Page 1


Page 2
PROUCTION OF PRINCIPAL AGRICULTURAL CROPs
KLOGRAMS
MOLUON Lografi
| | V 240 220 is TA 220 20 ܤܡܐ 200
180 - - 180
160 = 憩ggER H 160
40 140
20 20 MBA: ONS OF NUTS NUTS 3000 LS S S S S S S S S S S S S S S 3000 2300 = COCONU 2500
2000 is - 2000 1500 F - 1 1500 Lo! METRC TONS MILLION METRIC 19:
—--------z' 22. He 《་ཁོའི་ངོ་མཚ| 22 2.0 pao ീ - 20
صے صے نے 霄。魯 = محی H 18 o6 = ീ M - 16 馈·岛 #= Ν ノ a A
踢隆酸圈 12 ܣܩ܂ 2ܘ ؟ e S L S S S S S S S S SMSSSS O
*體 *ಿ *寫 *75 *電 “ገ7 *寫 "go " *ಿ?
RUFEES ’êGO MALLKONS
SDR MILLION & • ? 500 -T-----
?ሖ@
-500 - cvRRENT Account salanc
traDE BA: -1000 --
MERCHANDISE EXPORTS
AND IMPORTS
RUPEES'000 MILL*ğ
A.
-60
PUBLIC DEBT
(GROSS)
80
70
-50
է 0
30
RUPEES MILLION 5000
-5000 -
| 20:۔ -15000 |-
-20000
CURRENT ACCOUNT BALANCE
TRADE BAL
-25000
1975 1g76 1977 1979 1
BALANCE OF
ANNual
CO
P
'78 烹9 '80.
COMPOSITI FOREIGN Month
 
 
 
 
 
 

N
ECONOMIC INDICATORS
Successes have no doubt been recorded in the economic development strategy of the country in recent years but they have not come without accompanying problems. The problems are mainly of a structural nature and are closely interlinked with vital sectors of the economv. as evident from the indicators on this page.
Sri Lanka's balance of payments has continued to deteriorate and the major reason for this was the declining terms of trade brought about both by a greater demand for imports (with increasing development needs), and the comparatively poor export performance, particularly by the major commodity exports. The result in reflected in a less optimistic overall economic picture (than in some earlier years) that emerged at the end of 1982 and the Central Bank reporting that production (growth of real Gross Domestic Product) had declined last year. The reason, as illustrated here, was mainly the lower growth in agriculture, particularly such major crops like paddy, tea and rubber, which recorded negative growth rates in 1982.
A harsh international climate, in which terms of trade were unfair for Sri Lanka, only compounded these problems. For instance, although the volume of both rubber and coconut exports showed an increase in 1982, these gains were almost
fully wiped out by the drop in international
SDR MILLION 500
Over ALL galANCE prices. Meanwhile, the import bill continO ued to soar. Crude oil imports cost over S. -500 Rs. 10 billion in 1982. reflecting an in
1000- للمدكس - - -
RUPEES MILLION -- - 5000
-OVERALL BALANCE
5000
ཤ-ཀང་༡༡་ ANce 1
-20000
上ーlーlーー25000 979 S60, 1981 1982
PAYMFrTS
crease of over 25 per cent more than the previous year even though quantities imported did not go up proportionately. The resulting adverse terms of trade led to a widening of the country's trade gap and a further deterioration in the balance of payments situation. This also created a greater resources gap demanding even more foreign assistance, revealed in the diagrams below.
issues that confront the national budget, especially when the pace of development has to be maintained, and if the economy is to , "ove ahead. How to limit expenditure while raising more revenue is today a basic task but closely linked to it are these wider issues of production, balance of payments and foreign resources.
There are

Page 3
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Einse
Volume 8
Diary of Even
Finance & Bar
Upali Nan.
J. Diandas
Lal de Alv
NEXT ISSUE
Univer COn Cep Sri La COuntr
* Labou
* Sri Lair
* Flour 1
* Palmy1
 
 
 

Numbers 11 & 12 Feb/March 1983
CONTENTS
COLUMNS
tS 2 February 1983
nking 12 Deposit trends in the banking sector
SPECIAL REPORT
3 BUDGET 1983 5 The 1983 Budget – an analysis
圈
FEATURES
ayakkara 14. Post-Harvest Losses and small farme i
storage problems in Sri Lanka
19 Errors in Government - Decision influencing — Documents, their Causes and remedies
vis 28 Possibilities in Inland Fisheries for Deve
loping the Peasant Economy of the Dry Zone - Part 11
sity Education-its early beginnings, development, and basic its; introduction and progress of university education in nka and present issues facing university education in this
Y.
r exports as major foreign exchange earner
hka's first merchant bank with foreign participation
milling and wheat flour consumption
"ah Sugar production in Sri Lanka.

Page 4
Feb. DARY O
1. Japan's unemployment stood at 2.4 percent of the total labour force, or an average of 1.36 million persons in 1982, the second highest after 2.5 percent recorded in 1955, Japan's Statistics Bureau announced in Tokyo.
5 Governors of the Inter American Development Bank (LADB) tentatively agreed in Paris to a $ 1.3 billion
lending programme in the next five years but remained divided over the question of individual country contributions, according to a bank official. Governors of the 42-nation agency were meeting to finalise a 1983-86 funding programme to provide credits for development projects in Latin American countries. LADB members include the US, Canada, Western European nations and Japan as well as Latin American countries.
The International Monetary Fund (IMF) reported in Washington that the inflation rate in non-oil devetoping countries continued to increase, reaching 39.2 in October last year. In contrast, the rate of consulsaer price rise in the industrial countries slowed further in November dropping to 6.1 percent from 6.6 in October, the Fund said.
8 An Agreement was signed with the international Fund for Agricultural Development (IFAD) providing for a loan of SDR 12.95 milion (Rs.293 milion, approximately) for the Badu la District Rural Development Project. The proceeds of the loan is designed to increase income and improve the living standards of the rural population of the project area, with particular reference to the small holders growing irrigated field crops, vegetables, tea and minor export crops.
8 The Appropriation Bill 1983 which will be presented in Parliament on February 25, 1983, by the Minister of Finance and Planning. The Cabinet of Ministers approved the draft Appropriation Bill, which indicates the budget deficit to be almost 29 billion rupees this year. Total expenditure is estimated at Rs49655 million consisting of Rs.25,662 million recurrent expenditure and Rs.23,993 million capital expenditure; while total revenue is estimated at Rs.20,803 million.
The Cabinet approved a loan of 17.5 million DM for the Kirindi Oya irrigation Settlement Project on a recommendation by the Minister of Finance and Planning Mr. Ronnie de Mel. The project is co-sponsored by ADB, International Fund for Agricultural Development (FAD) and Federal Republic of Germany.
9 Stressing the urgent need for a world economic recovery, Finance Ministers from developing nations, meeting in Washington, called upon industrial countries to adopt stimulative economic policies. At the same time, the International Monetary Fund's Group of 24' Finance Ministers, from Latin America, Asia and African countries, urged a major expansion of IMF financial resources for loans to member-nations that face international payment difficulties. President J. R. Jayawardena inaugurated the third session of Sri Lanka's eighth Parliament,

F EVENTS
O
11
16
18
19
25
The world economy will make a gradual recovery this year from worst recession since the 1930s, accor. ding to a forecast prepared by the International MoneEary Fund (IMF), stated a Reuter report. In its report on the global economic outlook, the IMF said it appeared the recovery would gradually pick up speed as the year progressed. The revival of economic activity to which lower inflation and interest rates are expected to contribute is now projected to gather gradually during 1983, the report said. The Central Bank yesterday moved to stabilise the exchange rate at Rs.23.05 to the US dollar by moving the rupee-dollar parity slightly over one rupee. The Governor of the Central Bank was reported as stating that no further adjustment was required to improve the competitive position of the Sri Lanka rupee in promoting exports while also extending a protective arm to import substitution industry to strengthen itself in the medium term. An agreement with the Asian Development Bank (ADB) for a loan of US Dollars 12.5 million (Rs.317.5 million, approximately) towards financing a Livestock Development Project. The project is aimed at increasing the quality and producitivity of cattle, buffaloes, pigs and poultry in the project area.
The Government announced a revision of turnover tax rates on trade, manufacturing and imports and also import duties in a Gazette Extraordinary published on February 18. Revision in import duties were
also announced by gazette on February 26. An
crease in the sales tax on leaf tobacco used in cigarettes or pipes was also announced. Among the items on which changes in price were announced are rice, sugar, wheat, arrack and fermented beverages, and newsprint (See page 4).
Britain proposed a 9 percent cut in the prices of its North Sea Oil and within hours the world's top oilproducing cou ntries were following suit. The announcement that Britain intended slashing three dollars off a barrel, making its crude the cheapest high-quality light crude on the official world market, had quick repercussions in the Middle East, Central America and Africa.
The gap between Government's revenue and expenditure this year will he an unprecedented Rs.28.9 billion, according to the Estimates of Fxpenditure and Revenue for 1983 presented in Parliament by the Minister of Finance. Government Expenditure in 1983 moves up to Rs.49.6 bn from an estimated Rs.41.9 bin. the previous year; while, Revenue is estimated at Rs.20.7 bin. as against Rs. 18.2 bn. in 1982.
The Japanese government will provide a grant or Yen 300,957 mm. (approximately Rs.27.79 million or US S 1.29 million) to Sri Lanka to be used for economic development, according to an agreement signed in Colombo. This is the fifth in a series of debt relief grants extended by the Japanese government to Sri Lanka in acceptance of a resolution of the ninth special session of the Trade and Development Board of the UNCTAD on debt and development problems of developing countries.
EconoMic REVIEW, FEB/MARCH 1983

Page 5
THE BUDGET
1983
46. ෆිදාස)
The importance of the Budget حي of 1983 is that it sets out the broad guidelines for the country's economic policy during the Government's second term of office, just as the Budget of November 1977 set out the guidelines for the five years that followed. >
The impact of the Budget on the new economic policies introduced in 1977 has been felt in varying degrees over the past six years and growth has been recorded in nearly all sectors of the e economy. The average rate of the GDP during this period has been more than
擎、
§දා,සදාදා
రిజిరిం} double that of the previous five years, while a noticeable upward trend in employment creation has been observed. But with these successes in economic development have also emerged problems of a structural nature, which demand adjustments if there is going to be continued economic progress in
the years ahead.
in dev facing up to the of payments and
The Budget also
orientation
One significant feature of the Budget for 1983 is that it attempts to face up to the country's current resources position. It indicates the need for a re
for 'austerity' in come some of the the economy. In
objective it emph
allocate scarce resources as rationally as possible, with a carefully of priorities
reduce Government expenditures especially those relating to ca no new capital projects to be undertaken in the next two years
step up the domestic savings effort; with the anticipated slowin of foreign resources
make a substantial effort in revenue collection for the year 1983
deal with the balance of payments problems facing the country in the exchange rate and tariff structure
provide additional incentives for the traditional exports sector; producer margins and thereby increase production and exports; products and markets to reduce the country's dependence on a
bring about reasonable price stability in the year 1983 by bring balance with the reduction in the expansionarw financing compon
enhance the flow of resources to the private sector through
and exchange rates which will enable the required shift of resou areas such as export oriented labour intensive production.
ECONOMIC REVIEW FEB/MARCH 1983
 
 

Cs gital ExependitarS
EcarreStrit
1977 'elopment policy in deteriorating balance
budgetary position. amphasises the need the country to overmajor problems in order to achieve this asises the need to:
worked out system
pital projects; with
g down in the flow
hrough adjustments
to ensure sufficient ook for new export harrow activity base
ing the Budget into 2nt of the Budget
ppropriate interest 'ces to high priority
oze gyo go os os2 gigs
ಔG೦೦೦
20000
10,000
As seen in the table, while total current expenditure declines in the next few years total current receipts are expected to progressively increase. Receipts from income tax, BTT and selective sales taxes are expected to almost double between now and 1987. The objective in this policy is to enable the government to achieve a surplus in its current account by 1984 and also to bring the overall investment in GDP ratio to a level that is consistent with the country's absorptive capacity. A focal point of budgetary operations in the years ahead, according to declared policy, will be the generation of sufficient Government savings which could, on the one hand, reduce the level of expansionary domestic financing and on the other, compensate for any shortfall in foreigri resource inflows. .
The immediate problem, however, was to find the necessary resources to m, set urgent Government expenditure, a situation which is best summed up in the following words of the Minister himself:
'We have to raise resources to match Government expenditure, and, in so doing have been compelled to call upon the people to make many sacrifices . . . . . If We do not take immediate steps to correct the adverse trends in our economy, we will be forced to take much more painful measures in the future . . . . . 尉
We must gontinue our forward march . . . . we can do so only by sustained hard work, austerity and sacrifice. Above all, rigorous financial discipline must be maintained. This will be the theme of my speech'.
3.

Page 6
An analysis of some aspects of the Budget is contained in the following paper, on page, 5.
Turnover Tax Rates
These revisions entail a general increase of turnover tax rates on trade, manufacturing and imports, with the exception of few items. Turncover tax on tcburist hic tels was reduced from 20 per cent to 13 per i:it vivhile turriover tax on the support of gers and jewellery has been removed altogether. Moreover, Government departments, lccai authorities and District Development Councils have been exempted from Turnover taxes, except when they indulge in business. Bread, books (excluding magazines, periodicals and newspapers) crude oil, infant milk food, paddy and rice (uncooked), wheat and wheat flour except at the point of importing or milling will continue to remain free of turnover tax. In addition to the above articles, cement, cigarettes, fertilizer, petrol, diesel oil, kerosene, fuel oil, naptha and bitu men and sugar have been declared as exempted articles except at the point of import or at the point of manufacture. Further, all varieties of liquor have been declared as exempted articles (except at the point of import or manufacture) when sold in sealed bottles in licensed premises. On the other hand, tax credit granted to importers who sell imported articles whether to a customer or to registered manufacturer on account of turnover tax paid at the time of import, has been withdrawn.
Import Duties
These revisions, applicable to all imports for certain items, are as follows:
Old Rate New Rate
Rates below 1.2%% Free 5% 5% 74% 7%% 10% 10% 12%% 12%% 15%
Rates over 12%% ) General increase of 10 but less than ) percentage points upto lee A ) a maximum of 99 per cent
These revisions were published in the Gazette Extraordinary No.232/6 of 26th February, 1983 and No.232/10 of 18th February, 1983.
4.
1
Central Gover Interest on Pu|| Subsidies Current Trans Other Current Total Current Yotal Current 7. 1 I Income Ta 7,2 BTT 73. Selective S 7.4 Export Di 7.5 Import Du 7.6. Others 7.7 Additional Budgetary Sav GDP at Currer
As Percentage
Čentral Gover Interest on Pu Subsidies Current Trans Other Current Total Current Total Current 7.1 income T 7.2 BITT 7.3 Selective 7:4- Export Du 75 mport Du 7.6. Others 7.7 Additiona Budgetary Sav
includes expe includes pensi
SOURCE: PUB.
Ministry of Fin. Sales Tax
The Gover cigarettęs or pi | ruary, 1983.
Other Price R
1. Rice - T
2. Four - T
3. Bread - T
4. Masoor Dh:
5. Cigarettes
6. Liquor -

Budgetary Current Receipts and Expenditures 1983-87
(Rs. Million)
Budget 1983
nment Comsumption 8162 blic Debt 71.51 2410 fers to Private SectOr 2431 Transfers 3361 Expenditure 23515 Receipts 24.118 Χ 3624 7O90 Gales Taxes 2780 uty 2604
3124 Mobilization O tings 603 ht Market Prices 1243OO
· of GDP
'nment Consumption 6.6 blic Debt 5.8 1.9 fers to Private Sector 2.0 Transfers 2.7 Expenditure 18.9 Receipts 19.4 3X 2.9
5.7 Sales Taxes 2.2 Jty 2.1 Jty 39 2.5 Mobilization O fings O.5
1984
9396 7743 2650 2628 37.43 26160 2811 O 4190 8796 3232 2781 5403 2708 1OOO 1950 147610
64 5.2 18 1.8 2.5 17.7 19.O 2.8 6.0 2.2 1.9 3.7 18 O.7 1.3
nditure on food and kerosene stamps ions and interest subsidy to National Savings Bank
1985
10805 8821 2916 2789 42.19 295.50 33375 4765 101.95 3734 3074 5992 2786 2829 3825 172370
6.3 5.1 1.7 1.6 24 17.1 19.4 2.8
5.9 2.2 18 3.5 1.6 16 2.2
1986
12425 10437 3208 2973 4.737 33780 3898O 54.75 1 1960 4356 3385 6762 3309 3732 52OO 198OOO
6.3 5.3 1.6 1.5 2.4 17.1 19.7 2.8 6.0 2.2 1.7 3.4 1.7 19 2.6
LIC INVESTMENT 1983 - 1987 National Planning Division,
ance and Planning. E.
1937
14283 11679 3528 3155 5325 37970 44,470 6124 13698 4945 3709 7544 354O 491O 65OO 225640
6.3 5.2 1.6 14 2.4 16.8 19.7 2.7 6.1 2.2 1.6 3.3 1.6 2.2 2.9
nment increased the sales tax on leaf tobacco used in the manufacture of be tobacco by Rs. 13.00, to Rs.295.00 per kg., with effect from 18th Feb
visions
he price of imported Irice from Rs. 5.75 to 6.15; per kg.
he price of flour from Rs.5.95 to Rs.6.82 per kg.
he price of bread from Rs.2.50 to Rs.2.80 per loaf of 450 grams.
all - The price of masoor dhal from Rs.20.25 to Rs.17.50 per kg.
- The price of cigarettes were raised by five cents per cigarette in respect
of all brands of cigarettes.
The price of Coconut Arrack was raised from Rs.39.00 to Rs.40.00 and that of Special Arrack from Rs.32.UO to Rs.33.00
ECONOMIC REVIEW, FEB/MARCH 1983

