Page 1
(ONOMI RVV
an
PRODUCI (Mn, kg)
A People's Bank Publication
 
 
 
 
 
 
 
 

Lanka. ECOO N ノ

Page 2
PRODUCTION OF PRINCIPAL AGRICULTURAL C
MILLION KILOGRAMS MILL 24 O -
220
TEA
2OO -
180 -
BER 160 |- RUB
140 -
1 2Ο 盖
MILLIONS OF NUTS sYIL 3OOO 育
2500 L
COCONUT
2OOO
1500 鱼 盖 盘
MILLION METRIC TONS MILLIC 2.5
2.. O PADDY っ一て
e کصر حس۔ سے صے صے سے
" كمصدر مص۔ عبر 1.5 ހ~~J ށށ′ محي N محہ صے
سمصصے سے پہلا 1 O 重 皇 t
1973 "74 * 75 176 177 '78 7g 1 BC] 1
TRENDS IN THE ECONOMY
The performance of Sri Lanka's economy in the first half of 1984 increased by 41 percent in the first half of 1984 as against the same p of tea, rubber and industrial exports. If these trands are sustained a related to the balance of payment and budgetory management. The in resulted in the expansion of monetary aggregates. Particularly in June was recorded; while the monetary base also increased by Rs.49 mill
Rs. 39.7 billion by the end of June.

ROPS RUPEES PER KILOGRAM
utt
90
ION KILOGRANIS - 80
240
EXPORT 70 PRICES - 220 60
- 200 վ 50
40 18O
COLOMBO Վ 50
PRICES - 160 20
1 O 140
O فسسسسسسسسسلسعسعسلسمسلسل سسسسد 1984 1983 1982 اکسیمی MONTHLY AVERAGE 120 ل:
TEA PRICE
LIONS OF NUTS
-t-t- 3000
2500 <"كريم
- 2000
RUPEFS 'OOO MILLIONS
BROAD SUPPLY
--- 1500
IN METRIC TONS 5 - 2 يحضحسسسسسسسسسسسسس.
NafÖNÉý کصصر ܢ ܗ=ܗ ܡܗܝ ဎွိ 2.0 محصے جیحہ ح*
DEPOSITS
- 1,5 Y
1979 1980 1981 1982 1985 O
--- 1 - 0
MONEY SUPPLY 81 '82 83
Monthly
| indicates certain favourable trends. Aggregate earnings from exports eriod last year. The increase has resulted mainly from higher earnings nd strengthened they could help to ease considerably the problems crease in external assets of the banking system at the same time has this year, a Rs. 840 million or 14 percent (reserve money) expansion ion to reach Rs.12.4 billion and total broad money supply reached
ECONOMIC REVIEW, May - June 84

Page 3
Volume 10
Diary of Even
Gamani Abeyase
Ronnie de Mel
S.A. C.M. Zuhyll A.S. Widanapath
M.H. Gunaratne
Chandrakanthi II
Asoka Bandarage
NEXT ISSUE
来 Export Dev The role of 来源 Concern at financing sy 来源 Aġemagore effi
COVER
Palitha Kann
 

tS
ekara
e
irama
Dharmadasa
е
Number 2 May/June 1984
C O N T ENTS
COLUMNS
May 1984
SPECIAL REPORT 3 The Economy in 1984
15
19
24
26
29
30
FEATURES
Sri Lankas” Economy in 1984
governments investment priorities and expectations of the private sector Nutritional status of SRi Lanka
A study of hired labour payment for paddy harvesting operations in the Gall Oya scheme The concept of the intermodal tariff structure for sea borne exports
A buffer stock of gold for producer exporters
Towards International Feminism
elopment : Policies and Achievements Co-operative Rural Banks in Sri Lanka's Rural sector
slow progress towards a more orderly and equitable international
Stem
cient administrative service
angara

