, widely predicted, did not surprise anyone but the decrease disappointed many who were expecting greater concessions, especially since a fall in petrol, diesel and kerosene prices was expected to trigger a chain reaction of price reductions in almost all sectors of the economy, thereby cushioning the adverse effects of inflation.

A wage hike, also widely predicted did materialise, but not in the anticipated form. What is proposed is an increase in the cost of living allowance subject to a maximum of Rs.1000. The President was to argue in his Budget speech that he was advised in his discussions with trade union representatives that this would be more effective than a salary hike.

Another attempt to smother the spiralling cost of living was the reduction in the rates of the Value Added Tax (VAT). While this reduction should also help reduce the prices of most goods and services, whether this would, in fact, happen in actual practice and whether the intended benefits would trickle down to the consumer, is left to be seen.

Even if there was an increase in the take home pay of the public servant - and the added bonus of a fuel price and VAT reduction -there were other avenues where the public would be called upon to tighten their purse strings.

Many imports that cannot be considered luxury purchases - milk food, chocolates and biscuits, clothing and leather goods were subject to increased duties that would see their prices increase in the local market. The principle underlying this exercise appears to be that this will not affect the sections of society that are most affected by the present economic hardships.

There also appears to have been a conscious attempt to grant redress to the lowest income earning groups. That explains the concessions afforded to pensioners, the increases in festival advances and distress loans and the relief granted to low-end consumers of electricity and water. Clearly, these measures will prove popular among large sections of the public who have been burdened with an ever escalating cost of living in recent times.

The Budget was, of course, preceded by an ‘alternative Budget,’ the first of its’ kind in this country, presented by the opposition United National Party (UNP). These proposals, unveiled just over a day before the Budget would have offered much food for thought for decision makers in the Treasury, but they too were not sensational.

They did, of course, claim to offer more relief to the public but that is always easier said than done, especially when pontificating from the opposition benches. Nevertheless, it is a laudable exercise and one which opposition parties should continue to practice; at the very least, it would keep the government on its toes.

The ruling party’s challenges however cannot be considered to be over with the presentation of the Budget in Parliament. Already, the Appropriation Bill has run into some snags, being successfully challenged in the Supreme Court by the UNP. In response, the government has assured that any clauses inconsistent with the Constitution would be amended.

But the greater challenge would be in ensuring the smooth passage of the Budget through Parliament. It will be recalled that there was high drama last year, not once but twice, when the Budget was put to the vote. In both instances, it was the crucial role played by the Janatha Vimukthi Peramuna (JVP) that saved the day for the government but today, at least a faction of the JVP is estranged from the ruling coalition.

At present, the ruling United Peoples’ Freedom Alliance should not have any difficulty in having the Budget approved by Parliament because it does appear to have the required numbers to do so. But coalition politics is a funny game with many twists and turns and given the experiences of last year, the Alliance will surely leave no stone unturned to ensure this year’s Budget vote will be strife-free for the ruling party.

This is in the context of speculation that the UNP is wooing at least some of its defectors of the Karu Jayasuriya-led faction and encouraging them to return to the fold. The timing of that event if it does come to pass, could coincide with the vote on the Budget proposals, the UNP hopes.

For the government therefore, Thursday’s Budget proposals were just the beginning of a long political tight-rope walk. There is a dangerous balancing act still ahead, so it still needs to tread carefully in the few weeks ahead.

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