Page 7
THE 1983 BUDGET
AN ANALYSIS
Yasapala Karunasinghe* (Tax Consultant) Introduction
The budget is a comprehensive record of anticipated public expenditure and revenues. The expenditures are broadly classified into: recurrent and broadly classified into: recurrent and capital,and represent aggregates of expenditures recorded by objects of various ues are also classified by source such as taxes, duties, as well as revenues from other than taxes. This is followed by a comparison of Government expenditures with revenues and, in the event of a revenue shortfall (which incidentally is more regular than a surplus), the Finance Minister announces new proposals which usually include revisions to taxes and
duties, borrowings in the domestic sector, and aid commitments from the international donor community.
Thus, the budget is the principal mechanism of managing public expenditures and mobilizing resources to meet annual expenditure plans. It is also the main instrument of implementing the Government's fiscal policy.
This vear's budget anticipates financing of Rs.49.6 billion; an increase of about Rs. 11.0 billion from the last year's which now stands at Rs.38.8 billion. (This paper draws information from the 1983 Draft Estimates of Expenditure and Revenue of the Government and the Budget Speech of March 8, 1983). The 1983 total expenditure outlay consists of recurrent expenditures (Rs.26.5 billion) and capital expenditures (Rs.24.8 billion) The Minister of Finance and Planning proposes to finance the 1983 expenditure program
by: (1) domestic revenue (Rs.26 billion),
(2) foreign financing consisting of loans and grants (Rs.14 billion) and (3) borrowings from non-banking sources (Rs.8 billion). A Rs. 1.4 billion unfinanced gap, however, still remains.
* views expressed in this paper are solely
those of the author.
ECONOMIC REVIEW, FEB/MARCH 1983
The purpose of luate the 1983 buc an economic policy late it to the ecc process. The analysi Sections. In section Outlay is briefly r COWerS reSOUrCe n cing the budget; anc tes the budget's im and employment, in of payments and pub PUBLIC EXPEND
Table 1 provide blic expenditures for 1983 as well as which help place th in a comparative p
Current estimate 置 (Table 1) PUBLICE
198
RECURRENT 160
SALARES 40 NT.DEBT 38 Domest. 31 Foreign 7 SUB.& GRNT 35 Fad. Stamp 15 Kr. Stamp 1 Feritzir. 6 inf. Mik Intst (1) 3 Other 7 MSCLLNS. 35
CAPITAL 133
LOANS 16 Domestic 1O Foreign 6 TR.COP (2) 73 Mahaweli 38 Housing 1O Electrc. 6 Watr. So. 3 LN.COP (3) Electrc. Tr. Bd. (4) AC. AST (5) 38 UNDER EX. −
TOTAL 293
1. 2. ' 3.
4。
5.

this paper is to evaget, especially from stand point, and renomic development is divided into three 1 the expenditure viewed; section 11 bilization in finan
section 1 1 1 evaluapact on production lation, the balance ic debif. TURE PROGRAM a breakdown of puy major categories for 1982 and 1981 e 1983 expenditure erspective. The reof Rs.26.5 billion
accounts for almost 52 percent of the total expenditures. This represents a marginal decline in percentage terms relative to two previous years. Capital expenditures have increased to 48 percent in 1983 (accounting for Rs.24.8 billion) up from about 46 percent in 1981 (a) Recurrent Expenditure
The recurrent expenditures estimates for 1983 is approximately Rs.6 billion more than the 1982 provisional estimates of Rs.20.5 billion. This represents a 29 percent increase compared with the total budget acrease of around 27 percent in 1983. The recurrent expenditure estimate of Rs.26.5 billion is represented by four major expenditure categories: (1) salaries (22 percent);
XPENDITURE BY MAJOR CATEGORIES (RS. MILLIONS)
1982
1 PERCNT PERCNT. 1983 PERCNT.
O5.OO 5444 20484.00 49.60 26523.00 51.63
8O.OO 1388 4422.00 1O.7O 5.645.00 1Ü፲99 56.00 13,12 5612.00 13.59 7504.00 售4.51 43.OO 10.69 4281.00 1037 5619.00 10.94 13.00 2.43 1331.00 3.22 1835.00 3.57 82.00 12.18 3760.00 9.1O 4244.00 826 21.00 5.17 151O.OO 3.66 151O.OO 2.94 6400 O-56 177.00 O43 288,00 0.56 37.00 2.17 1OOOOO 2.42 1OOOOO 195 82,00 O.28 125.00 O3O 100.00 1.19 88.00 1.32 450.00 1.09 67O.OO 1.30 90.00 2.69 498.00 1.21 676.OO 1.32 89.00 12.21 7690.OO 1862 9019.00 1756
93.OO 45.56 2081600 5040 24847.00 4837
19.00 551 2806.00 6.79 4767.OO 9.28 O2.OO 341 2023.00 4.90 3410.00 6.64 17.00 2.10 783.00 1.90 1357.00 264 45.OO 24.98 11375.00 27.54 1132.00 21.67 16.OO 1298 7217.OO 1747 6773.OO 13.18 20.00 3.47 703.OO 1.7O 571.OO 1.11 73.OO 2.29 305.00 O.74 81 OO O.16 43.OO 1.17 957.00 2.32 1379.00 2.68 69.00 1.94 1177.00 2.85 1252.00 244 95.00 O66 470.00 1.14 695.00 1.35 71.00 O58 526.00 1.27 450.00 O88 :60.00 13.13 5458.00 1322 5730.00 11.15
25OOOO 6.05 1966.00 3.83
98.OO 100.OO 41300.00 1OOOO 51370.OO 100.OO
Interest Subsidy to National Savings Bank Transfers to Public Corporations Loans to Public Corporations Loan to Sri Lanka Central Transport Board Acquisition & Maintenance of Real Assets

Page 8
(2) interest on public debt (29 percent); (3) subsidies, grants and contributions to public corporations to offset losses (16 percent); and (4) maintenance, repairs, transportation and allowances (all grouped under miscellaneous) (33 percent).
The increase in 1983 expenditures on salaries is about 28 percent over 1982 and this increase appears to include the Rs.100 salary increase announced for public employees receiving a monthly salary of Rs.1000 or less. The salary increases account for 20 percent of the increase in the recurrent expenditure. interest on public debt is the most striking sing item taking the biggest slice of recurrent expenditures. In absolute, terms, interest on public debt has increased by approximately Rs.2 billion, representing a 33 percent increase over 1982. As a result, its share in the total recurrent expenditures, has gone up from 27 percent in 1982 to 29 percent in 1983. About 67 percent of this Rs.2 billion increase is accounted for by interest on domestic debt, a direct consequence of the increasing dependency on domestic sources (bank, as well as non-banking sources) to finance growing budget deficits. There has also been a corresponding increase in interest payments on foreign borrowings, as the pace on development projects has increased.
Subsidies, grants and contributions to public corporations is one category where the Minister of Finance and Planning has avoided increases. The Food Stamp Scheme, under which more than 50 percent of the population receive encashable Coupons to purchase food commodities, remains unadjusted to take into account rising food prices. Despite a drop of more than 50 percent in real value of the food stamps since the implementation of the program in 1979, the Government has not increased the value of food stamps to protect recipients from rising food costs. Although the value of kerosine stamps has been increased by Rs. 6.0 to Rs. 15.50 per household per month, this increase will only partially offset 6
the price increa the kerosene s in 1979. Expen eous category h Rs.2.7 bilion to of recurrent expe 26 percent in 19 increasing mainte portation costs expenditures on and education.
(b) Capital Ex
Capital exp expected to rea billion. Howev
made for estima amounting to R budget decrease representing a 2! the 1982 provisi total, loan rep Rs.4.7 billion,
billion for capita repayment of dol Rs. 3.4 billion frC representing a 69 payments on for about 73 percent million in 1983 included in the interest payment recurrent budget)
Capital trans tions amount to resent a margina Rs. 11.3 billion it Development At recipient with F this is 6 percent 1982. The capi National Housing in 1983 will be tion of 19 per capitáil contribut in 1982. The V nage Board recei of Rs.1379 millic million in 1982), water supply anc country. The bu loans to public to Rs. 1252 mill tricity Board is t Rs.695 million,

ses of kerosene since tamp was introduced litures on the miscellanave gone up by about account for 33 percent nditures compared with 82. This partly reflects nance, repairs and trans
and partly increasing
services, e.g., health
enditure
2nditures in 1983 are
ch a total of Rs.24.8 er, when allowance is ited under expenditure S.2 billion, the capital s to Rs.22.8 billion, 5 percent increase over onal estimate. Of this payments account for leaving only Rs. 18.1 investments. In 1983, mestic loans increases to om Rs.2 billion in 1982, 2 percent increase. Reeign loans increases by | over 1982 to Rs. 1357 (Loan repayments are capital budget while is are included in the
fers to Public CorporaRs. 11.1 billion and repIl decline compared to In 1982. The Maha Welli thority is the biggest Rs.6.8 billion, although t less than its share in tal contributions to the Development Authority Rs.571 million, a reduccent compared to the ion of Rs.703 million Water Supply and DraiVes an increasing share on (compared to Rs.907 to carry out its on-going sewage-schemes in the dget also accommodates Corporations amounting on. The Ceylon Eleche largest recipient with
followed by the Sri
Lanka Central Transport Board (SLCTB) with Rs.450 million.
(c) Capital Spending by Sectors
Table 2 summarizes the 1982 capital budget breakdown by sectors. The Government's policy of 'no new projects', Which was first introduced in 1981 as a disciplinary measure in maintaining the consistency of actual expenditures to the budgetary allocations of respective Ministries, has not been relaxed in 1983. This means that the Ministries are hot permitted to undertake projects which had not been approved earlier and included in the budget estimates; and implies that the 1983 allocation will be entirely utilized for on-going development projects.
(i) Agriculture
The Government emphasis, as reflected in budgetary allocation by sectors, is still on agriculture with particular attention on developing irrigation facilities and improving existing irrigation facilities for greater efficiency and better management. This continuing emphasis reflects the long conceived strategy of providing irrigation facilities in the dry zone as a means of increasing agricultural production. The Accelerated Mahaweli Program (AMP), which is now entering the fourth year of execution is still the country's lead irrigation developinent project receiving the priority in invest
ment allocation. It accounts for 34 percent of the total capital spending and about half the allocation in agriculture. The AMP is still in the construction phase and, accordingly, the budgetary allocation will be utilized to finance the construction of dams, tunnels, irrigation canals, hydro power storage facilities and to provide other physical and social infra-structure such as roads, community centres, etc. At this stage, the successful completion of the AMP is vital to the nation as if offers vast opportunities for agricultural development, direct as well as indirect employment, and power supply for rural and industrial. development. Accordingly, the Government's investment priority for the Mahaweli Program must be seen in the context
of its substantial contribution to overall ECONOMIC REVIEW FEB7MARCH 1983

Page 9
economic growth and its likely responsiveness to economic problems confronting the country. Moreover, the project has already taken vast amounts of resources, and a retreat from the commitment made would represent the relative waste of scarce resources.
(ii) Economic Overheads.
For purposes of providing productive infra-structure, or economic overheads, the budget allocates Rs.4.1 billion accounting for about 20 percent of total capital spending. This allocation is divided among (1) transport development, including new additions to stock for railway and the Transport Board fleets (Rs.936 million), (2) development and improvement of power supply and distribution (Rs.788 million), (3) improve
ments to Water Supp. and construction at roads, bridges an (Rs.1007 million). are vital to ecol for many reဍဒ္ဓဝns struction of, anរូmpr infrastructures contr try's Capital stock, a economic activities such facilities in the tion, distribution anc commodities and se these activities are us by the private secto capital requirement it direct returns si these developments most, if not all of th
TABLE 2. SUMMARY OF CAPITAL EXPENDITURE BYSE
Total Capital Percent Foreig Expenditures (Rs. Million) (Rs.M
1. Agriculture 9624.30 47.78 5476
Mahaweli 6763.OO 33.58 4523 Other irrigation 637.90 3.17 67 Land Dev. Forestry
etc. 121.00 0.60 5( Field & Minor Export
Crops 683.30 3.39 319 Plantations 746.70 3.71 442 Fisheries 132.1O O.66 54 Animal Husbandry 80.40 O4O 1: Other 459.90 2.28 1(
2. Industry 62.20 O.31 59
3. Economic Overheads 4052.20 2012 236
Transport 935.8O 4.65 53 Power 788.7O 3.92 73. Water Supply 1320.6O 656 64 Other 1OO7.10 5.OO 46
4. Social Overheads 2055.20 10.2O 102
Education 432.20 2.16 4. Health 826.2O 4.10 69 Housing 794.80 3.95 27
5. Other Programs 4348.30 21.6 12
6. Total 20142.20 * 1OOOO 934
* Total Capital Budget is Rs.24.8 billion.
payment of Rs.4.7 billion.
ECONOMIC REVIEW, FEB/MARCH 1983
The figure shown here is withot

ly (Rs.1320 million) hd improvements of d public buildings Such investments homic development including: (1) conovements to physical ibutes to the counind (2) expansion of requires the use of 2 process of producmarketing of goods, rvices. In addition, ually not undertaken r because the heavy S do not provide nce the benefits of are spread across
e population.
CTORS
yn Aid Percent
illion)
500 58.9
3.00 48.39 7.20 O.72
).70 0.54
2.90 3.42 2.50 4.73 4.20 O.58 3.00 O.14 D.90 O. 12
9.OO O.53
9.70 25.35
).70 5.68 5.00 786 D.90 6.86 3.10 4.95
D.40 1092
30 O.44 9.40 748 2.7O 2.99
9.40 1.38
S.50 1 OOOO
t capital re
on direct participation in
(iii) Social Services
Providing basic social services such as sanitation, medical care, educatior and community services is another major responsibility of the public sector, These services have been given an allocation of Rs.1260 million, divided bet Ween education (Rs. 434 million) and health (Rs,826 million). Despite the scarcity of financial resources the go. vernment is still providing a share of efeund 6 percent on these services. The housing develop, ent, which can also be considered as falling partly within social overheads, is another lead project of the Government and its allocation is progressively being reduced as the National Housing Development Authority has now entered commercial production of houses, enabling the authority to recoupe the cost of (low cost) housing programs from the profits on the sale of houses.
The Government's lowered priority industrial development is clearly borne out from the relatively small share budgeted for industry. Under the open and liberalia zed economic policy pursued by the present Government, the private sector is expected to assume a greater role in producing agricultural and industrial outputs, and the Government is strengthening the private sector expansion by providing services. Financing the Budget
The draft Estimates of Revenue and Expenditure of the Government which was prepared much in advance of the budget speech, reported Rs.20.1 billion from revenue sources, based on the assumptions of prevailing tax structure at the time of the preparation of these draft estimates. The reported revenue estimate left an unprecendented budget deficit of around Rs.29.0 billion. The Minister of Finance is responsible for bridging the deficit and the options available to him are limited to (1) increasing domestic revenue (2) mobilizing foreign assistance including commercial borrowings from abroad (3) borrowings from the non-banking domestic sector, (4) borrowings from
7

Page 10
the domestic banking sector, and (5) issuing additional treasury bills. However, the government has opted to rely on the first three choices to increase the total receipts to an estimated Rs.48.0 billion; but this still leaves an unfinanced gap of around Rs. 1.4 billion.
The government has first looked into the possibility of increasing revenue, and lyas looked to indirect taxes as the obvious choice. an unsatisfactory compromise, the reaSoning for additional revenues from indirect taxes appears to stem from the proportionately higher share of indirect taxes in total revenue and, accordingly a revision will result in proportionately higher revenues, relative to other revenue sources. Moreover, an upward revision of direct taxes would undoubtedly be a deterrent to investment in the private sector, especially at a time when the Government is trying to induce more private investments to support the economic expansion that the country needs badly,
Taxes on consumption and imports were the two areas where the govern
Although this is rather
ment's attention Concentrated in revenues from inc the revisions on th introduced in mic a gazette notifical popularly termed in the past most ters penalized si gazetting for ad The most commo consumers of alc of luxury goods owners of assets year, however, th from this traditic to previously ut as basic food iten sugar and bread. brought under til
means the consu bear the tax on the consumer ha directly and ind import duties or raw materials. however, spared are no new tax
TABLE
1981 Rs. Million Percej indirect Taxes 12105.00 7.5.2.
Sales (2) 2829.00 17.5 Excise 2O27.OO 12.6 import Duties 3225.OO 2O.O. Export Duties 3685.00 229 Licence 95.OO O.5. Transfer of Assets 22100 13
Direct Taxes 2029.00 12.6
income Tax 57OOO 3.5. Corporate Tax 1459.OO 9.O.
Non Tax Revenue (3) 1957.00 12.1
Total 16091.00 1 OOO
1. Revenue in 1982 is now estimated at Rs.18,200 million a c
2. Additional revenue estimate of Rs.3729 Mn., included it
breakdown is not possible at present.
3. The Central Bank profits transfer of Rs.1500 Min. included

has been particularly bringing in additional lirect taxes. However, ese two categories Were February '83 through ion which came to be the "Midnight Gazette'. former Finance Minisalective groups when ditional tax revenues. groups were smokers; holic beverages; buyers and appliances; and and properties. This 2 Minister has deviated onal norm by looking tapped sources such hs including rice, flour, These tenas haye been he sales tax, and this mer will have to fully ach item. In addition, is been affected both irectly by the revised consumer items and The government has, the producers. There (es on production in
1983, but producers will be effected by higher prices on raw materials such
as petroleum, and this would in turn esult in higher consumer prices.
These measures are expected to bring about Rs.3.7 billion in additional revenues. There is also another new source that the government has tapped to fi nance the budget expenditure, i.e. the Central Bank profits. The Minister has accommodated a request from the Cent. gali Bank to transfer Rs. 1500 million of its profits to the Government's revenue and to reduce the Central Bank's treasury bill obligations to the Government by a like amount. These budgetary proposals increase the Government revenue to an estimated Rs.26.0 billion as compared to Rs.20.1 billion in the draft estimates (Table 3). The anticipated
increase in Government revenues simultaneously reduces the budget deficit to about Rs.23 billion from the original atimate of Rs.29 billion.
According to figures reported in the draft estimates, the Government planned to utilize about Rs. 10.0 billion from foreign assistance sources in the form of
REVENUE ESTIMATES
1983 له"1ga2
nt Rs...Milion Parcent Rs. Million Percent 3 10748.00 59 18486.00 71.01
B. 3139.OO 1752 8826.00 33.90 O 1935.00 10.63 26OOOO 9.99 4 2800.00 15.38 4OOOOO 1537 O 2264.00 1244 26OOOO 9.99 9 336.00 1.85 180.00 O.69 9 224.00 1.23 240.00 O92
1 3051.OO 16.76 36OOOO 13.83
4. 619.00 3.40 57OOO 2.19 7 2432.00 13.36 3030.00 1164.
6 1969.00 10.82 3996.OO 15.35
O 182OOOO 1 OOOO 26032.00
irop of Rs. 1602 million or 8% from the original estimate.
in 1983. However, this consists of sales taxes as well as import duties. A
in 1983.
ECONOMIC REVIEW, FEB/MARCH 1983