Page 4

Economic REVIEW, May - June 84

Page 5
BALANCE OF PAYMENTS
ANNUALLY sa SDF MILLION SDR MILL
OVERALL BALANCE _0 ming ്.
CURRENT ACCOUNT -500 BALANCE .
TRADE BALANCE 1
°CC
soon FUPEES MILLION − RUPEES M]
O I
-5OOO
CURRENT ACCOUNT 1 000D BALANCE N
-15000
TRADE BALANCE-7
-2OOOO -
25000 டேட் 盘 1
1976 1977 1978 1979 1ցԲD 1ցՑ1 1982
THE ECONOMY IN 1984
By mid 1984 Sri Lanka's balance of payments situation had strengthened considerably. The country's total Current Account "deficit which stood at Rs. 5.3 billion or SDR 214 milion at the end of the first half of 1983 had come
down to Rs. 1.2 billion or SDR
48 million by the first half of 1984. Foreign exchange receipts in the first six months of the year had been as much as Rs. 8.5 billion more than in the first six months
of 1983 and Rs.10.1 billion more than in the first six months of
1982. The economy was certainly strengthened as a result though there were also manageable problems arising from developments in the international economic scene.
Notable gains up to September 1984 have been recorded in several sectors of production, particularly in those related to plantation and
ECONOMIC REVIEW, May - June 84
industrial exports, gered at end of 19 rubber prices be upwards, continu its momentus thi opportunities off prices for these c taken full advant duction levels i prices were attract Tea product first half of the increase of 37 p comparative perio export earnings first half of 1983 : billion as against the same period Earnings from rut ed a 33 per cen first half of 198 the same period
earnings from in
in the first half o
 
 
 
 
 
 
 
 
 
 

—്
ION
mmmmmm 5նD
ཀྱང་བྱ།། ---《ཡོ_
{ }{ 50 ست سسسسسسسيصد
ー。
- -1000
ION
5նն]C)
O سے صے
վ -56Օն
-1 նÛնÙ
-15000
20
- -25000
1985
The boom trig283, with tea and ginning to look led to maintain rough 1984. The ered by higher ommodities were age of and proincreased where ive. ion during the year showed an er cent over the di last year; while from tea in the amounted to Rs. 7 Rs.3.6 billion in i of last year. ober also registert increase in the 34, compared to of 1983; while hdustrial exports f 1984 at Rs. 6.
billion registered a 40 per cent increase over that of the same period of 1983. Earnings from textiles and ready made garments showed a 44 per cent increase and from petroleum a 42 per cent
increase. Earnings from other ex
ports too increased considerably. One significant outcome of these trends has been that the chronic imbalances that were showing in both the balance of payments and public , debt situations have been reversed.
The strengthened foreign reserves situation emerges clearly in a comparison of the mid-year levels of external assets over the past four years; from Rs.6.4 billion in 1981, total external assets moved up to Rs.7.5 billion in 1982 and Rs. 10.9 billion in 1983 and then shot up to Rs.15.7 billion by June 1984. The total reserves in terms of external assets which were adequate to finance only 2 to 3 months of imports in the earlier years had so improved that assets were available to cover imports upto over 5 months by August 1984. A further consequence was that the debt service ratio too recorded a drop from a level of óver 18 percent in 1983 to 16 percent by August 1984.
Another positive impact was that the massive increase in the export earnings has, added a substantial amount to government coffers, helping to narrow the relative value of the budget. tary net-cash deficit of Rs. 16.8 million.
: When presented as a percentage of the
Gross Domestic Product (G.D.P) it is seen that the ratio had dropped from 17 per cent in 1982 to a mere 9.8 percent by August 1984.
The overall Government budget deficit which was as high as Rs.20.1 billion in 1982/83 was expected to come down to only Rs.8 billion in 1984/85, with estimated expenditure at Rs.45 billion and Revenue estimated at Rs.37 billion. Revenue in the previous two years was Rs. 17.8 billion and Rs.25.2 billion
These positive trends in both production and price structure of exports do not necessarily mean that there: must be complaency. Many of the export items now recording high earnings have earlier been susceptible to ad
- verse weather and other unfavourable
factors in the international marķet place and it is apparent that the economy must now build up sufficient safeguards against such situations. A more detailed discussion follows.

Page 6
SRI LANKAS” ECONOM
by Dr. Gamini Abeyasekara
Additional Director Economic Affairs, Finance Division, Ministry
Formally Deputy Director, Rural Credit Division, Central Bank of
Sri Lanka has been often cited as an interesting example of a less develoned economy whose social progress reached a much higher level then what could be generallv exnected from countries with similar per capita incomes. The emphasis placed on welfare programmes and distributive policies by respective governments since and even prior to the independence of the country, undoubtedly paved the way for impressive achievements on the social front. Such an approach to development was made feasible to a great extent by the relatively favourable external trade conditions and the accumulated foreign assets of the country. But from the mid ninteen sixties, adverse terms of trade and growing balance of payments difficulties led to an inward-looking policy consisting of exchange and import controls, and administrative procedures for regulating the economy. These trends were reinforced in the early seventies by the difficult energy situation the country had to face, which in turn aggravated the twin problems of low economic growth and high unemployment while contributing to cost-push inflation. It was in this context that the new economic policy package was introduced in late 1977.
The economic reforms initiated in November 1977 and the folllow up measures taken consisted of a series of steps relating to monetary, fiscal, exchange rate, trade and balance of payments policies. On the one hand, the new approach was characterized by greater resort to reliance on market mechanists and free trade while on the other hand it entrusted the primary responsibility of promoting growth and employment to the government. Accordingly, a massive public sector investment programme was
launched to : employment leading and i foreign partic and employm ties.
The stratic was to embar infrastructure have a long ge view to expa: capacity of th the economy foreign invest to suppleme engaging in qu generating ag and commerc use of the va infrastructure the governme. expansion of ment of produ ed as the th liberalized op For this, pror cation of expo tion of imp facilities for purposes bec; portant.
Overall Perform of the Econo
In the ea was successful cant progress Notable achie' tions in the mortality rate crude death r expectancy all coupled with literacy and the populatio performance lagging behind put grew only to the increa

Y IN 1984
f Finance & Planning
eylon.
2celerate growth and which also aimed at lducing private and pation in investment ent generating activi
gy of the government on capital intensive, type projects, which station period, with a iding the production e different sectors of The Private and ments wereexpected ht this effort by lick yielding, surplus ricultural, industrial ial activities making rious incentives and facilities provided by nt. Furthermore, the exports and enhancection were emphasizrust of sustaining a 2n economic policy. notion and diversifirts as Wellas utilizaorts and exchange production oriented ume extremely im
ᎥaInᏟe
my
lier years, Sri Lanka in achieving signifiin the social sector. ements were reducnfant and maternal as well as in the te, increases in life d nutritional status improvements in iucational status of . Economic growth lowever, has been as the national outharginally in relation : in the population
thereby confining the per capita income of the country to a relatively low level. The stagnation in the economy associated with rising unemployment proved to be a major social and political threat by the minet een Seventies.
The status of major socioeconomic variables during the decade of the seventies can be seen in Table 1., below. It is clear that the low rate of savings, averaging less than 13 percent, had arrested the growth in national output during the 1970-77 period. The Gross Domestic Product (GDP) reflected an annual average of less than 3 percent growth rate while the corresponding rate was nearly 2 percent in the case of population. Therefore, per capita incomes grew only marginally during this period. Although in absolute terms the per capita income of the country which was Rs. 1,036 in 1970 rose to Rs.2,470 by 1977 showing a more than two-fold increase, much of this reflected the inflationary impact. Hence, after allowing for price escalation the real increase in per capita income has been estimated at Rs. 1, 143 in 1977 which indicated only a 10 percent cumulative growth over the seven year period. In terms of U.S. dollars the per capita income in Sri Lanka in 1977 was $ 200 compared with S 110 in 1973.
The new economic policy package in operation after 1977 appeared to have been effective in accelerating investment and growth. The level of capital formation has averaged nearly 28 percent during the 1978-83 period, reaching a peak of almost 34 percent in 1980. A noteworthy achievement is the more than doubling of the ratio of investment during the past six years in comparison with the 1970 - 77 period. (See Table 2) However, it should be revealed that such a magnitude of investment was made possible by the inflow of foreign resources, which accounted for about 46 percent of the total
ECONOMIC REVIEW, May - June 84