Page 11
一
project and commodity loans, including Rs.2.2 billion in outright grants. The Minister now expects a higher utilization of foreign assistance and the anticipated expenditures have now been revised upward to Rs. 14.0 billion (Table 4). This additional Rs.4.0 billion appears to come from unutilized foreign aid in 1982 and the pre-1982 years. The unutilized foreign aid that has been accumulated through the end of 1982, for example, Works out to a total of more than Rs.20.0 billion in current prices, and in 1982 alone about Rs.4.0 billion appears to have been unutilized. Although the accumulated foreign aid is a possible source of budgetary support, the flexibility of mobilizing it is somewhat limited because of the conditions that must be fulfilled by the Government, especially in the case of project aid which is often tied to the rate of implementation of development projects,
is not planning any the banking sector, a regular source in t extent the Governmer out the assistance banks is yet to be seen
Sri Lanka's ann diture program has be over the last few ye the 1982 budget inc Over 1981 and the increased 27 percent To a great extent, th the rapid growth in tures due to (1) infla in the economy rest costs of services, (2) new expenditure new development a progressively increasir cations for interest foreign and domestic of the necessity Of
TABLE 4 FINANCING THE BUDGET DEFICIT
(Rs. Million)
1981
Total Expenditure 31 101 Revenue 16228 Budget Deficit 14873
Financing From:
Project Loans & Grants 81.83
Foreign Commercial Loans - Bank Borrowings (Domestic) 6296
Non-bank Borrowings 432 Cash Balance - 38
Total 14873
1982
38800
182OO 2O6OO
兴 Original Revenue Estimate was Rs.20803 million. The increase in rev million is accounted for by revision in BTT on Feb. 18, 1983 (Rs.372
profit transfer of Rs.1500 million.
** This reflects the unfinanced gap.
Borrowing from the domestic nonbanking sector is a more regular source of financing the budget and, in 1983, about Rs.8.0 billion is expected from this source. This budgetary support to the Government mainly comes from (1) savings institutions, (2) insurance funds, and (3) provident and pension funds. Surprisingly, the Government
ECONOMIC REVIEW, FEB/MARCH 1983
for providing admini social and Welfare se my and maintaining on borrowings, the r res component of susceptible to any Cut The sacrifice that make, when recurren growing rapidly, is o'

borrowings from which has been he past. To what ht can get by withfrom commercial
ual public expen*en growing rapidly ars. For example, :reased 32 percent
1983 budget has over that of 1982. his increase reflects recurrent expendiationary tendencies ulting from higher maintenance, etc.,
requirements for ctivities, and (3) ng budgetary allopayments on both : Ioans. Because
such expenditures
SLSzSYSLLL
1983
494O9 26O32 * 23377
14O16
1361** 8OOO
enues of Rs.5229 9) and Central Bank
istrative, economic, rvices in the econothe commitments ecurrent expendituthe budget is less
S.
the country has to t expenditures are ften at the cost of
investments on long run economic development especially under conditions of severe financial constraints. Iron - cally, without adequate spending on long run economic development, a nation cannot satisfactorily address itself to its pressing economic and social problems. Faced with this situation, most developing nations compromise for borrowings both from domestic and international sources for funds, for investment on economic development. This action, on the other hand, often leads to adverse developments in the economy as reflected in high inflation and a weak balance of payments situation. Accordingly, public spending must be viewed from the joint perspective or evaluating both benefits and costs. This section takes a close look into this issue, with particular attention to the 1983 budget expenditure program.
(a) Production and Employment
Capital spending shifts resources from present consumption to building up capital stocks in the country with a view to increasing production in the future and enabling the population to later enjoy higher consumption levels. This is the main consideration for a Continuing emphasis on capital spending, as it serves the nation's economic progress. In the short run, capital spending generates more employment and creates increased demand for raw materials. When these developments are viewed from the income side, capital spending could lead to increased incomes, which
in turn induces more consumption and production. In the long run, capital spending helps to increase Capital
formation as reflected in the develop
ment of and improvements to physical
infra-structures, such as buildings, roads, dams, equipment and machinery. Increased capital formation enables a country to move into new production frontiers leading to progressive increases in production and thus increased availability of goods and services for consumption. Moreover, capital spending in the public sector motivates expansion in the private sector which in turn results in capital formation in the private sector

Page 12
Despite a considerable increase in the capital budget, there will be no new investments on new projects, a continuing measure introduced in 1981 following the rapid increase in the money supply and, thus, inflation in 1980 and 1981. However, such restrictions may adversely effect the economic progress in the country, especially when the expectations for more employment under an open economic system have been kept high. Without new development activities the growth of direct employment opportunities in the public sector, and indirect employment in the rest of the economy, will be gradually reduced, at least in the short run. The decline in the rate of income in economic growth and slackening of employment opportunities experienced from about 1981 partly emanate from lack of investments in new ui ciects. A declining performance is likely to become more serious, especially in the area of employment, in the years to come as the government will have to face new issues such as the relocation of a labour force which will face displacement once on-going projects are completed.
The private sector's role in the economy, especially in the areas of production and employment, surpasses that
of the public sector by significant margins.
The private sector's dominant role in the economy is self-explanatory if the 70 percent share in the total capital stock and the 80 percent share in the total abour force are used as yardsticks. Therefore, cuts in public spending may not necessarily lead to slow economic performance provided that the private sector expansion in the economy can be ensured. It is for the purpose of increasing its role, that the private sector has been given various production incent tives under the present liberalized economic setting, and the present tax structure.
Unfortunately, there appears to be a very slow response to such incentives, as producers are beginning to face high production costs which reduce the profitability of their business ventures. Moreover, the effectiveness of producer incentives is gradually eroded with higher production costs. In addition. producers
"Ο
are facing stif imports despite There are some b. for producers, ho is making plans offering new inci these incentives ced. Hopefully bring at least in production a private sector. A per bushel has als paddy floor pric production. But be absorbed by marketing costs. the increase in th of tea and rubbe by rising replantil
Analysing th of production a not very promis already unemplo who are now ent
According to t Socio-Economic the Department
tics, the unemplo reduced to abou
of more than a in the economy nised sector of been able to ab:
number of new e force in 1978
recent reports i job creation sho
sector (The Centr This is only a
for example, bas results of the 19 there were abou age group betwee neither attending at the time of t their status is not Would probably ta
tunity presents the employed, o are occupied in at least 37 Weel
that under-emplc ag unemployment.

*fer competition from increased import duties, bright spots in the budget wever. The Government to boost exports by entives to exporters, but have yet to be announ, these incentives will marginal improvements ind employment in the price increase of Rs. 5.0 o been announced in the e to induce higher price this increase is likely to rising input prices and Similarly, a large part of he subsidy for replanting 2r may also be absorbed ng costs.
e budget in the context und employment it is ing for those who are yed as well as those tering the labour force,
he Labor Force and Survey of 1980/81 of
of Census and Statis
yed labor force has been t 845,000 as a result
million jobs generated since 1977. The orgathe economy has also sorb almost the entire
intrants into the labour and 1979. However, ndicate a considerable rtfall in the organised
'al Bank Review, 1981) part of the problem, ed on the preliminary 981 population census, It 1.5 milion in the n 10 and 29 who were
school nor employed he Census. Although very clear, the majority ke up jobs if an opporitself. Even among nly about 60 percent a job which includes gs of work, implying
by ment is as serious
(b) Inflation
The sources of financing the budget are at least on the face of it, not as expansionary as they could be; being made up of foreign aid and non-bank borrowings. Therefore, the budget, unlike in the past few years, will not exert as much inflationary pressure on the economy. However, it is extremely doubtful that this budget will also not have to depend on bank borrowings to a considerable extent. This reasoning emerges, from the strong possibility of a financing shortfall because: (1) the revenue estimate of Rs.26 bilion for 1983 appears to be highly unrealistic, (2) the actual utilization of foreign aid is likely to be much less than anticipated, and (3) the unfinanced gap will be much more than estimated due to ommissions and under estimation
of public expenditures.
Revenue shortfalls from anticipated
targets have been very common in the past. In 1982, for example, a revenue shortfall of around Rs. 1.6 billion has been recorded. The revised revenue receipts show only about Rs. 18.0 billion accounting for an estimated 18 percent share of the GDP. Assuming a real growth rate of around 5 percent and an inflation rate of about 20 percent the expected revenue estimate of Rs.26.0 billion in 1983 roughly works out to about 23 percent of the 1983 GDP, Given a declining trend of revenues as a share of GDP from around 27 percent in 1978 to 18 percent in 1982, the possibility of increasing revenue by Rs.8.0 billion in 1983 is unlikely.
The revision of anticipated foreign aid utilization increases from Rs.10 billion to Rs.14 billion in 1983, and this addition appears to be made up of carryovers from the past which include an unutilized Rs.4 billion in 1982 alone. One conclusion that can be drawn from the comparison of the 1982 foreign aid under-utilization of Rs.4 billion and the overall under-expenditure of Rs.2.5 billion is that the domestic financing was not adequate to make use of the foreign aid available to Sri Lanka in 1982. Given the past experience of foreign aid under-utilization, the odds
ECONOMIC REVIEW, FEB/MARCH 1983

Page 13
appear to be more in favour of a subs- Table 5. tantial under-utilization in 1983 as well.
The unfinanced gap of Rs. 1.3 billion
needs adjustments to take into account 1 - FOREG - (i) Comr om misions such as the subsidy revision (ii) Disbu on kerosene. This revision increased 2. FIXED C the subsidy transfer to the Petroleum Public - ii) Total
Corporation to Rs.288 million from Rs. 177 million accounted for in the (a) includes
(b) Public Se draft estimates. However, this difference (c) PEEC rat has not entered the revised computa- (This table sh. tion of budget expenditure. Further- :
more, both recurrent and capital expen
Source: Public
diture estimates recorded in the draft estimates will have to be revised upward due to the recent rupee depreciation (c) Balance of Paym against the dollar. The author estimates the impact of rupee depreciation alone should boost public expenditures at least from 5 percent to 10 percent, thereby increasing the unfinanced gap. The budget does not offer any indication as to how such uncertainities with an almost dou can be accommodated or what courses prices for all grades of action the Minister will consider if relative to 1982. E such developments occur. In all probability, the unfinanced gap could reach as high as Rs.8.0 billion. The issue here is the ability of the Government to finance a deficit of this size without resorting to domestic market borrowings, thus increasing the inflationary tendencies similar to those that occurred in the 1980-1981 period. Apart from the likely contribution to inflation from the financing side of the budget, the price revisions introduced two weeks before the budget will further add a few percentage points to the Consumer Price Index (CPI) in 1983. However, the size of its contribution will depend on the price revision's impact on consumption. If there is no change in consumption level, the price increase (d) Public Debt will be fully reflected in the CPI, depen- Borrowings from - ding on weights of consumer items and foreign sources
in the index. If consumers can accom- regular feature in su modate only a part of the price increase, public expenditure prog on the outer hand, allowing the balance rationale behind bor to be reflected in consumption cut backs, it is an alternative s the effect of the price increase on the which can be utilizec index could decline proportionately. purposes to generate However, the price increase of petroleum income. These new wiii make a more definitive contribution should help to reduce to inflation because of the widespread and, at the same time,
ECONOMIC REVIEW, FEB/MARCH 1983
nature of its effects OI
The demand for should experience slow as a result of higher pr ciation of the Sri Lan the dollar. On the e reported to have mai
information, the tea remain favourable thr and this should help no of payments situation, rate the long period ol plantation production.
Will also induce a h exports of rubber and
until higher productic from a devalued rupe the higher income mac ducers following the di anticipated developmen narrow the current acci terms which Will cer the financing of the bal much easier.

Foreign Aid Commitment, Disbursements and Fixed Capital
Formation 1977 - 1982
1977
AD tments 254 sements 204
PITAL FORMATION sector (b) (c) 185 c) - 386
on Aid Group Assistance.
USS Million
1978 1979 1980 1981 1982
400 569 628 815 577 251 268 326 437 415
329 413 742 688 853 546 851 1261 1210 1414
tor including extra Budgetary investment. (Rs. USS) for 1977 and respective nonfixed rates for other years.
ws how the level of domestic capital formation, both government and total,
ramatically in recent years.
The greater availability of foreign assistance had
ea important factor in promoting this change).
Investn nt 1983-1987 Ministry of Finance and Planning.
prices ar costs.
ents
imported goods er growth in 1983 ces and the deprekan rupee against xport side, tea is de good progress bling of average in current prices Based on current export trade will oughout the year it only the balance but also amelioF stagnation in tea The devaluation igher volume of coconuts, at least in costs resulting e begin to erode le possible to pro2valuation. These its in 1983 should punt gap in dollar ainly help make ance of payments
both domestic have become a pporting annual rams Table 2. The Owings is that Durce of capital for productive new sources of income sources the debt burden the economy is
benefitted with higher production, more services and new employment opportunities. However, the continued dependence on borrowings can become a serious issue and is open to the Criticism that the country is heading towards a situation known as the 'debt trap". The main criticism against the 'debt trap' is that the country requires more and more current borrowings to service the past, accumulated borrowings, as well as for economic survival.
Sri Lanka's debt situation is not very encouraging; it has been growing
at an unprecedented rate since the middle of the last decade. The worsening situa
tion" is well-demonstrated when the public debt is expressed as a percentage of Gross
Domestic Product (GDP). In 1975, for example, the public debt ratio remai
ned at a moderate level of 40 percent of GDP, but due to increased depen
dency on borrowings afterwards, it has dramatically increased to over 70 ps
cent at present. Interest and loan repayments in 1983 alone accounted for
more than 25 percent of the total budget.
This clearly signals a potentially unhealthy financial situation and the
need for the Government to generate increased revenues. To avoid more
serious debt problems, the Government has two options: reduce public
spending or increase Government revenue. The first option is clearly not
viable given the country's commitments to more production, more employment, and higher incomes. This leaves basically the latter. However, this requires
imaginative and non-traditional policy decisions to generate additional reven
ues without sacrificing production, employment and living standards.

Page 14
Banking
Deposit Trends in the Banking Sector commercial Bank.
A major feature of commercial banking activities in 1982 was the considerably high liquidity position of the banks. Total resources of commercial banks rose by Rs. 7,438 million in 1982, compared with an increase of Rs.6,184 million in 1981. A substantial part of the resource growth in 1982, amounting to Rs.5,934 million, was contributed by the increase in deposits. This growth in deposits, coupled with a significant deceleration in demand for credit from the private sector, enhanced the liquidity base of the commercial banks. The growth was most apparent in time deposits, where because of the high interest rates being offered for such deposits by the commercial banks there was a 73 percent increase (an increase of Rs.2,526 mm) in the first half of 1982. This continuous improvement in liquidity, without a corresponding increase in availability of attractive shortterm investment outlets, compelled the commerical banks to effect certain changes in their deposit mobilisation programmes in mid 1982. Interest rates were reduced on time deposits and the practice of accepting 24 months deposits were discontinued by many banks, with a view to reducing the costs of deposit mobilization and making short term deposits more attractive. ص
The enhanced liquidity position ratio of liquid assets to demand deposits rose from 110 percent at the end of 1981 to 121 percent at the end of 1982 in the commercial banks. The Half Yearly Survey of Bank Deposits and Advances, (up to the first half of 1982) carried out by the Central Bank, clearly shows that there was a sharp rise in total deposits of the public and a declaration in demand for credit. This survey also reveals important trends in the distribution of deposits among indigenous banks vis-a-vis the foreign banks.
The total number of accounts with all commercial banks as at the end of the first half of 1982 amounted to 4,186,354 which indicated an increase of 19.2 percent over the corresponding period of the previous year. In the meantime the average balance per account also increased by 19 percent, coming up to Rs.5,300/- during the same period. Thus the total value of deposits of the entire banking industry, by June 1982, amounted to Rs.22,178.8 million which shows that there was an increase of 41 percent over the total deposits of the corresponding period of the previous year. (See tables 1 and 2)
Of the 4,186,354 accounts held by the commercial banks 98 percent of the total number were with the indigenous commercial banks; that is, the People's Bank, Bank of Ceylon, Hatton National Bank and the 12
total deposits of t percent increase; V the total deposits
cluding both new recording a 45 pe
Table 1 Patt
Total number of at Average balance pe
Total Deposits (Rs Demand deposits ( Time deposits (Rs. Savings deposits (F
overall impact of t the indigenous ba in the negative cha of deposits held by share of deposits hel which contributed
of the total depos industry in the first to 79 percent in
(See table 3).
Related to th
in the average ba banks during the
pointed out earlier account of the ent an increase of 19 p
Table 2 Ch
Number of accoun indigenous banks
Average balance pe for a banks
Average balance pe of indigenous bank
Average balance p of new foreign bar
Average balance p of old foreign ban

Finan Ce
The growth rate of the nese banks recorded a 33 hile the growth rate of of the foreign banks (innd old) was much higher, rcent growth rate. The
rate of the average balance of the indigenous banks were only 12.17 percent. On the other hand, the foreign banks recorded an increase of 53 percent and the composit average balance per account of the foreign banks (both new and old) amounted to be Rs. 56,750 approximately. The average balance per account of the recently established foreign banks increased fręm Rs.27,460 to Rs. 181,260/- recording a 40 percent increase;
ern of change in the deposit mix of the commercial banks
ng the first half of 1981 and 1982
January - June Percentage
1981 1982 Change
:COUntS 3512, 183 4,186,354 19
:r a CCO u nt
(Rs...) 4,453 5,300 19
mn) 15,638 22, 179 41
Rs.mn) 4,125 5.218 8
mn) 8,843 13,186 73
is...mn) 2,687 3,674 17
his pattern of growth on nks, could be observed
Inge in the relative share y these banks. Thus the d by the indigenous banks, approximately 92 percent its of the enti - yafiking quarter of 1981, dropped the first quarter of 1982.
is factor are the changes ance of the commercial period under review. As , the average balance per ire banking sector showed ercent although the growth
while the residual category of foreign banks (those established prior to 1977) showed a 45 percent increase in their average balances per account, moving upto Rs. 44,850/— from Rs.27,075/- within the period of one year, (See table 2).
A somewhat superficial explanation to these development has been that there was an 'orientation' of the indigenous banks towards retail banking, while foreign banks concentrate more on the wholesale banking, However, the implication of this “orientation' has to be evaluated in the light of the highly competitive atmosphere under which the indigenous banks had to carry out their
anges in average balances per account of indigenous banks and foreign banks
Over One year
(Jan. 81 - June 82)
As at June As at June %
1981 1982 Change
is held by the
3,441,939 4,102,626 19
r a CCOUnt
4,453 5,300 19
racCOunt S 4,190 4,250 14
raCCount ks 27,460 181,260 85
r a CCO u nħt S 15,660 65
44,850
ECONOMIC REVIEW, FEB/MARCH 1983

Page 15
operations. Inevitably the small time accounts induce comparatively higher administrative costs, which place the indigenous banks in an unfavourable position in the competitive bidding for large scale commercial lending, Meanwhile, the comparatively higher weighted average interest rates of the indigenous banks, which arise Out of the higher costs of funds gradually displace the indigenous banks from more profitable large scale commercial lending.
In addition to the more explicit changes in the total deposits, there has been another relative and more implicit pattern of growth of deposits of the banks during this period. This is the immediate outcome of the relatively
sharp increase in fixed deposits vis-a-vis total savings and demand deposits. . In other words
the trends in the deposit mix continued in favour of the fixed deposits as against savings and demand deposits. For instance, demand
deposits, which constituted more than 26 percent of the total deposits in the deposit
mix of the entire banking industry in the first quarter of 1981 dropped to 23 percent in the
first quarter of 1982. This change was principally attributed to the changing pattern
in the composition of demand vis-a-vis fixed deposit. (See table 4) In other words the
rate of increase of time deposits during this period was 49 percent while it was as low
as 28 percent in the case of demand deposits. The apparent discontinuity of classified data, in terms of indigenous and foreign banks does not permit an analysis of the degree of change in different banking sectors. However, based on the available data, it appears that the change in the deposit mix is more acute in the indigenous banks. The overall
iLSYS
Table 3 Market share of indigenc
Total deposits with the commercial banks (Rs.m
Estimated number of ac held by the indigenous b
Esti mated aggregate dep held by the indigenous b
Aggregate deposits held the foreign banks
Market share of the indigenous bank. (%)
Composition and trends
First haf 1981
First half 1982
effect of this trend a
competitive position of
BANK ADVANCES: Slackening of demand-commercial advances d
While there was a substantial growth in deposits, the growth in demand for bank advances was comparatively slow by the first half of 1982. It is apparent from the purposewise classification of bank advances that those for Commercial purposes dominate the picture, taking up almost half (49.3%) of all advances granted during these two years. From Rs.8.8 billion granted in the six months ending December 31, 1980 Commercial advances kept increasing consistently to reach Rs.11.1 billion for the six months ending June 30, 1982. By 1982, however, there
is a change in the purpose for which Commer
cial advances were granted. In the first six months of 1982 advances for export trading declined by 5 percent; while there is a high demand for import credit. Advances for wholesale and retail trading also declined by 9 percent, reflecting a lower level of activity in the trading sector.
The two other main purposes for which bank advances were nranted are industry and agriculture.
ECONOMIC REVIEW, FEB/MARCH 1983
Advances for indu: ding mining and fish and the building trade) or 18 percent in the firs' this period, increased in evident from indicators increased export earni sector. The growth ir was partly the result power supply when com ponding period of 1981, mainly reflected the ent fields of textiles, Weari products; chemicals,
Advances for agri marginally by Rs.29 m half of 1982. Advance sector declined by Rs.2 was partly explained b use of fertilizer by th advances for paddy cult by Rs.22 million over til

bus banks vis-a-vis foreign banks in the field of deposit collection
As at June As at June %
1981 1982 Change
n) 15,638 22,187 4,188
counts banks 2,441,939 4,102,629 19.2
Osits anks (Rs.mn) 14,421 17,436 20.91
by
1217 4,751 290,39
92.2% 78.59% 13.61%
of the deposit mix
Demand Time Savings
4.125 (26%) 8,843 (56%) 2687 (17%)
5,318 (24%)
13,186 (59%) 3674 (16%)
gain undermines the the indigenous banks
as it pushes up the cost of funds of the indi genous banks
ominate
strial purposes (incluing, and engineering rose by Rs.846 million t half of 1982. During dustrial activities were such as fuel usage and ngs in the industrial the industrial sector of the uninterrupted pared with the corres
The increase in credit nanced activities in the ng apparel and leather petroleum and coal.
cultural purposes rose hillion during the first s granted from the tea 16 million. This drop y the decrease in the is sector. Meanwhile, ivation rose marginally he period under review.
Advances granted for housing purposes rose by Rs.197 million when compared to an increase of Rs.157 million in the corresponding period of the preceding year. This increase consisted of increases in advances for purchase of existing houses (Rs.58 million) and construction of houses (Rs.139 million). Housing advances have registered a constant rise from Rs.8 billion in December 1980 to Rs.1.4 billion by June 1982.
Another significant aspect is the fall {from June 30, 1981) of advances to FTZ enterprises. Upto the middle of 1981 almost 28 percent of all advances went to FTZ enterprises, but by June 1982 these enterprises accounted for ohly about 4 percent of all advances. It should be noted that over this period advances of the FCBUs (Foreign Currency Banking Units) had moved up from Rs.3.4 billion in June 1981 to Rs.11 billion by December 1982.

Page 16
FEATURES
POST-HARVEST LOSSES AND SMALL FARMERS PROBLEMS IN SRI LANKA
Upali Nanayakkara
Post-harvest and storage losses are on the increase in Sri Ιανικα, Sector Organisations handling paddy and rice, flour and Sugar, and fru physical losses have been found to be high. The deleterious effects by State agencies in the field of paddy has tended to increase post-h ployment, allow adoption of inappropriate technology and a movin Sources of energy (e.g. Sun drying), and it has also induced the bloc | maintains Dr. Upali Nanayakkara, Director Marketing, Agricultural Sri Lanka, in this paper. As a solution he proposes a significant sh away from price support programmes and handling various operatio, by the public sector. He suggests a shift of these resources now utilise production functions to support programmes for an extended problems of small farmers, traders and private millers, while the priv, lised more for basic trading functions of buying and selling, milling,
in the food system.
A 1980 Workshop on (Post-Harvest Losses)P.H.LL examined the problem in terms of (a) perishable food items (b) durable food items and (c) fish losses. This paper will expand on the ideas presented at this Workshop in connection with items (a) and (b).
Perishable Food items
These were categorised to 1nclude various kinds of (hill country and low country) vegetables, leafy crops and tubers, and fruits, all of which are derived essentially from plant sources. In practically all these areas of P.H.L. L. the causal factors have been identified more as being (1) technologically related factors (bruising during handling and transport; inability to increase shelflife due to the absence of storage, processing and preservation facilities; poor techniques in packing, stocking, handling, movement, etc.) and (2) economic factors such as unprofitability to growers, lack of a stable market (whatever this may mean), periodic gluts and shortages, price fluctuations, etc. Causality between the viarables indentified have not been established, however, through any objective measurement of the P.H.L.L., referred to. More important, there appears to be little evidence to justify the adoption of any conceivable type of technology available (whether “appropriate’, or otherwise) either in financial terms, or in terms of the microeconomic analyst's measure of the “opportunity costs of resources. The
雷4
Workshop Report of several disadvan
which enhance P. The solutions to t
indicated as impr for better identif of the problem an several intermedia a technical and the setting up of and the provision Size of Losses
The size of loss in this Report as percentage for frui and pineapple; 25 by weight; 30 p 5 to 35 percent fo bles; and, perhaps. vegetables. All the rule of thumb' precise measureme
It is known, hic of the Departmen vernment institutic development of m cal losses of about fruits and vegetab been quoted by as far back as the belief that this pe. on account of the in the major citie rural-urban migrat at economic growt favoured the urba up the rates of flo ban sector causing

TORAGE
-

Page 17
______ཟ---། articularly in the public
ts and vegetables, where of market intervention rvest losses, reduce emg away from renewable ing up of Scarce capital Depelортетt Authority, ft both in public policy is of paddy production d in these various paddy Scale of research on the te Sector should be uti
Storage and distribution
indicates the existence tageous natural factors H.L. E. of perishables. he problem have been oved data generation cation of the extent d the improvement of y functions more of technological nature, grades and standards, of grower incentives.
les have been indicated ranging from a small its such as woodapple percent for bananas ercent for tomatoes; )r hill country vegetamore for low country se appear to be rough estimates rather than
ltS. wever, that the efforts t of Marketing (a goon responsible for the arketing involve physi40% of its purchase of es. This measure has he Department from early 1970s. It is our centage is now higher increasing congestion s as a result of heavy ion; conscious efforts l, which have generally n sector, have speeded w of labour to the ursevere demand on the
available infrastructure and have tended to block up produce flows to and from the metropolitan centres.
In this paper we wish to postulate the hypothesis that the existing system of perishable produce marketing by the private sector in Sri Lanka is economically efficient in the sense that the costs of any marginal changes in structural variables and/or the behaviour of its market participants, is not liekly to yeild commensurate benefits. The alternative hypothesis is that many non-marginal changes need to be made at this juncture in Sri Lanka's economic history to enable a significant reduction in the real resource costs of performing the marketing functions for highly perishable agricultural produce and that is only by such policy measures that this society may minimize P.H.ILL. in this area. Changes in the location of break-bulk functions, a conscious shift to the use of 'appropriate' rather than highly capital intensive technologies in performing these functions, the improvement of our techno-economic knowledge of seasonal production patterns and forecasting capacities, and significant improvements in our food science and food technology related capacities constitute some of these relevant non-marginal changes. Another non-marginal change may be to shift away from the public sector's performance of selling and distribution functions with regard (especially) to perishables. There is much in the way of research and development that could usefully constitute the role of the public
Sector.
P.H.L.L. in perishables aggravate the
problem of low real income levels of the Sri Lankan people. This society incurs high 'costs in performing the marketing functions for perishables. While relatively rapid changes are occuring in her capacity to raise the biological production function in small farm sector agriculture, the marketing problems are getting compounded by the rapid expansion of production capacity pari passu ' with increasing constriction of the channels and increasing marginal costs of pro
ECONOMIC REVIEW, FEB/MARCH 1983

Page 18
ܥܠ ܐ܂
cessing the growing volume flows. As a consequence, P.H.L.L. are on the increase both in absolute terms as well as in proportion to production. While there may be no objective estimates of losses in quantity or value terms, experience and judgement indicate that P.H.LL. are increasing at an increasing rate. Much can be done, we believe, by appropriate policy measures for the conscious reduction of P.H.ILL. in perishables by changing the direction of our approaches to perishable produce marketing and the implementation of some of the development measures referred to above.
Specific storage problems
A few specific storage problems in regard to this perishable produce area may be highlighted. The cultivation of red onions is spreading to most parts of the Island today. However, the ability to spread out the cultivation into diverse production areas with different cultivation schedules or time periods, has still not been created. Experiments are needed to identify the potential additional costs of particular regions, starting later on in the cultivation season relative to the increased benefits from higher market prices for produce coming out during the off-seasons. The bulk of the production gets concentrated during the periods July to September and midJanuary to mid-March in most parts of the Island. However, the knowhow of stacking or storing shallots is not yet extended to the new farmers entering into red onion cultivation. The storage and stacking knowhow of the traditional red onion farmers are, in this respect, adequate and perhaps “appropriate”, but that of the new-comers into the industry are not.
In the case of potatoes, the major problem arises from the shortage of seed which is normally imported. LOW cost storage bins are now being experimented with by the Department of Agriculture. The major goal is to develop simple outdoor wooden structures which admit diffused sunlight and thereby retard sprouting. Such simple storage structures constitute “appropriate technology’; and they could be used by small cultivators within their farmsteads. However, until ECONOMIC REVIEW, FEB/MARCH 1983
this technology is devel no means of storing pc to delay sales beyond slump in prices. Our a high proportion of t. by the Department of M hill country potato. account of the conc harvesting season and t. the Department of purchase this output price. Since this is anc simple storage technolo loped if P.H.L.L. are to the strategy of floor sector purchases of need re-thinking at 1 P.H.L.L. criteria.
Durable Food Items The most import Lanka in the durable f rice, the yields of whi wing systematically o decades. In 1973 the of rice was 874,000 m to 1.07 mln in 1974; and 1.42 mln in 1980 roximately 89% of ann It may be justified potential exists for : output expansion as of Agriculture helps intensive margin of c. increased investments extention and input su with the adoption of b practices. Also, the ey cultivation is being p Sri Lanka at the presen irrigation scheme - the In the circumstances, rice will be of much i. economy. Since the subscribed 29 percent contribution to the C it is clear that a redu within this sub-sector high returns to investm
The 1980 Works summarized the type paddy sub-sector as
** Untimely harvestir
and rodent damag of excessive sun an

oped, farmers have
the post-harvest experience is that he output handled Marketing from the crop was lost on :entration of the he official pressure Marketing had to
at a guaranteed n-traditional crop, gy has to he devebe reduced. Also, prices and public
such perishables east in terms of
ant crop for Sri Ood area is paddy/ chi have been groVer the last few 2 domestic output L. t. This increased 1.1 1 mln in 1977; (representing applual requirements). to State that the a rising trend in the Department push further the ultivation through in research and pply co-ordination etter management (tensive margin of ushed further in t through a major
Mahaweli Project. .H.LL. of paddy/ importance to this paddy sub-sector of agriculture's }NP during 1980, action in P.H.LL. is likely to yeild :nt.
hop on P.H.L.L
of losses in the
g, shattering, bird 2, and the effects i rain;
* Bundling, with additional shattering
and exposure to the elements;
* Transportation and handling, with further shattering and contamination
* Threshing, where deterioration OC= curs in both quality and quantity;
* Drying and storage, where improper field stacking results, in quality and quantity losses;
* Milling, including inefficient parboi
ling practices; and
* High moisture deterioration and simi
1lar probfems.ʼʼ
and in the rice-sector as
* Paddy and rice losses in the Paddy Marketing Board's storage facilities;
* Food losses at the Food Department;
and
* Food losses at the Cooperative
Wholesale Establishment (CWE)when importing, storing, and distributing.'
Here too, quantitative assessments of such losses are fragmentary. Paddy losses of the Paddy Marketing Board (PMB) during storage have been recorded by this agency as follows:
TABLE 1 - PADDY LOSSES DURING STORAGE IN P.M.B. STORES
1972 - 1980
Year Losses % of total
(m.t.) handles
1972 395 1.50 1973 63 0.27 1974 87 0.42 1975 131 1.13 1976 102 0.79 1977 218 0.89 1978 57.1 1.77 1979 390 1.50 1980 107 1.06
Source: Poddy Marketing Board.
5