Page 7
capital formation activity during the period following the introduction of new economic policies in 1977. In other words, the domestic savings ratio has not kept pace with the investment requirements of the country. There has been, however, an encouraging feature in regard to overall national savings as the domestic savings have been increasingly supplemented with inward remit tanccs from Sri Lankans abroad.
For example, the ratio of national savings as a proportion of the GDP reflected 15 percent as against an annual average of 12.7 percent in the 1970-77 period which was possible on the basis of domestic savings alone during the 1978-83 period. Hence, the rapid growth in investment, while savings remained relatively stable necessitated the assistance of foreign sources of financing to bridge the gap between desired investments, and the possible savings. While the heavy resort to foreign assistance might involve debt service implications in the years to come the fact that Sri
Lanka could mob foreign capital testimony to the und investment
country. The tasl would be to mak Such capital and
and export earr meet the funds fo capital and pay
and other changes
Responses of Maj Economic Sector
It should be strowth impulses range of econom than one or tv. p rtʼcu'ar ʼmpʻr`rt that the domestic struction and serv have the poten employment and have maintained growth rates duri period. For exa with the early 7C agriculture experi
TABLE 1. SOCIO-ECONOMIC PROGRESS OF SRI LA
1. Economic Growth
(a) GNP Per Capita (Rs.) Current Prices 1
(b) GNP Per Capita (Rs.) 1970 Prices 1
2. Mid Year Population ('000) 12.
3. Employment (000) 3.
4。 Unemployment ('000)
5. Unemployment as a % of Labour Force
6. Gross Domestic investment (Rs. Million) 2
7. National Savings (Rs. Million) 1
8. investment as a % of GDP
9. Savings as a % of GDP
10. Foreign Resources in investment
as a % of GDP
ECONOMIC REVIEW, May - June 84

ilize large doses of was considered a improved financial
climate of the k ahead therefore, ce the best use of generate surpluses lings required to Dr amortization of ments of interest
O
S
a noted that the have come from a hic Secfors rather
WO activities. Of
' nce is the fact agriculture, con'ices sectors which ntial to expand generate income reasonably high ng the 1978 - 83 ample, compared )'s when domestic ienced an average
growth rate of 3.5 percent, in recent years there has been an increase of more than 5 percent per annum. Meanwhile the construction sector which registered a negative growth rate achieved unprecedented levels of activity thereby maintaining a nearly 9 percent average annual rate of growth during the 1978 - 83 period. The services sector - which consists of an assortment of activities including utilities, transport and communications, trade and commerce, banking and finance as well as public administration and defence services - nearly doubled its growth rate and maintained a 7 percent annual increase since the liberalization of the economy in late 1977. The new economic policies have thus generated wide-spread effects accross sectors, which are particularly vital for employment creation.
A significant achievement related to the agricultural sector in recent years has been the steady
NIKA IN 1970, 1977, 1978 & 1983
1970 1977 1978 1983
O36 2470 2836 7017
O36 1143 1221 1432
514 13,942 14,190 15416
550 3854 4O65 5002
747 1284 1193 865
17.4 25.0 22.7 14.7
2589 5259 8554 35,471
93O 6539 6622 20,166
18.9 14.4 2O.O 29.0
14.1 18O 15.5 16.5
4.8 -3.6 4.5 12.5
Source :Central Bank of Ceylon; Ministry of Finance & Planning

Page 8

ECONOMIC REVIEW, May - June 84

Page 9
ECONOMIC REVIEW, May - June 84
 

Page 10
increase in paddy production which has taken Sri Lanka near to its goal of self-sufficiency in rice. Paddy cultivation provides employment to about six hundred thousand persons and occupies one fifth of the arable land of the
country. Furthermore, paddy is predominantly a small farmer crop as there are more than 1.6 million parcels of cultivation of which about 74 percent are less than one hectare in extent. Therefore, increases in production as well as in the price of paddy tend to contribute to employment and income distribution in the rural sector. The production of paddy which in Maha and Yala of 1976/77 totalled 80 million bushells exceeded 1 18 million bushels in 1983/84. Much of this increases has been due to better production methods, improved seed varieties and greater utilization of inputs such as fertiliZer rather than due to increase in the area cultivated. As a result, there has been a significant improvement in the average yield per acre which rose from 47.7 bushells in 1977 to 69.7 bushells in 1983. It appears that the price incentive has been a major factor which induced the farmers to increase
production and a marketable surplus.
The Guaranteed Price which stood at Rs.33 per bushel in 1978 was steadily raised to Rs.62.50 by 1983 while the open market price has risen to over Rs.75 per bushel over the same period.
However, the performance of the export oriented plantation sector over this period has not been as impressive as that of the domestic agriculture sector. There was only a slight improvement in the value added by tea, rubber and coconut production taken together, during the 1978-83 period. Compared with a negative growth rate of 1.7 percent recorded in the 1970-77 period even such a slight revival of the plantation crops was encouraging but it was not adequate to make any significant impact on the overall performance
8
TABLE 2 SE
1. Gross C (Consta
2. - GDP Pe (Consta
3. Agriculi (a) Exp. (b) Pad
4. Manufa
5. Constru
6. Services
LLS
of the agricu agriculture s more than Gross Domes Lanka its pe the overall economy, fa other sector, production t crops become due to their
export earnir Approximatel total export in is derived fr Coconut whi percent of th Lanka. The d of these crop cited as the
that the Sri faced after t the nineteen st
The liber and imports v an impetus t sector by ma mOre machin materials and