Page 19
Thefts from PMB stores have not been recokened as storage losses for purposes of these data. The milling losses at PMB mills have been reckoned at 0.5 percent to 1.0 percent of the total weight handled by the organization. If additional processing is done to satisfy consumer needs, a further loss of 0.3 percent to 4.3 per cent of weight is rec
koned. The Food Commissioner (F.C.), the
government department responsible for rice, flour and sugar imports, incurs certain physical losses in performing the logistics of import and distribution. The average physical losses have been estimated by the F.C. as amounting to approximately 1.0 percent to 1.5 percent of annual import volume. Imports during the ten year period 1970 to 1980, were as follows:
TABLE 1. IMPORTS OF RICE, FLOUR AND SUGAR BY THE FOOD COMMISSIONER DURING
1970 ΤΟ 1981
Volume ('000 m.t)
Year Rice Flour Sugar
1970 534 375 244 1971 339 336 288 1972 266 329 21 7 1973 343 3.71 194 1974 3O2 449 43 1975 460 463 62 1976 425 386 47 1977 543 532 1 OO 1978 170 61.2 164 1979 211 474 249 1980 190 361 199
1981 157 - -
Source: Food Commissioner
One is inclined to believe that the real value of resource losses by the public sector institutions handling locally produced paddy/rice activities and imports of rice, flour, sugar and other food items, must be higher than what the data would suggest. This is likely to be so because the variable of “quality” does not usually get reckoned when we take stock of the performance of 'ex
6.
change' and 'ph functions by public are generally inflex king. The abseni motive force of priv, efficient performanc of flow and the q of exchange functic cost/use in physical usually aggravates th bility. Inventory stores may be st which may be foi specially if manage1 out regularly and til ment information data retrieval are less developedness. infestation is oft reports of field
would indicate.
fumigation or pes behind for long pe on account of
tortuous procedu. tional responsibilit accept the hypot relative to the sector performanc must be fraught especially in the and warehousing.
Incentive system
Another facto the problem of P.F. agencies handling tribution functior System under whi kers in these O
Rather than beir
cost consideratic
for example, the m of sale is expecte future, the public may be induced t even though an ap costing (if carried ( the total costs of h
the additional gain rise in unit price. problem is often priate costing sy accounting technic ted by public age

ysical distribution' sector agencies which ible in decision mace of the powerful ate profit through the pe (as judged by speed uality of such flows) ons, and low resource distribution activities, ↑e problems of inflexicosts are often high; ocked with produce gotten after a while is get to be transferred ne systems of managecommunication and weak, a fact of acute Insect and weevil :en rampant as the and circuit officers Even expenditure On t prevention may lag :riods after pest attack financial constraints, res and divided Seclies. One is likely to Ihesis, therefore, that private sector, public le of trading activities with high P.H.L.L. processes of storage
r that may aggravate I.LL. by public sector
processing and disis is the incentive ch officers and worrganizations operate. Lg guided by leastons public sector arket price of an item d to rise in the near
sector selling agency O hold back disposal propriate management ut) may indicate that olding are greater than
from the anticipated In any case, the basic he absence of approstems; modern cost ues are seldom adopncies at least for the
fact that such labour commands high transfer prices. Also, our experience is that “capital is generally assumed to be a “free good by these agencies rather than a very scarce, economic, resource particularly for a very lessdeveloped economic system which Sri Lanka is. In any case, the point at issue is that the larger the stock that is held, the higher the probability of product losses not only through driage and pest damage, but also through pilferage. One is therefore, inclined to believe that the P.H.LL resulting from the public, sector's handling of food purchasing and distribution activities are higher than what the data would seen to reveal. The recurrent reports on wanton damage caused to public infrastructural facilities as well as produce merely to cover up corrupt practices provides reinforcement to the acceptance of this hypothesis of heavy produce losses in the public sector.
Identifying causal factors in
post-harvest losses
Post production losses of paddy/rice in Sri Lanka have been estimated by Wimberley in 1974 as 25 to 30 percent. (1) (1980); These losses are said to arise from the perhaps avoidable preharvest probelm of shattering to the postharvest problem of bundling, field transportation, threshing, drying and stacking, storage, etc., both on-farm and off-farm. Illangantileke had emphasized in 1979 that “Improper "harvesting handling, threshing, processing, storage, and marketing operations produce losses in quality and quantity in the case of Sri Lanka (2) (1981). Perhaps, as a result Of the work of a few scientists in this area, today's climate appears quite conducive to increased research efforts at identifying the causal factors in paddy/ rice P.H. LL more precisely, and for the quantification of such losses in relation to specific post-harvest functions. Sùch efforts have still not begun on a big enough scale in Sri Lanka, at least for the fact that the institutional base and the incentive system necessary for the conduct of such research has not so far been created (a point We elaborate on
below).
ECONOMIC REVIEW, FEB/MARCH 1983

Page 20
Milling efficiency
A summary of some of the bits and
pieces of research done recently in Sri Lanka on paddy/rice P.H.L. issues may begin with the suggestion that the minimization of P.H.L.L must be associated with a closer dialogue between plant breeders and process technologists. A study by Jayaratne and Vellandi (3) (1978) indicates that paddy milling effeciency is affected not only by the “type of processing adopted (raw or parboiled), but also by the “variety’
Other characteristics. The rice outturn on milling of paddy depends on the variety of paddy, its condition and the processing conditions.'' Different varieties have different milling outturn rates. Yet, breeders, in their search for higher field yields of raw paddy tend to neglect the aspect of milling outturns. An integration of these disciplinary areas in looking at paddy/rice P.H.L.L., alongside the simultaneous upliftment of the level of process technology in Sri Lanka, is called for. .
A study conducted by Breckenridge (4) (1976) highlighted the relationship between parboiling and the improvement of milling recovery rates (and the quality cf milled rice). When cost considerations (in parboiling) are introduced, however, the economic justification of increased milling recovery may have to be somewhat modified. The duration of 'soaking' and in the 'steaming of paddy for improved milling recoveries (from parboiled paddy) were studied by her and shown to vary for different types and qualities of paddy. She too, has urged the need for reckoning these factors more Cbjectively if we are to raise milling yields and enhance the quality of milled rice.
Palipane and Vellanki (5) (1977) studied further the importance of the length of paddy soaking time and the water temperature at which this cooking should be done for optimum milling results. They question the traditional practice of cold soaking and emphasize that P.H. LL can be minimized quantitatively as well as by quali
ECONOMIC REVIEW, FEB/MARCH 1983
tative improvements by adopting improve niques. The Vellanki lingam and Wickrem: (1977) adds further possibilities for cost improved parboiling
maintaining existing q considerations. De research (7) (1980) ad to the hot soaking an on milling Outturns.
Nevertheless, in th rising energy costs, th of fuel become aspect in this context that on research in that the of such research are One needs to evaluat whether the marginal technically superior m by the marginal Savir and value products of quence of such inn In any case, the view approach to P.H.LL re tive action which Dr. emphasized in our believe, very necessar tal context as is inter-C that we have implied mentS.
Problems in storing
The problems of rice have also been by scientists in Sri Lar **on farm storage “BISSA” was evalua the RPDC (9) (1978 shown promising rest tional method invol losses, low capital, co mentary labour in and providing the fall over the timing of Palipane (RPDC) with tral Agricultural Rese noruwa), are currentl study measuring cha of rice grains and p insect infestation du mercial warehouses.

n the milled rice | parboiling tech
Velupillai, Ramanayake study (6) knowledge to the reduction through techniques while
Lantity and quality Silvas subsequent ds further evidence | parboiling effects
ese days of Steeply 2 economic aspects s of viability. It is e Sees a gap in such economic aspects generally neglected. 2 in all these cases costs of adopting ethods are justified tgs in the physical the gain as a conseOvation adoption. point of a systems search and preven, Illangantileke has discussions is, we y in a developmenlisciplinary research in the above state
storing paddy and examined at times ka. The traditional technique of the zed by Palipane at ). The study has Llts with this tradiring little produce sts, a lot of complebut (employment) mer greater control is paddy/rice sales. Breckenridge (Cenarch Institute, Ganconducting a joint ges in the quality hysical losses from ng storage in com
Milling losses
Milling losses, too, have been the concern of some researchers. The traditional 'hand pounding of paddy technique was examined by Vellanki and Ramalingam (8) (1978) so as to evaluate milling losses. This study provides evidence for the need to introduce mechanical means, albeit simple 'appropriate’ technology, to minimize P.H.L.L. in milling and for the improvement of quality. Undergraduates of the Department of Agricultural Engineering, Pera= deniya University, have, under the direction of Dr. Illangantileke, recently measured the efficiency levels of different types of commercial mills in terms of the total yield and the amount C head rice obtained.
Lack of research incentives
The above are some of the efforts of researchers at analyzing problems impinging on P.H.LL. in the domestic production of paddy and rice. It is believed, however, that the extent of research into such issues is hardly sufficient, the body of knowledge built up is insufficient as a base on which sound policies could be mounted. It is to the credit of our few scientists, in this area for developing even this amount of research knowledge given the facilities and the incentives provided. These research results are more the personally motivated and individual efforts of the various scientists hailing from several independent institutions such as the University of Peradeniya, the Central Agricultural Research Institute at Gannoruwa, and the Rice Processing Development Centre at Anuradhapura. There is no integrated effort in Sri Lanka at implementing a broad research programme focusing on a variety of issues related to the minimization of P.H.L.L. in paddy and rice. Problems of Rice Processing Development Centre
It is in this context that we propose to highlight herein the importance of the Rice Processing Development Centre (RPDC) at Anuradhapura. This Cen
tre is a project which resulted from FAO/UNDP initiative. It was equipped
重了

Page 21
with various types of rice mills, parboiling and drying systems, threshing floors,
storage facilities, a fully equipped labora
tory for chemical research, classroom facilities, a library, an auditorium, hostel facilities, and staff quarters. It was established in 1976 to facilitate improvements in rice processing in Sri Lanka and implicitly,therefore, to study P.H.LL. revention and minimization issues with regard to this major food item so crucial to the economy. Unfortunately, we in Sri Lanka have not yet learned to appreciate this FAO/UNDP project let alone to properly administer and manage it in such a way as to facilitate the process of economic development. Soon after the preparatory work in setting up this Centre was completed, we 'losto nur foreign experts even before they were able to extend to us their advanced theoretical and practical knowledge of paddy and rice milling, storing, factory layout and other technical-technologicai issues, and even before we were able to grasp, as a society, how to define a course of action for a broad spectrum of useful research, and/or to train and activate our young scientists and other research personnel to take over the research and managerial functions of the Centre.
This research organization, the RPDC began as a subordinate arm of the government’s Paddy Marketing Board (PMB) an institution responsible for price Support. Unfortunately, the Centre has continued to remain a handmaiden of this PMB, and to serve the day to day parochial needs of this action oriented government organization Which is regularly under pressure to achieve different targets and fulfil non-research related objectives. As a consequence, it has not been possible to develop within this Centre, a culture of research and experimentation into the post-harvest problems faced by farmers, millers, storage and warehousing concerns, equipment and machinery manufacturers, traders, consumers, and other participants in the paddy/rice industry. “Under-development' itself displays thus a tendency to create vicious circles of poverty and ignorance which tend to keep poor
18
countries poor, pointed out to u
Today, it h fied Research a Technical A Technicians to d nas functions of fully underutiliz
a cause and with lopment directi Development A. Lanka has seen remove this Ce
ment and contri it up as an inde zation with prc responsible for and evaluation pertaining to all should be led at nal personnel hav Universities, re World and dom organizations. It to handle the of post-harvest with emphasis C “market' related behavioural guid search. For, the logical changes closely related to and human be
would indicate.
Proposal for Fo nology Institut
Another im idea which the A is the setting up Food Technology on the lines of t. dels. P.H. LLin S1 ted to the lack knowledge and ca ring, processing, pa ving, etc. Until th areas of Food Sci logy is built and 1 a healthy apprec. “market’ and '' pects, the conce of P.H.L.L. in S
remain a mere aca

ndeed, as Ragnar Nurkse ; not so long ago !
Ls Just One or two qualiDfficers, One Engineer, ssistant and two Lab 2al with all the professiothe Centre. It lies woe. d and apathetic without out direction. The deveon, as the Agricultural uthority (ADA) of Sri
in this context, is to ntre from the manage
bl of the PMB and to set pendent research organifessional leadership and
the independent study of post-harvest problems grains and cereals. It ld directed by professio"ing close liaison with the search institutes, and estic R and D Oriented needs to be strengthened
socio-economic aspects research issues as well ın “demand” and Other i dimensions to provide lelines to technical re
effectiveness of technothat can be adopted is what market conditions navioural considerations
pod Science and Tech
е
portant developmental DA has been promoting of a Food Science and / Institute in Sri Lanka he Indian and Thai mori Lanka are highly relaof sufficient scientific pacities in regard to stocking,packaging, preserLe Scientific base in the ence and Food Technothe capacity created for iation and concern for "marketing' related aspt of the minimization Sri Lanka is likely to demic issue.
Intensifying interest in “demand for food
Another view point, we wish to present, and an approach the A.D.A. is vouchsafing, is to intensify, interest in the “demand’ for food side of the equation in Sri Lanka's efforts at bringing about a reduction in P.H.LL. The attention today is heavily biased towards what economists refer to as the 'supply or the production, or technology related, side of the issue. Our plea is that if emphasis were shifted to the “demand' side, concern will be aroused towards measures to increase “real incomes' of consumers and for the better identification of consumer needs. The improved identification of consumer demands and patterns is likely to facilitiate the transmission of clear cut messages down the marketing channels about the intermediate functions that have to be performed, what products need to be produced, what needs have to be satisfied, what conversions have to be done, and so forth, in the profitable operation of food related business activities. Emphasis on the real income side calls forth attention on reducing the “real costs of performing all the related functions from cultivation to final consumption, the one way through which buyer (real) incomes can be increased. Higher real incomes mean that significant increases in the demand for food are likely to be given high income elasticities of demand in our part of the world. P.H.L.Lreduction is likely to become profitable to all and sundry; it is a major avenue for reducing
marketing costs. Especially if the cOncept of an "open market' economy were to be followed, as has been postulated as part of public policy in Sri Lanka, and there is a concommitant reduction in public sector controls and an elimination of trading restrictions on the private sector, business opportunities are liekly to rise. If P.H.L.L. reduction becomes an area of profitable opportunities, one can predict with a high degree of confidence that whatever new knowledge is developped on cost reduction techniques it will be readily adopted and resource use
economized on.
Concluded on Page 33
ECONOMIC REVIEW, FEB/MARCH 1983

Page 22
Errors in Government -
Decision
Influencing - Documents, their
Causes and Remedies
J. Diandas
Errors in decision influencing documents can no doubt result in poor decisions and also cause embarassment to and mislead those who rely on them. This could happen even at the highest levels of the Government decision making process as revealed here. In this paper, originally presented at the annual sessions of the Sri Lanka Association for the Advancement of Science in December 1982, John Diandas, a chartered accountant by profession and keen student of the transport and energy sectors, conjectures why this happens and considers some remedies. His main conclusion is that there ought to be more awareness of the fallibility of decision-influencing reports and other documents and a greater recoginition of the need for verifying them.
INTRODUCTION
Government is an amorphous conglomerate body of people, and it is sometimes difficult to identify who the real decision makers are. Proposals are originated at various levels in various places. Whether they become decisions or not depends on a multiciplicity of processes and procedures.
Some decision-influencing papers contain serious errors that have or could have caused or influenced poor decisions.
The purpose of this paper is to conjecture Why this happens, and consider some remedies. In order to do this some examples of errors in decisioninfluencing documents are described.
METHODOLOGIES OF GOVERNMENT DECISION—MAKING
Among the motivating factors for decisions are inertia i.e. do the same as before; bright ideas; open or covert aims of interest groups; serious study of alternatives; component needs of overal plans or perspectives; patent or apparent failures in existing programs; and crises.
Among the process and procedures leading to decisions are discussion and debate; interest and media pressure; position papers of varying formality and length; and gossip, anecdote, and hearsay ECONOMIC REVIEW, FEB/MARCH 1983
Among the seats o are key interest gr tors, minister, col ment secretaries; c.
Sometimes a p paper, menm Orandu statement of altern Call it what you for decision; and gives support for a or policy or pol decided upon. in is adverse to the r be shelved or con amenable paper,
However, writ play an apparent so the question a them, on what bas casts, with what de of the implications
papers are very patently less So. sometimes incorpc or computation. financial or account any such papers a formal independent
EXAMPLES ( EVALUATION
A 1979 Cent energy gives a clearly that petro to 90 per cent energy consumpti wood) in the late lative share of (h mained below 10
1. Report submitt K S E Jayatill
2. Towards « in Ene
3 Impact of High Lanka' SLAAS
4. Effects of the
& 9 Feb 8O
 

f substantial decisions oups; key administrammittee of developabinet; and President.
Iosition paper, cabinet Im , feasibility study, atives, sessional paper, Will, is the real basis sometimes it merely project or program, icy reversal already this case, if the paper real proposal, it may traverted by a more
ten evaluations do tly important role, rises of who writes is of facts and foregree of understanding s, and so on. Some competent. Others Even competent ones rate errors of fact
Yet unlike historical ting statements hardly re put to the test of
verification.
OF CARELESS
ral Bank Report on
table showing very leum products grew of total commercial on (excluding fire70s, and that the rehydro) electricity re
per cent. 墨
The next paragraph of the report was a lengthy caveat approving Sankar and Fernando to the effect that 70 per cent of the heat inherent in oil or coal is lost in thermal conversion to electricity or motive power, and that when this is accounted for the relative share of (hydro) electricity goes upto 30 per
cent. This is illustrated in Figure 1.
A Minister used this Central Bank report as basis for an address to an important seminar. He cited the whole table and the averment that 'over 90 per cent of energy consumption (excluding firewood) is met from petroleum products, and electricity forms less than 10 per cent', but did not observe, or was not guided to observe, the caveat ding Central Bank paragraph.
The Minister's speech was reported in the press, with emphasis upon 'Electricity's 10%, and a condensed version of his whole speech was published in a Sunday newspaper shortly thereafter.
Obviously the Minister's mind was impressed by the small (10%) contribution by hydro electricity, and many of his listerners and readers would have been similarly impressed. The question here is not that a particular decision was about to be made or influenced by this misinformation, but that a whole series of attitudes towards the energy problem and its solution may have pervaded political and cabinet thinking until some opportunity arose to dispel the mis-impression.
Obviously if hydro-electricity produces only 10% of commercial energy, then even doubling hydro output by means of large investments would only raise hydro's share to 20% and therefore not have much impact on the big problem.
ed to the Energy Committee by the Study Committee headed by Dr eke, Central Bank of Ceylon undated probably 1979.
rgy policy in Sri Lanka. T L Sankar & G B A Fernando SLDP Apr 8
Oil Prices and the Economy. Hon. Li Athulath mudali in "Energy in Sri PROCEEDINGS Jan 80 ed M Munasinghe 1981
Oil Crisis, excerpts from L Athulathmudali Sunday Observer 20 Jan
9

Page 23
On the other hand if yarn
share is 30 per cent, then doubting LANKA ENERGY SOUR could increase its share to 60% and perhaps save over one third of oil imports.
One must not blame Ministers for taking economists' paragraphs at their face value without searching for later Caveats. Yet the Wrong impression created about hydro's small share might well have played its part in a later Cabinet 'commitment' (since de-committed) to nuclear power, itself largely based on incomplete information. Oil impact on external trade and balance of payments
The same Minister's address3 WOOD (which was in many ways an excellent treatise), and the excerpts in the Sunday newspaper cited Central Bank data to show that 1976 oil imports abstracted 24% of total value of exports, a very
WHAT 7. IS HYDRO 2
FIRE
serious position indicating that one 60": quarter of exports goes to sustain usage of r ergy in the country.
However, whereas oil imports in 1976 amounted to R9 Mn 1,219, reexports realised Rs. Mn 514, so the net energy cost was only Rs Mn 705. On COMM Direct this basis oil usage cost only 16% of ERC Oil exports. If all export earnings are included (i.e. the 'invisibles' such as AL 277. tourist earnings and remittances from West Asia) the percentage would be
407.
even lower. Oil for
The same error of perception con- •to: tinues to this day. Many people believe 137. that 1981 oil imports were 48% of seas exports, yet with adjustment for oil all ●●重会重、 re-exports and invisible exports the per- energy cial
enerpy
cerage is about 27%.
ASSUMIRG - NO Not that such lower figures should
have been or should be a basis for complacency, yet clearly Wrong perspectives
could arise in the minds of many deci- Cost of electricit
sion-makers influenced by the . higher Somewhat ear figures of 24% in 1976 and 48% in a DGEU (Departi 1981. Electricitu Undert:
壹圆
5. Petroleum Statistics of Sri Lanka 1970-1980. Planning and Eco
(Ceylon Petroleum Corporation) Sep 81
6. Administration Report of DGEU (Department of Government El
for 1963/64.
雲

ss 2ES
Waste Heat
|-
FIRE
WOOD
607.
53.
fiye
d a dلظ 7 Esg N
Direct
Oil
|| || 277. 18
ට 11 Fire 9 wood 35 HIN
Oil Oil s Hydro
邹 ○ Electra t; 9 45 9 70 Electris icity Electras hydro hydro 4city 30 37. city 4. 2O 4 30 - electris al all eners all useful
city energy gy showing useful commer
窗邑露缸é energy cial heat energy
HYDRO
у
lier in energy history, ment of Government akings) annual report
nomic Section of CPC
lectrical Undertakings)
ASSUMIG ALL ELECTRICITY FROM HYDRO
which received press publicity near 7 20 years ago gave the cost of electricity at 9.88 cents per kwh.
However, an analysis of the depart ment's accounts from which the cost figure
was derived was published in a professional journal This analysis made several adjustments for capital expenses, amor
tisation, interest etc and Concluded
ECONOMIC REVIEW, FEB/MARCH 1983

Page 24
that the real delivered cost for different modes of generation was 03.79 cts/kwh hydro, 04.85 cts/kwh Gal Oya purchases, and 10.63 cts/kwh thermal, with an average of 05.24 cts/kwh.
Thus not only was the overall cost shown to be a little over half the reported figure, but the disaggregation showed a cost for hydro (then and still the main source of generation) at just over one third of the cost reported.
In this case, too, specific decisions may or may not have been influenced by an inflated perception of cost, yet very probably some decisions about pricing electricity, some prospects about hydro investments, and some proposals to electrify tea factories or the railway, may have been adversely swayed by this mis-impression.
Today there are better studies and papers (though less official publications) about electricity cost. Yet there is still a danger that individual project proposals take into account postulated average costs and prices rather than the marginal costs that Ought to be applied to particu
lar Cases.
Prospects for a coal power station
Another example is a consultant's reporto discussing the logistics of generating electricity in a large (1080 MW) coal burning thermal power station.
in a set of calculations he estimates the need for coal ships of 60,000 tons capacity as growing from 3 ships yearly at stage 1 (60 MW) to 36 ships at the final stage (1080 MW).
But assuming no change in load factor, a simple multiplication by 18 (divide 1080 by 60) reveals a need for 54 ships, which is 50% more than proposed, and also changes other logistical needs such as handling a ship every 7 days instead of 10.
in this case i typi" error at a dra has led to an aggr next draft, and so unwise to laugh at hecuase We all mak we devise cross-chek or plot per unit an independent pe working.
| recall a texti really big project in his hotel room gures with that of Sultant, and finally mistyped as a crore racterised it to, w of a nought'.
In the Coa || Sitt sent after its deliver be, to a reviewer i sion for opinion, corrections Were to the coal-dock C to plan the approp capacities.
Electricity deman
in yet another position papers, a draft Report' forecas demand growth at growth rates rangin based on a 1981 es generation yielding forecast for 1980 gwh needing generi
| n turn this foi used, with avid V. measures, to post investment program. 1h e 1981 estima were no doubt tak cast made in Aug
7. What is the True Cost of Electricity. J Diandas The Accountancy Jo
8. Guidelines for Planning the Ceylon Electricity Board's Power Static
gala in 1987. E. C. Fernardo Feb 82.
9. Sri Lanka: issues and Options in the Energy Sector. Ahmed et al Wo
82
10. Sri Lanka:
May 82.
issues and Options in the Energy Sector. Ahmed et a
ECONOMIC REVIEW, FEB/MARCH 1983

t appears that one ft stage of the report egation error in the on. It is easy but
an engineer's error, e such errors unless S in Our tabulations, comparisions or get rson to check our
e technologist on a working all night to reconcile his fi
the financia conadmitting a million leading, as he chavell, just "an error
udy, the report was y to the power that n a different profesand one hopes that sent early enough designing consultants riate coal unloading
A.
di forecastS
look at electricity World Bank/UNDP sts electricity annual various sub-sectoral g from 4% to 24% timate of 2, 1 12 gwh 1,795 gwh sales. The was for sales 4,342 ation of 5, 108 gWh.
recast of demand Was without conservation ulate power Station
4
ate and the forecast en from a CEB foreust 1981. Yet the
urnal Jan 66.
ons beyond Randenj
rid Bank/UNDP Feb
World Bank/UNDP
World Bank /UNDP Draft Report was issued in February 1982, by which time it was easily ascertainable that the actual sales for 1981 were only 1492 gwh which is 17% less than the August estimate, although generation at 1,872 gwh was only 11% less, system losses having leapt up to 20% in 1981. Even if the Bank's mission had to write up their report in October and November 1981, there was ample opportunity to ascertain that the sales for 1981 would fall well short of the CEB pre
diction. -
However that may be, at least one analyst, to the knowledge of this writer, advised the Bank's team of the error during the discussion period. Yet the Final Report* issued in May 1982, long after the end of 1981, contains the same figures in the same tables, used for the same discussion of the same projection of need for thermas power stations, and of the oil and coal needed to fuel them.
Now this report, carrying its World Bank impress, will not disturb the Electricity Board who know their own figures well enough, but it can influence analysts, advisers and others in other ministries, and their attitudes towards, coal, electricity, hydro-electricity etc.
If one applied to the 1981 actual sales the growth rates year by year as in the report (although these ought perhaps to be lowered or otherwise adjusted in the light of 1981 actuais) and the same estimate of 15% system losses, then the electrical energy required in 1990 would be only 4,235 gWh as against 5,108 in the report's 'base case', and 4,023 against 4,853 in the "conservation case.
The energy requirements in the World Bank /UNDP Report are tabulated against hydro capacity to give deficiencies of 1,574 gwh and 1,323 gwh in the two cases, which deficiencies would be only 701 and 493 respectively based on 1981 actual sales.
The deficiencies are used in the Report to display the need for 80 MW diesel plants and 120 MW coal plants by 1990; and the fuel need would be
2.

Page 25
300,000 tonnes coal and 246,000 tonnes oil the latter reducing to 169,000 tonnes oil in the conservation case. But with the reduced computation of gwh demand there Would be no oil need in either 'case' (and hence no need for the new diesel plant) and coal would reduce to 286,000 tonnes and 201,000 tonnes in the two 'cases'.
Interestingly a locally developed report issued in early March 1981 for the ADB (which the World Bank /UNDP Report mentioned as 'a good overview and description of the sector') takes in an earlier February 1981 CEB forecast giving a much higher 1990 need for 5,722 gwh, but it very wisely describes this as 'tentative'. The World Bank/UNDP team should either have used the same term for the August 1981 CEB forecast, or as behoved them in February 1982, should have ascertained the actual 1981 figures.
Now the World Bank/UNDP Final Report, which is more attractively printed and bound than the ADB one, is, as said earlier, not likely to bother the CEB people ( who know their own figures) unduly. They may in fact use it to demand investment funds ahead of need as a hedge against unpopular power cuts in 1990 or so. Even so is it correct for other analysts, advisers etc. in other ministries or financing institutions to be swayed by figures so significantly deviant from reality or by or by poorly based forecasts.
Using hindsight not available to the World Bank team even in May 82, it is interesting to note that 1982 actual electricity generation, which was unrestricted by power cuts based on supply constraints, will be only 2,050 gwh, somewhat less than 21:12 gwh adopted by the World Bank team for 1981, and this despite conjectures of growth rates of the order of 25%.
Petroleum product data
The Petroleum Corporation has recently and commendably started pub shing an annual statistical abstract. cne first covering the period 1970-1980.
22
The second issue the figure forwarc
The first iss sets out sales, c in a table of ove also includes ur and cost per ton the revenue per 4.9 and the cost be clear to mos lication that th Rs 4,900 and Rs 4
The danger h immediate users assume that oil as much as it noughts') but this report as a S the error and E findings.
This writer Wide publicatior errors used to pr by authors seate tres as the BrC with at least one
Likewise ther with many crit criticisms publish and elsewhere be one mistaken us search report's err
Vehicle populat
Moving to th a recent Departm publication asser follows (emphasis
SLLSMMMSTSTSqiSLLLS
11. Sri tanka E and BP Se
12. Automobi
Institution
Richard Ri
13. Review of Role of UN
14. Nuclear Te
15. Bu | | etin or Statistics M

e, due soon, will take
to 1981.
ue* on its first page, :ost, profit and volume eral II performance which nit revenue per tonne ne. Typically for 1980 tonne is given at Rs Mn Rs Mn48. It should t readers of this pubhe figures should be 4,800 per tonne.
ere is not so much that
of the table would costs a thousand times does ('a matter of 3 that researchers using ource would perpetuate 2xtend it in their own
has seen several Worldhs with similar stray oduce spurious findings d in such eminent CerDokings Institution
nought out, if noj; three.
e is a UNDP Report” icised conclusions the ed in NeW Scientist' ing fortified by at least se of some earlier re
ΟI.
tion of Sri Lanka
he World of transport, ent of Census Bulletin "ts b=3s inter alia as
mine):
'The incessant demand for Motor Vehicle Statistics from diverse sources in recent years reflects, at least party an increasing awareness of the need for improving the National Transport system to serve the requirements of a rapidly expanding economy. This Publicatinn which up-dates the available information will in some measure satisfy this demand. The transportation of both consumer goods and the finished products of local industry has a profound effect on the life of the people. Statistics of the National Lorry Transport Fleet are therefore presented herein. Similarly, all passenger transport vehicles ......... It is hoped that this information will be of consi derable use in the planning, implementation and evaluation of programmes for the devetopment of goods and passenger transport services in the country. The period prior to 1977, was characterised by a severe paucity in the imports of transport equipment. With the liberalization of imports towards the end of 1977, there has been an unprecedented increase in the importation of motor vehicles, spare parts and accessories. The material furnished in this publication will, therefore, be useful in the evaluation of the impact of that policy on economic growth in this field."
The Bulletin lists in its first table what is described as 'Total vehicle population as at 31.12.81." Thirteen categories of vehicles are given and the total is 337,382 vehicles. This figure is in fact the Registrar of Motor Vehicles' total for 'motor vehicles on the registers
as at 31.12.80.' As at the later date 31. 12.81 the Registrar's figure is 374,000
Leaving aside the matter of the year to which it attaches, the difference in description 'total vehicle population' and 'Total vehicles on registers' is vital because a publication of the Ministry of Finance and Planning reproduces, from RMV records, the same ist totalling 337,382 to which it subjoins the following note -
-ത്ത-------ബ
Energy Sector Study. G B A Fernando, D Chandrasekera, D M Jayasekera, palage for ADB Regional Energy Survey Mar 81.
es and Cities: Strategies for Developing Countries. Wilfred Owen, Brookings for OECD Aug 73, relying on a graph distorted by oversight in a paper by ce in siT's Technology Review Journal.
the impact of Production and use of Energy on the Environment and the DP. (Known as the Usmani Report) unpublished 1975.
chnocrat Tilts at Windmills. J. Tinker in New Scientist 6 Nov 75
Motor Vehicle Statistics 1979. H Gunasinghe Department of Census and
lar 82
རྫི་
ECONOMIC REVIEW, FEB/MARCH 1983

Page 26
'the number of motor vehicles on the register is believed to be a significant overstatement of the number of vehicles which are active, as it is thought to include many vehicles which have been scrapped but not removed from the register.
example SLCTB has approximately 7,500 buses in its fleet, but 15,000 still on register.'
The discrepancy is measured by the fact that the number licensed in 1980 was only 221,827 vehicles' The gravity of this discrepancy, which has persisted in the statistics over several years is illustrated in Fig 2 which is extracted from a recent Transport
Sector studvo
The only concession to this grave
statistical problem in the Census Bulletin is a footnote (on the list mentioned earlier) against the 15,000 figure for CTB buses which reads as follows:
"ств running fleet, as at 31.12.80 -753.
The rest of the Bulletin goes on to give very detailed analysis of "the motor vehicle population", and especially motor lorries as at 31.12.79. The total as at
31.12.79 is not given, but if one cares to add the totals analysed in tables, it comes to 167,503 forries, light commercial vehicles and cars, which is close
to the 31.12.79 RMV figures for similar vehicles 'on the register', in respect
of which the corresponding 'licensed' figures are much lower at 109,000 odd.
The Census Bulletin tables break down lorries into age, year of registration, fuel used, fare, payload, series, ownership, horse-power etc.,etc. But one has to question whether any of these analyses is 'useful to the evaluation of the impact of policy on econonic growth.'
On the contrary, the analysis may positively mislead the users of this Buletin.
Whether any unsuitable decisions are made in this case would largely dépend on secondary analysis of the Butletin by Ministry analysts or researchers.
ECONOMIC REVIEW, FEB/MARCH 1983
3?ó *
342
32)| (the h :
Venic {
300 -
2多2 *
22
{6) != ९19 - O Aجا
Act
Ꭵ0Ꮽ
S. የ Y v cé
60 |-
k 0ئھ
c د؟ تو \ }۔ Uo q
う
g
čĄ. 5ع &-Cمص Exports of Tea
The Ministry of “Tậhsport Statistic: is a commendable
annual issue, yet it grOSS errors, in ta handling, it include: tea loaded at fig 368,000 tonnes in
 

Licensee Motoe
VEHICLES PER RIMV -
ahey figures roy v2g stere di as may be due to an-noticed
As or stat is ti ca L errors: )
Sto-Y con ve3. نسس۔۔۔۔ سے... "محیط ؟ کcA
«ÖÖጳ'ዩ st-gళ
༤ ...༤་ ༤ و معتقات < غté b۸۶م: ، . . . . . قه
, cs G4 TO 7 Z 73 7A, 75 fc. 77 73 p 3C 3i
tonnes in 1980. Anybody in this sector Planning pubicaಠ್ಠn would know that production and export S in Sri Lanka” of tea ranges around 200,000 tons recently eunched (200 Mn kg or 400 Mn lb) per annum, too is not free of or about half the figures given in "Tranabulating port cargo port Statistics'. S metric tories of it is unlikely that decision-makers. lures ranging from dealing with tea would be misled by 1974 to 420,000 this mistake, yet the figures go signi.
23

Page 27
  

Page 28
EXAMPLES OF CARELESS REVIEW
CTB’s contribution to economic progress
A Committee was established last year to inquire into the operation of privately owned buses and to advise government on methods of regulation or self-regulation which would improve their congbution to passenger transport needs.
it was not part of this Cormittee's terms of reference to inquire into the past performance of the CTB (which acronym is used in this paper to represent the Ceylon Transport Board and its successor Central and Regional Boards), rior did it summon the CTB ίο obtain views on its own performance.
At the time of this writing, the Committee's report is not yet publicly available. But one chapter of it was dis gorged in the Sunday press in Juri
according to which the report said inter alia (emphasis mine). :-
"We hawe so far reached the conclusion that the bus transport service, as a state monopoly, has failed to play its role in the economic progress of the country ........ That the Transport Board did not, could not and would perhaps not meet these needs is evident ήτοιη
伊莎
as so so.
The report cites a list of needs, and some numbers ailegedly as evidence of the sweeping “did not, could, not, would not' finding, but the Committee apparently did not care to look at CTB performance indicators over the whole period 1964 to 1981. These are displayed in Fig 3 extracted from a recent Transport Sector studyo Fig 3 shows inter alia that the principal output of the CTB increased from 4.5 billion passenger-miles in 1964 to 12.3 billion passenger-miles in 1980 i.e. it increased by a factor of 2.7. Thereafter there was a sharp 30% decline in 1981 influenced by a massive fare increase and by the surge of private buses 'greaming off' a lot of traffic.
The massive increase in performance from 1964 to 1980 shows clearly that the CTB did play a big role in the economic progress of the country, and -ECONOMIC REVIEW, FEB/MARCH 1983
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64 65 66 