TORAL GROWTH PERFORMANCE : 1970 - 77 AND 1978. 83
Value (Rs. Million) (Average Growth Rates %) 1970 1977 1978 1983 1970-77 1978-83
mestic Product
t Prices) 13,187 16,078 17,401 22,815 2.9 6.0
Capita
it Prices) 1054 1153 1226 1472 1.3 4.1
ural Sector 3732 4.299 4532 5492 2.1 4.1 drt Crops 1.191 1052 1111 1081 -1.7 O.5 |y & Others 2541 3247 3421 4442 3.5 5.3
turing Sector 2197 2357 2541 3O14 1.O 4.2
;ti On Sector 744 619 794 1028 -2.6 8.8
Sector 6419 8288 8315 12,548 3.7 7.2
Source Central Bank of Ceylon Ministry of Finance & Planning
ltural sector. As the ector accounts for one quarter of the stic Product of Sri rformance influences growth rate of the r more than any Furthermore, the rends of plantation even more important relationship with the gs of the country. 50 percent of the come of the country om tea, rubber and :h also covers 41 : average land of Sri 2cline in production perhaps, can be most adverse factor ankan economy has e energy crisis', in venties.
lization of exchange as intended to act as
the manufacturing ing freely available ry, equipment, raw odern technology as
well as by helping to expend the
infrastructure facilities such as energy, telecommunications and transportation, Nonetheless the performance Of the industrial sector So far has not been up to expectations as the share of this sector still remains at about 14 percent of the GDP; although there are signs of increased capacity utilization by both public and private sector industries. For example, from an estimated capacity utilization in the industrial Sector of about 60 percent prior to 1977 it moved up to 70 percent in the year following liberalization and thereafter has shown gradual improvement, stabilizing at an estimated 76 percent by 1983. The annual growth in the industrial Sector which was limited to about 1 percent on average during the period 1970-77, improved to more than 5 percent per year since then. In addition to the increased capacity utilization, the new investments and expansion of existing industries would have also contributed to this growth. In regard to new investments the enterprises set up in the Free Trade Zone
ECONOMC REVIEW, May - June 84

Page 11
under the GCEC appear to have been a major source of growth particularly in the 1980's. There are mixed and divergent views about the impact of liberalization on the industrial sector and the government has initiated measures to streamline the incentives structure, tariff systems and other forms of assistance to this sector keeping within the broad framework of the open economic policy.
Focussing on the services sector, it is possible to identify at least two main types which are closely linked with economic activities. They are firstly, the infrastructure facilities such as transport, communication and energy; and secondly, the trade and commerce activities. On the one hand the liberalization of the economy helped as a supply mechanism towards
expanding infrastructure facilities through imports of vehicles, equipment and technology. On the other hand, the pressure of demand for infrastructure started building up rapidly and strongly consequent to the upsurge of economic activities in a variety of fields following the liberalization in late 1977. For example, the demand for electricity which had maintained a modest growth rate of 7 percent in the 1970 - 77 period started growing at 12 percent in 1978 and 1979. Therefore, in addition to resorting to more expensive thernal power generation to supplement the hydro power capacity of the country, in order to increase the supply of electricity, demand man
agement strategies also had to be
adopted mainly through pricing policy to curb the rapid growth. Similar effort had to be made in relation to petroleum consumption which grew particularly along with the import of vehicles as the new registrations at the Motor Traffic Department rose by about 27 percent per year. The telecommunications and postal services sectors also experienced rapid pressure on demand emanating
from the accelerated growth in
ECONOMic REVIEW, May - June 84
Table 3 FOREI
1. Trade Balance
1 (a) Exports
1 (b) imports
2. Services Balance
2 (a) Receipts
2 (b) Payments
3. Transfers (Net)
3 (a) Private
3 (b) Official 4。 Current Account
5. External Resourc
6. Terms of Trade (
the economy. He expansion of sup zation of deman ployed in regard
Foreign Trade and Balance of Payme
Much of the services sector ar other related to import transactio it is more meanin seperately review of foreign trade a implications to balance of paym should be recalle that one of the of the 1977 polic encourage expor COntrast to an im strategy. EXCeS through qualitativ high tariffs were conducive to the petitive trade anc

EN TRADE AND BALANCE OF PAYMENTS IN 970, 1977, 1978 & 1983 (Rs. Million)
1970 1977 1978 1983
- 316 + 350 - 2,393 -20304
2016 6640 13,207 24,917
2332 6290 15,600 45,221
- 103 + 304 + 119 - 1,297
237 923 1942 7.959
340 619 1823 9.256
+ 69 + 612 +1242 +10.416
6 122 342 6,400
75 490 900 4,016
Balance - 350 +1266 - 1032 -11,185
е Сар -1124. - 860 - 4048 -32,760
1978 = 100) INDEX 106 102 100 44
Source : Central Bank of Ceylon
:nce, measures for ply and rationalid had to be em
to these sectors.
rats
activities in the e in one way or the export and
ns and therefore
gful and useful to the performance ctivities and their the country's ents position. It l in this context major objectives y reforms was to :- led growth in port substitution tive protection e restrictions and considered not growth of comindustry. Mean
while it was also recognized that the transition from an inward looking controlled economy to an outward looking open economy could not be sustained without a rapid and sizeable increase in export earnings to finance imports. Therefore, continuous financing of imports through foreign aid and borrowings was not considered a feasible or desireable strategy. Nevertheless, in view of the poor performance of the export sector there was no other choice but to resort to foreign assistance for the maintenance of a liberal import policy.
The pent-up demand for imports due to the earlier system of controls as well as the fresh demand stemming from the growth dynamism resulted in a massive increase in imports since 1978. The average annual rate of expansion of imports. during the 1978-83 period has been as high as 24 percent and the level of imports rose from SDR 819
9

Page 12
nillion in 1978 to SDR 1796 million in 1983. In contrast to this, the increase in exports over the same period showed an annual average growth rate of only 9 percent, as export earnings increased from SDR 678 million in 1978 to SDR 988 million by 1983. Meanwhile the terms of trade declined drastically over this period. The outcome of these trends in imports and exports was the widening of the deficit in the merchandise trade account.(See Table 3). In the balance of payments the sub component known as the trade balance rose from SDR 144 million to SDR 808 million, reflecting a nearly six fold increase in the deficit in the merchandise account over the 1978-83 period.
The adverse impact on the balance of payments position resulting from the deterioration of the trade balance was mitigated to some extent, by the favourable trends in respect of the receipts in the services account made possible mainly by the inward remittances of funds by Sri Lankans working abroad, and earnings from tourism. For example the private transfers showed a 15 fold increase and amounted to SDR 255 million in 1978 compared with only SDR 17 million in 1978. Similarly, earnings from tourism which stood at SDR 44 million in 1978 rose to a peak level of SDR 133 million in 1982 before it declined to SDR 102 million consequent to the drop in tourist arrivals due to the July disturbances in 1983. However, the overall external resource gap in the balance of payments rose significantly from SDR 228 million in 1978 to SDR 1,312 million by 1983 necessitating that amount of finances from foreign sources.
Monetary and Fiscal Developments
The acceleration in economic activities in response to the policies introduced in 1977 stimulated both investment and consumption expenditure. Their consequences were
1O
reflected in fiscal policies. domestic credit supply grew í the other hanc and expansio expanded year 4). These fac buted to infla the economy
a major tas
The rapic creation was p 1979 and 198 credit increase 70 percent, r of expansion supply during high as 49 per Hence the lev money suppl two fold betw rising from R Rs.19,860 mil restrictive poli ed to decelera of credit cr
supply. Yet,
Table 4
MONETARY
-
1. Governt
2. Govern
2 (a) F
2 (b) C
3. Budget
4. Narrow
5. Broad M
6. Consum
7. Wholes:
se