Page 29
Here the question at issue is whether government's whole policy formulation process has been set off track by misimpression, or perhaps whether govers ment's predilection for a given line of policy has been unjustifiably confirmed by the report's mis-conclusions on the
ΟTB
As a postScript to this case, One htted that Bradman Weerakoon at a Population Conference, made a different evaluation of CTB and rail contribution to progress, from that of the Committee. But his viewed got less publicity and presumably will carry less clout. In offering multiple explanations for Colombo's comparatively low rate of urban in-migration:
Mr Weerakoon, also credited the country's good system of roads and public transport as a major factor in sparing ,capital from growing unma nageable"
Mampower productivity im bus transport
i has become fashionable for Societies where 80% of the workforce is engaged in the tertiary (service) sector to send researchers abroad to examine the affairs and activities in the third world. One such recent area of research is the bus business where data is either tacking or inaccessible to visiting research
teams,
the easiest dependable data to pick sea for such teams is number of buses" and 'number of employees'. from
the relationship between these two has been developed an indicator 'employees per bus”.
In countries where labour is expensive and difficult to get, this indicator may be a reasonably useful measure, 9Weր though it puts one item of input against another and where output measured in passenger-miles) is difficult to attract to public transport. But in a third world country the essence of transport productivity will be the following:
bus-milies or passenger-miles per bus per day.
26
bus-miles or . ployee per day
Despite this, searchers' limited their own backgr to get at relevant World Bank, whe
States:
'There is cle productivity
staffing leve ployees per quired bus), an average
Indian comp
Similar fir several consultan of them to in staff productivit
in fact, of two or three sh days and Sunda stand-by Crews
which work mo mostly go to
Likewise buses, per day and rt
passengers need in turn entails
shop staff. Fi their own tyre ding, build th
form other sig
need more sta just run buses reasons why er
TTTTkLSSLSLSSLSLSSL
23. Commit
(GMT)a
24. FRaill, Bu
- Ameer
i Lanka Asian 8
. Against
Sri La World

bassenger-miles per em
f
the international reapproach (limited by ound and by inability data) has spread to the are an appraisal report
lar evidence that abour is low; as an indicato, is stand at 10.4 em
TTR (time table rewhich compares with 8.7 for a sample of anies".
ldings are found in its reports although most ention other aspects of
y
course, buses that work ifts and vork ful SaturIys need more crews and than those, as in Europe,
stly a five day week and the depot before dark.
which yr un more miles in with heavier loads of
mora rmaintenance, which more depot and work
naily companies which do
maintenance and retreaair own bodies, and pernificant engineering work, ff than companies whích
These are some of the mployees per bus, which is
8 seaSure of input per input, is of little value. Yet following World Bank influence, many serious economists, et alone politicians and administrators, have been summing up their assessments of CTB performance in terms of this catchy input/input measure.
in consequence believe several grave decisions have been taken under consi. derable influence of this misleading mode of review.
Causes of Error
The causes of error or factors at work which lead to them are multiple. They must include the following factors, one or more of which may be co-present:
- inadequate collection of data
2-inadequate understadirig of the
subject mātier
3 - biased a-priori view point or un
scientific approach
A-willingness to report vzhat is vYan“
tad
5-lack of time to reconsider or dis
CSS
6 - inaccurate caiculations
7-inadequate checking of typescript
of printers proof
- inability of writer to check the
print-out of his ow: Work
he last point req. í Fęs e cidation. na tendency of an autor when chec
king his own work is to raad what is in
tee comprising A C Ameer, Chiman, Ernest Perera (DG), S - Munasinghe nd Ebert Silva (private buis operator) with K Kuhathasen as Secretary.
is, no help to progress. Prema de Mel. Sunday Observer 7 June 82
Report: good in parts. J Diandas Daily News 12 June 82
Concurs: urbanisation: excerpts from Bradman Weerakoon's address to 3rd
Pacific Population Conference BMCHSun 27 Sept 82
the trend of urban growth. Sun 30 Sept 82
nka Staff Appraisal Report: road passenger transport project. E. Pogson et al Bank Feb. 80,
EconoMic REVIEW, FEB/MARCH 1983


Page 30
statisticians,
his mind rather than the written, typed or printed text; therefore he glosses over mistakes irrespective of whether they may have originated at dictation, script typing or printing stage.
A cursory analysis of the examples given below show a distribution of these
ypes of factor as
Some Remedies
The examples given show that, in a limited spectra of activities, papers germane to reviewing the past and deciding upon the future have included
errors of varying degrees of gravity
which have or could have led to unsuita
ble nolicies, programs or projects.
Furthermore, budgets and project feasibility studies are not usually audited.
Hence two questions arise:
1. is there a need for better verification, cross-evaluation, audit, cal it what WOU will, of macro level papers which lead up to policy, program or project adoption, modification or negation ?
2. if there is such a need, should the need be performed by accountaints, economists, engineers or scientists or a mix of these people 2
On the question of need, this paper has described examples of errors in a narrow spectrum of economic functions marinely transport and energy. There seems ra reason to presume that other economic and social areas would be
free of such errors, and therefore free of the risk of inept decisions. Hence the conclusion that there is need for see
condary evaluation in the reviewing, po decision-making pro catory evaluation Ca such as: formal audi independent personr fessionally inhibite teams that draw u. bearing documents; of proposals in orde criticisms.
On the questio the overviewing rol the training and it different disciplines and economists a in gathering, analy explaining data, 'th dology, which is the and cross-checking experiential intuiti pendent sources of v
The accountant sometimes lacks a
Hydroelectric shar Oil related tio expc
Cost of electricity
i Coał power statio
Electricity forecas
Petroleum cost pe vehicle populatio Tea export guota Urea project Nuclear power
CTB performance
perspective and tend Or entities as if the fi own sakes. However, broad - knowledge of
29.
{፱፻፭}.
30.
31 , Sri Lanka Cent fra Transport Buard:
Associatias Jan 81 p 28-30 and p. 53.
Sri Lanka Transpore Board: Report on operation and traffic.
Sri Lanka Central transport Board: Appraisal Report Mitches; Jan
Financia; Forecasting and Pi
ECONOMIC REVIEW, FEB/MARCH 1983

of papers involved licy-formulation and cesses. Such verfiin take several forms t by internal or el; inclusion of pro* d persons in the the key influence
and informat airing er to attend informal
h of who should play
e, one must consider stinct of people in
While statisticians re well experienced sing, tabulating and ey lack one methoprocess of balancing and, they lack the on for seeking indeferification.
t on the other hand macro or functional
of commercial, industrial and agricultural matters, and does not lack the talent and training needed for an independent and participatory evaluation rolé.
On the other hand again none of these people have a trained understanding of natural, technological, scientific and other physical processes. For this understanding engineers, chemists, biologists and so on are needed. -
On the whole it is difficult to Conclude which particular-form of verification is suitable for a large range of circumstances, or which groups of people should be involved. There is clearly a need for verifying at several stages. This would include:
Conceptual checking Data source checking. Data process checking Document production checking
Subject
1 2 3 4 b c 7 8
}一#一词
"S X
3rt::S X
Χ - Χ - Χ - Χ
е X
tOs X
X
X.
Χ
X
s to look at figures. igures exist for their the accountant has a
f thēs whole spetra
/A Heraty Moy* 783 p.
79 is 2
atnih hig. Faik Foy &
Yet perhaps the, most important conclusion is that there ought to be more awareness of the fallibility of decision-influencing reports and therefore greater recognition of the need for verifying them. Once this need is recognised, the scale, scope and personnel for the verification could be easily determined on the basis of Common sense coupled with scientific approach.
27


Page 31
Possibilities in Inland Fisheries for Developing the Pea
of the Dry Zone - Part 11 Lal de Alwis
There is an urgent need to generate more still time employme Lanka, to improve the rural economy and uplift the nutritional stat. areas. The utilisation of the dry zone tanks for inlandjisheries can I blems, maintains Lal de Alwis of the People's Bank Research Depar possibilities of inland fisheries. The first part of this paper was carri
32.
in the dry Zone of Sri Lanka, which c vers approximately 66 per cent of the total and area of the country and holds 33 per cent of the country's population, the peasant community is characterised by acute problems of poverty and malnutrition. The lack of economic activity and poor levels of income were also
revealed in a study carried out by the University of Peradeniya (see box below). 1250 in this context the necessity to develop the natural resources within the Dry OOO Zone such as the inland water bodies, has been emphasised. (Details of the 750 available water bodies and production potential were listed in part 1 of this 500 NOTE: Fluctuations may be due to the
following reasons. 1. Seasonal migration of fishermen. 250 ii. Fluctuation of water level. iii. Agricultural activities of the area. iv. 4'eather conditions of the Zone. O ل F
it was illustrated in Part 1, that potential production of inlar in these water bodies and efforts should be made for expansion discussion was then turned to the need to give due consideration order to create a market for inland fish in areas away from the coasta
* Over 70,000 families seem to be dependent on paddy cultivati
tion works in the Dry Zone, (pp. 3)
* The average size of the family for the Dry Zone as a whole is
* There is a relatively large labour force though its rate of partic has to be. This suggests the need to generate more employmen Zone areas. (pp.20)
* Unemployed persons comprise 7.92 per cent. (pp.21).
* A particularly noteworthy feature of the occupational structul
incidence of part farming. (pp.23)
* On average the Dry Zone farms are less than 3.7 acres in size. (pp.
* The household annual income varies from Rs. 3,600/- to Ts. 7,00
* Generally farm incomes in minor irrigation areas are less than ti
areas. Another difference is that farm incomes of households
gation are subject to a higher degree of fluctuation. (pp.27)
Source: Socio-economic Survey of Minor Irrigation in the Dry Zone
Peradeniya, 1980 October.
* (10) A preliminary of 21 Ceylon Lakes lithiology and Fish Prs. Mendis, Bulleti I lisheric's Research Studies. Ce:’ion. 1965, pp. 3 گے.
 
 
 
 
 

ant Economy
it in the dry zone of Sri s of the peasants in these elp in relieving these profrient in this study of the din cur issue of Oct/Nov
paper), Changes in the levels of water in the Dry Zone tanks can effect fishing activities, though there are other factors as well as may be observed in the dia
gram.
Monthly fish production in perennial tanks of the try Zone - 1981
M A
Id fish is un doubtedly high
f potential capacity. The to people's preferences in fishing centres.
pn under the minor irriga
about 6 persons. (pp.18)
pation is not as high as it f opportunities in the Dry
e of the Dry Zone is the
25)
/-.
ose under major irrigation
perating under minor irri.
of Sri Lanka. University of
LLS
lui tion i tential 4. S.
7. 16.
A S O N ل
Productive Capacity
The production potential of 17 inland water bodies has been computed in 1962. It shows that the fish catch is 00 lbs/acre per annum in the Parakrama Samudraya, his productivity figure had risen to 475 b/ acre per annum in 1975 vith the introduction of fast growing hybrid varieties of fish. A similar productivity increase had been recorded for other tanks in the Dry Zone during the same perioed,
By using hybrid varieties of fish to util lize the unutí lized and underutí lized fish food in the irrigation tanks the quantities of fish available for catch per acre should be further increased. Through such successful
fish farming efforts it was expected to pro
duce 63 hs/acre pero annum in the large irrigatio: tasks by 1980; which is a six fold increase over that of the productivity in 1965, Production was expected to be 26,000 tons per year from only the arge irrigation (10)
he poduction figures of the larga, rivedium, anti smai scale tänks anci vius ha 5 been cuinputed at 39,453 tons in 330. According to this report of the aquaculture clevelopment aid training project of the Govern filent of
ECONOMIC REVIEW, FEB/MARCH 1983


Page 32
Sri Lanka, in 1981, the fish productivity ratio of the seasonal tanks was 500-1,000 ib/acre per an num and it was possible to further increase the productivity of this sector to 3,000 b/acre per an nurm with additional inputs. (11) Beside these possibilities the fish production both freshwater and brakish water in the whole inland sector was 19,947 * tons in the year 1980. This kias dramatically increased to 29,000 tons in 1981. However, this was far below the computed production potential of the year 1981, although it was a 49.4 per cent increase over the production of inland fish in 1980.
The potential production of inland fish is therefore undoubtedly very high in the Dry Zone water bodies and efforts should be made for the expansion of potential capacity.
Marketability and Popularisation
Most of the irland water bodies are far from the coastal fishing areas, and therefore their produce may have good demand in the hinterland. Generally, the fish caught in coastal areas are packed with ice and transported to the interior of the country which involves a middleman in the process. This would ಇಂಗ್ಡೆ to costs over the distribution channe and the price of sea fish at the consumer's end. On the other hand if fish is not packed in ice it could get spoiled within a few hours and will not be marketable,
it appears that neither a high price per unit nor spoiling of sea fish is avoidable at the consumer's end. These factors should result in further discouraging accessibility of sea fish to the people living in the interior of the country; while encouraging consuPomers to shift to the nearest alternative product. One consecuence is that it creates competition between sea fish and fresh water fish. The preferences of people are based purely on unit price, quantity, freshness, taste and food habits, if these preferences are given due consideration in promoting inland fisheries a wider market could be created for these fish, especially in the areas away from the coastal fishing centres,
One of the apparent problems regarding the marketability of intand fish is its taste. if the same methods and style of cooking sea fish are used in cooking iniard fish the fresh water fish does not häive a var y patatabé) taste, Furth crimore, ith th ch poow u teat !, ect: pi ę :s used in Sri Lanka here is no intainlithin yet in these for cooking inland fish; neither has the media inade any attempt to introduce recepies using inland fish, These are disadvantages in the popularisation of inland fish in Sri Lanka,
Generally Sri Lankan cooking utilises a targe amount of spices and ingredients to upgrade the taste and smell of food, 'Embu Thiyal' with blood fish varieties is a very popular and delicious method of cooking
ECONOMIC REVIEW, FEB/MARCH 1983
fish in the southern pi this can be cited as a Speciality. In the sa popularize the consury the introduction of sui king such fish is essentia
Another argument bility of inland fish has tural and religious back Sri Lanka has a long-sta largely based on Budd living beings for any on with favour. Thou
hibitions in Buddhism hists who by necessity largely in the coastal reg and even in the Dry
For instance, the men engaged in inland District may be identifi at present inland fishin industry. The catch is people in various form dried fish, smoked fish e
Historical evidenc Perimiyan kulam inscrip try A.D. and the Sar 3rd century A.D., show people in inland fishin times. According to writtorn by Ven, Buced fish ing as well as fish c were in existence in the and was an accepted in turn contributed to on fishing in inland wate
Robert Knox in h dieval period (1681 A.D. has also provided inform These evidences suggests activities without any obstacles.
À similar example in Sri Lanka may be see around the 1950's, in imported poultry produ countries while more i development started in there were similar c rest "afvat against the pr also attempts to create taste and the nutritiona varieties of eggs.
Year 1972 1973
AmountSLLLLLSLLLLLSLL LSL SLL LS SLSS SLLSLLLLL LSL LSL LSLSLSLLLLLSLLLSS anae salass se a Rs...Mn. 13 13 "..."
(11) Project of the (
. ԼիVDP pp. 4 ' (This includes

rt of the country and example of cooking ne way, in order to ption of inland fish, table methods of coo
* against the marketabeen based on the culgrounds of the people, inding cultural heritage hism where killing of burpose is not looked gh there are sucก็ pro
there are many Budda are engaged in fishing ions south of Bentota. Zone tanks at present
majority of the fisherfishing in Hambantota ed as Buddhists; where has become an activa consumed here by the ns such as fresh fish,
C.
e, for instance the tion of the 2nd cennanthapasadika of the vs the involverment of activities in ancient ha Sannant înapasadika, hagosha, both in land ulture in inland waters Anu radhapura regime occupation and this relaxation of taboos rS at that tinne,
is reference to a nne ) in Sri Lanka's history tion on inland fishery. the presence of fishing cultural and religious
of cultural prejudices in the case of poultry
the 1950’s Sri Lanka icts from neighbouring intensive local poultry the 1960's, Here too ultural and religious ogramme. There were a prejudice against the value of the different
However, in 1980 despite the religious and cultural barriers the country was close to self-sefficiency in poultry products. Today no barriers exist and modern conditions have encouraged people to expand poultry farming rapidly. Many Asian countries with a similar cultural and religious heritage have already entered the era of fish farming in homesteads and at farm level.
When the above factors are considered, to expect that the problems regarding popue larisation of the consumption of inland fish. may be solved in a matter of a few decades will not be an unrealistic assumption,
Infrastructural facilities
A seperate Division of inland Fisheries was set up in the Fisheries Ministry in 1979 although efforts to develop this sector come menced in 1950's. But comparatively little attention was paid to this sector by either the private or public Sectಂಜ್ಞ until the for nation of an inland 1979.
Development of inland fisheries has been accorded high priority in the (19771983) Master Plan in view of its vast deve opment potential. Prior to the present Master Plan the capital investment allotted to the development of inland fisheries was below 10 per cent of the total investment of the Ministry. Under the new Master Plan it has been given a higher position in the total investment structure of the Ministry. (See table 1).
Having considered the potential harvest of the inland water bodies the Ministry of Fisheries started a subsidy scheme to encourage investment in this sector. Furthermore, facilities for technical assistance and other infrastructural network also began to be provided, The first subsidy scheme for the development of inland fisheries was started in 1980. A subsidy of 35 per cent of the tota cost of non mechanized craft and 9ಣ್ಣಿಟಠಿಠ for fishing in these Dry Zone wategrinted under this scheme,
The seven fishing crafts and their gear issued under this scheme had not shown a substantial performance in 1980, The quantum of subsidy was increased to a 90 per cent of the total cost of craft and gear in 1981. The airn of this upward revision in the subsidy was to intensify inland fish production by using an increased number of fishing units in the inland waters. Under the present scheme Rs.8,44 million has been granted for 18902
酸
Public Sector investment in Inland Fisheries
1974 1975 1976 1977 1978 1979 1980 1981 1982
32 11.29 5.49
3.25
382 3,70. 686 21, 14, 29.90
Source: Ministry of Fisheries
overnment of Sri Lanka for the aquaculture development and training
both the fresh and brakish water production of fish.)
29


Page 33
Brafts and gear over the period of October 1, 1981 to May 31, 1982. This dual increase, namely the quantum of subsidy and the number of fishing units getting it, gave rise to a 45 për cent increase in inland fish production in 1981 over that of the year 1980. In addition to this subsidy scheme, the Ministry of Fisheries is prowijding as 50 per cent subsidy for setting up of pond fish farming units in order to popularise this venture among tha villagers. This scheme grants Rs.2,000/- to Rs.10,000/- for a pond covering an area hf 10 perches to one acre, respectively. About S.1.3 million has been granted so far to the pond fish farmers under this scheme, accor. ding to the Ministry. (Table IV)
in addition granted by the
facilities were a to be made ava
of state banks.
1980 and its ma
number of
in the inland y: fish production a This credit schen 35 per cent subs of the craft and ge
The People' provided a maxi per fishing unit and allied gear.
Table TV Pond Subsidy Programme
Station No.of Applications No.of Cases Amou
Approved Paid
1. Beragala 12 5 45 2. Polonna ruwa 115 56 1134: 3. Galle 134 1 11 206,7 4. Pitipana 112 49 126,1 5. Pambala 31 17 70,6 6. Gimigathhena 154 54 1535 7. Nuwara Eliya 52 28 66.1: 8. İnginiyagala 68 44 152,0: 9. Man kulam 12 11 87ይ! 10. Anuradhapura 9 8 162 11. Panapitiya 28 27 28,0. 12. Muruthawela 36 17 32,6 13. Rambodagalla 46 6 21,7 14. Udawalawe 33 29 523 15. Dambulla 4.
Total 846 462 1,1310
There are 462 pond fish farming units which have been paid subsidiasanlounting to Rs, 1,131,035/ and the area co!'ered by those ponds is 99.25 acres in 1982. At present the number of pond units operatig in the islahid is not a significant feature in the country's fisherits. The University has received 496 and 1006 applications for subsidy in 1981 and 1982 respectively, and the number of applications approved in each of these years had been 414 and 846 respectively. Among the approved cases 121 and 640 applicants were paid a sum of Rs.242, 168/- and Rs. 1,131,036 in each year making a stubsidy total of Rs. 1,373.203 in 1982 December resently the total pond spread area is 23, GᏟᏤeᎦ.
Pond farming units are now becoming more popular in the upcountry, especially in Passara and Nuwara Eliya areas and this venture rould be further extended to the Dry Zone areas where farm lands and irrigation water is available.
(13) Socio-economic Survey of Minar Irrigation in the Dry Zone of Sri Lanka UniΟ versity of Peradeniya, 1980 Oct. pp. 3-27
granted on easy rnen of the fis
the relevant area only to 20 maj
Zone. The fo given priority f However, the ba led of as expecte began granting Cent of the tota i
People's Bank
1 Giri talla Tan | 2. Hurułu Wew 3 Kaudulla Ta 4. Kadu la Tan 5. Nachchaduw 6 Para krama S 7 Rajangana T 8. Ridiyagama 9. Sorabora We 1 O Tabobowa Te

to the financial subsidies Ministry of Fisheries, credit o anounced for this sector. ilable through the network This scheme was started in
in objective was to increase crafts in operation by 800
aters, in order to increase ld reach the targeted figures.
e has been linked with the dy scheme granted as costs ar from 1980. -
Bank and Bank of Ceylon mum amount of Rs.4,000/- for the purchase of craft These loan facilities were
ht paid Extent
OOOO 5s) p - 3 acres 23.00 13.6 acres 5OOO 15.25 acres 50.00 10.5 acres OOOO 6.3 acres OOOO 5.3 асres 20.75 3.7 acres BO.OO 15.7 acres OOOO 11.5 acres 00.00 5.4 acres B700 1.9 acres 25.OO 1.8 acres OOOO 4 асres OOOO 4 асres
35.75 99.25 acres
terms to the member fisherheries extensic in Societies in
At first, priority was given r reservoir areas in the Dry
Ilowing were the reservoirs pr credit under each bank. nk loans have not been avai. d as the Ministry of Fisheries a gubsídy äimost 90 per ost of craft and gear
a
nk
a Tank amudraya ank
Wa nk
Bank of Ceylon
Giants Tank Kanthalai Tank Mahakanada rawa Tank Mahawilachchiya Tank Minneriya Tank Padawiya Tank Senanayake Samudraya Udawalawe Tank Unichchai Tank O. Vavunikulam Tank
Though in the 940's and 50's inland fisheries was given little attention from the 1960's its resource potential and commercial and nutritional values began to be realised. The experiences of the Asian countries such as Japan, China, Korea, Taiwan, Philippines, Thailand, Malaysia, as well as Bangladesh and India was the driving force behind this development. During the last two decades a series of research projects were conducted on various aspects of the hydro biological conditions of the inland water bodies in Sri Lanka, where inland fisheries would be suitable. Findings of this research suggested that conditions were favourable in Sri Lanka.
The government therefore decided to provide more infrastructural facilities for the development of this sector, which also included assistance in kind and cash, through foreign aid as well as local channels, for setting up of fish breeding and research centres; for
improving the standards of technical and Y
commercial know-how; and for promoting inland fishing activity in rural areas. The result is that today there are 17 fish breeding stocking and distribution centres in operation
The progressive increase in the distribution of fingerlings helped to establish a large number of inland water bodies mostly in the Dry Zone, and some of these have been developed into commercial fishing centres at present. (Table V and VI).
Also, aquaculturists and fisheries instructors are deployed to cover almost the entire island, which includes both inland waters where fishing is now conducted and; the water bodies where inland fisheries have been planned. (See table VII).
The increasing facilities provided to this sector may help to create a greater interest in this newly developing area.
There are other factors that encourage the peasants to carry out fishing in the Dry Zone inland waters. For instance more than 90 per cent of inland water bodies spread over the Dry Zone are very closely connected to the paddy lands in the area. Over 70,000 families seem to be dependent on paddy cultivation under the minor irrigation work in the Dry Zone, (13) and dependent families
ECONOMIC REVIEW, FEB/MARCH 1983


Page 34
  


Page 35
Therefore inland fisheries can become an alternative product to cultivation of farm crops in the bry Zone, which ensures additional income as well as an insurance against the vagaries of crop failures. Furthermore, it also helps to diversify their economy and minimize the risk of dependence on one major farm product (mainly paddy). A Source of Subsidiary Income
income inequalities throughout the year can be noted among different sections of peasant society in the Dry Zone. The household annual income varies from Rs.3,600/- to Rs.7,000/-. Generally farm incomes in minor irrigation areas are less than those under major irrigation. Another difference is that farm incomes of households operating under minor irrigation are subject to a higher degree of fluctuation. (14). Their financial assets are generally very limited and a large part of the Dry Zone peasant society has lived in a debt cycle. In 1957, 60 per cent of agricultural families were in debt. The debt position of the rural sector has been increased by 134 per cent during the year
Table VI Development of Aquaculturists (ACC) - ly
Districts covered at present
Name of Inland Fisheries Station
Number of ACC deployed
at present
1. Polonnaruwé Poliomnaruwa
Trincomalee
3
2. Uda-Walawe Ratnapura
Moreragala (Part)
11
6 (under training) 5
3. Ginigathhena Kandy
Kegalle 2
4, Rambodapath Kurunegalia 2
5. Pitipana Gampañe
Colombo (Part) 2
6. Inginiyagała Moneragala (Part)
Amparai Batticalioa 2
7. Pannapitiya Kalutara 2
8. Nuwara Eliya Nuwara Eliya 2
9. Padawiya Anuradhapura (Part) 2
Mullaitivu
10, Head Office
Distribution Centre Colombo 1 (D.F.E.O.)
11. Mankulam Mullaitivu
Jaffna 1 Mannar
12. Dambulu-Oya Matale
13, Pambala Puttalam 2 v
14. Muruthawela Matara
Hambantota 3.
15, Galle Galle 1
16. Beragala 8adulla 1
17. Anuradhapura Anuradhapura (Part) 1 (D.F.E.O.)
Total All Island 38 [Ꭺ,Ꮯ,C. ) 2 (D.F.E.C)
40
Source: Ministry of Fisheries
1976. (16) To situation in the ments have take of pumping in ot this may not be question of indeb
The other sideration is the need credit or th indebted owing has been noted transactions, inv during the first or a few months they spend much ments as well a This weakens the are then compe borrowing during tivation season. (
It is here tha inland fisheries to minimize thes and somewhat peasants during th
Utilization of
The peasant mainly during th place in the tan occurence of the fferent times ca increasing their utilize both day the peak periods cultural labour it and to meet the di abourers from st during this peak cannot be fully
My observati the various Dry a view to ascertai fisheries, were tha to water bodies o peasants were alsc
and sales, drying
the periods of peasants do little and they use the The others who C do it during the
be a possible an of time and reso Iull periods, part lands of the Dry Z
(15) Small farmer Development Manual - Vol.1, Field Action for
shermen and Peasants. FAO Thailand 1978; pp. 107.
(16) Survey of Credit and Rural indebtedness among Paddy Farm
of Ceylon pp. 6-31.
(17) Rafnfed farming in the Dry Zone of Sri Lanka. ARTI-April 19
(18) Socio-Economic Survey of Nine Colonization Schemes in Ceylo
of Agriculture - University of Ceylon, 1969.
32

overcome this recurring debt
'ural sector successive govern
DAGRAM 1 1.
THE DRY ZONE AGRICULTURAL CALENDAR
in several steps in the form Showing Periods of Employment & under Employmen
institutional credit, although the ultimate answer to the tedness. actor to be taken into contime in which the peasants e time in which they become to their commitments. It that peasants have heavy blving large sums of money, half of the cultivation season after the harvests. Generally on their agricultural commits for consumption purposes. ir financial position and they led to look for sources of the latter part of the cul7)
it the additional income from Could come in good stead; e seasonal income variations "elieve the indebtedness of e such times.
Time
s carry out their farm work e day time. Fishing takes ks during the nights. The se tVVo activities at tvvo dian also contribute towards output, since they could and night alternatively. In there is a shortage of agrin the Dry Zone farm lands, emand cultivators have to hire urrounding areas. It is only farming period that peasants
involved in fishing activities.
ions, during many visits to
Zone agricultural areas, with
ning the prospects of inland
at peasants who reside close, ften go fishing. Some of the involved in fish distribution and allied activities. During ull in agricultural activities farm work during the day ir time at night for fishing. organize sales and distribution day in this period. This may swer to optimize utitization urces of peasants during the icularly those living on farm Zone.
Small Farmers, Smal Fi
ers 1976 - Central Bank
80. pp. 104-107
in 1967-68, Faculty
| $1
Land Preparation & Sowing — MP
Land Preparation & sowing-YP EHF
Harvesting -- MP Harvesting - YP III
MP — Maha Paddy
YP — Yala Paddy
Arresting Paddy Land Fragmentation
Early settlements of the Dry Zone provi. ded a fairly large size of land allotment to
グ
the peasants whereas the new settlements
provide a smaller area. The farm size of early and new settlements ranged from 9 to 3 acres respectively. (18) However, it had to be reduced, in accordance with the increasing man-land ratio.
Although, these allotments were not expected to be divided the "Ande' system and rotation of farmers on lands have continued to be in operation. Generally farmers pass on their lands to one son or among members of the family. This has resulted in an increased landlessness and land fragmentation in the second and third generation. (19) The fragmentation of allotments has been seen even in the early settlement schemes; where the large size (ie. 9 acres) plots were given to the farmers. (20)
In the near future, when the children of the peasants grow up there is likely to be acute competition for farm land. This situation can arise very soon in the new settlement where the smaller (ie. 3 acre) plots were given to farmers. This has further reduced the ratio of man and farm land in the peasant sector of the Dry Zone. In this context the development of secondary activities, through an area like inland fisheries may reduce the strain on land and help to increase the product per person and serve as a useful resource for peasant economic activities.
།།
ECONOMIC REVIEW, FEB/MARCH 1983


Page 36
CORRECTION JANUARY 1983 ISSUE
in our January 1983 issue, on Pesticides, in describing the pict the reference to the manner of spraying was inadvertently left of printing. The caption should have read 'Pesticides sprayi. is a distinct health hazard."
Also, the headings to Table 1 on page 4 were interchanged. read as follows: Year - No. of patients - No. of deaths.
Post-Harvest Losses and Small Farmer Storage Problems..............
Continued from Page 27
It is in pursuance of this approach of The better identifica increased attention on the “demand demands should en side that we in the ADA have helped ropriate signals of set up a Market Research Unit. This unit opportunities. Econc is expected to develop market researchers on the "real income" who will ultimately be able to better activities would indu
identify consumer needs and priorities. specific avenues for
in food.
REFERENCES
(1) National Sciente Council: "Postharvest Food Losses in Sri Lanka';
of a Workshop. 11 - 16 Feb., 1980. National Science Council of Sri Colombo, Sri Lanka.
(2) Sarath Ilangantilleke, Allan Phillips, Merle Esmay: "Post Rice Prod
三ー
Field Losses' Agricultural Mechanization in Asia, Africa and Latin Winter, 1981. (3) L. Jayaratne and Ram Rao Vellanki: "Milling Quality of Paddy War Sri Lanka', Technical Paper No.RPDC/4/78 of June 1978. RPDC A
pura.
(4) Chandra Breckenbridge: “Report on the Effect of Processing Con Milling and Grain Quality of Parboiled Rice' Research Bulletin 5/7 Sep. 1976.
(5) K. B. Palipane and Rama Rao Vellanki: "Hydration Characteristics
Varieties of Paddy'. Research Bulletin 7/77 of August, 1977, RPD Anu radhapura.
(6) Rama Rao Vellanki, K. Velupillai, J. Ramalingam and V.E.A. Wickr
“A Continuous Steaming Process For Parboiling Paddy'. Research 6/77 of June 1977. PRDC, Anuradhapura.
(7) S. A. De Silva: 'A Study of the Effects of Parboiling and Drying on the Cracks and Checks of Rice': Department of Agricultural E Faculty of Agriculture, University of Peradeniya, 1980.
(8) Rama Rao Vellanki and J. Ramalingam: 'Hand Pounding Of Paddy Lanka. Technical Note RPDC/6/78 of Dec. 1978. RPDC, Anurad
(9) K. B. Palipane: "Evaluation Of The Bissa - An Indigenous Storage
RPDC Report No.5/78, May, 1978.
Advantages of Smallness high rate of subsidy grar ment on the total invest Compared to the marine fishing units, nland fishing units are very small. Generally (19) Some Sociologic the capital to be raised is low (for the enter- The Ceylon Econ
preneuer) in inland fishing, because of the smal smallness of craft and gear required and the
ECONOMIC REVIEW, FEB/MARC: 1983
(20) Socio-Economic
versity of Ceylon
 

re Con the cover jut in the process g in this manner
hey should have
வஊக
tion of consumer ble transmit appprofitable market mic considerations side of post-harvest ce the Search for
reducing P.H.L.L.
Report
Lanka,
uction America
ieties. In
Anuradha
αlitions on '6, PMB,
Of Local C,
emanayake Bulletin
Techniques ingineering,
1 In Sri hapura.
Bin’
ited by the Government. There is also
no need to have mechanized craft and gear and no need to use fuel. This helps to keep the cost of production and market prices very low which can encourage consumers to purchase inland fish over the closest alternative which is sea fish.
Further, an inland fishing unit could comprise of only a few people; generally one or two members. Hence, it is easy to make amicable decisions and keep out problems such as disputes. The smallness can also help them to maintain their operational activities more regularly and confidently. These very reasons will enhance the entry of more small inland fishing units in places where basic conditions are favourable.
Again, compared to sea fishing the area of operation in each inland fishing unit is very small. Therefore, the provision of marketing facilities, of technical and advisory services are easy. Furthermore, smallness will be helpful in keeping them in touch with administration of credit and subsidies (various kinds of followup work and control). Hence, the advantage of smallness of an inland fishing unit can be helpful to both the administrators and the people.
Conclusion
It is clear therefore that the utilization of the Dry Zone tanks for inland fisheries may be helpful to generate more full time employment, as well as improve the rural economy, and help to uplift the nutritional status of the peasants. On the other hand these advantages listed above could provide a definite opening to the authorities to get a 'quick start" on fish farming on a more intensive scale in the agricultural areas.
The development of inland fisheries, however, are directly connected to the achievement of the following goals:
(a) Popularization of inland fish farming and consumption habits, especially through the mass media and extension services;
(b) Encouraging people to enter this area by providing financial, technical and advisory services and;
(c) Promoting self participation in the development of domestic level as well as national level fisheries.
al Problems of Colonization on a Peasant Framework, S. J. Thambiah omist, Vol. IV. No.3; 1958 Dec.
Survey of Elahara Colonization Project; Faculty of Agriculture, Uni
1968.


Page 37
The Economic Review in its eight year has produced several issues that are still For the benefit of the several member public who have made repeated ing below a list of some of the issues of w are still available.
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SRI LANTEKA Rs. 40/- SOUTH ASIA US$ 16/- SOUTHEAST
ASIA US$ 18/- AFRICA US$ 18/- JAPAN USS 20/-
MIDDLE EASA USS 20/. REST OF THE
WORLD USS 22/-.
PRICE PER COPY
LOCAL Rs.3/50 INTERNATIONAL US$ 27.
t