both monetary and
On the one hand, creation and money it a rapid rate. On |, the budget deficits nary fiscal action after year.(See Table tors together contritionary pressures in thereby necessitating k of stabilization.
i growth in credit articularly evident in O and total domestic d by 43 percent and spectively. The rate in the Quasi Money*
these years was as cent and 41 percent. vel i of the country’s y increased almost reen 1978 and 1980, ts.10,892 million to lion. Since then more cies have been adoptte the rates of growth eation and money
the Broad Money
supply level had risen to Rs.37,257 million by end of 1983 continuing to exert pressure on prices though at a somewhat reduced rate.
The expansions of money supply and credit creation, were to a great extent manifestations of budgetary management problems that emerged mainly as a result of a heavy public investment programme. For example, total public investment as a proportion of the GDP of the country more than doubled from an average of 7.7 percent in 1970-77 to 16.7 percent during the 1978-83 period. The share of the public sector in the overall investment level of the country amounted to more than 60 percent in the 1978-83 period compared with about 50 percent in the 1970-77 period. This reveals that despite the introduction of an open economic policy which was expected to be more dependent on private sector participation and the free market mechanism, the relative importance of the government,
AND FISCAL PERFORMANCE 1970, 1972, 1978 AND 1983
(Rs. million) 1970 197/ 1978 1983
ment Revenue
ment Expenditure
Recurrent
apital
Deficit
Money Supply
Money Supply
2,736 6,686 11,688 25,210
3,886 9,670 18,853 46,772
2,873 6.148 10,408 23,958
812 3,182 6,614 21,694
1,150 3,074 7,165 21,562
1966 5,366 5.936 14,748
3,115 8,717 4,956 37,257
hers' Price index (1952 = 100)
le Price Index (1974 = 100)
138.2
203.2
135.3
227.8
156.7
474.2
354。售
ECONOMIC REVIEW, May - June 84
Source: Central Bank of Ceylon

Page 13
expecially in the field of investment, had not liminished during the post-liberalization era Although, the government embarked on a massive investment programme mainly consisting of lead projects Such as Accere rated Mahaweli Development Scheme, the Housing and Urban Renewal Programme and the Greater Colombo Economic Commission as well as Other development projects, it has not been able to generate adequate, budgetary savings to finance such programmes. The provision of financial incentives to the private sector and the low export performance affected the tax revenue of the government. Meanwhile, despite the scaling down of certain subsidies public expenditure kept rising rapidly due to the massive investment outlays and cost escalations. Therefore, while foreign assistance was sought for financing investment projects the remaining budget deficits had to be bridged by resorting to an expansionary fiscal policy. The resulting implications on money supply through the issue of Treasury Bills and borrowing from the banking sector were reflected in inflationary trends.
The upshot of all these trends described above, coupled with the adverse effects of the balance of payments which necessitated the depreciation of the exchange rate, was an upsurge in the domestic price level. The Colombo Consumers” Price Index (1952=100) which is popularly known as the Cost of Living index which stood at 203.2 in 1977 rose dramatically to 318.2 in 1980 and 474 in 1983. In other words the rate of inflation in a given year has varied between 1 percent and 26 percent during the 1978-83 on an year to year basis. Similarly the movements in the Wholesale Price Index (1974=100) indicated a two fold increase from 156.7 in 1978 to 354.1 by 1983. During the entire six year period 1978-83 the consumer price index appears to have risen by about 15 percent while the wholesale price index has grown at an average of 7
ECONOMIC REVIEW, May - June 84
pcrcent per year excess demand pri push effects.
Emerging Trends in
The performa nomy in the fir: sccms to suggest tha economic develop might take a som turn this year. Th
Table S
item
Agricultural Expo
1.1 Tea
1.2 Rubber
1.3 Coconut
1.3.1 Kermel Pro
1.3.2. others
1.4 Minor Agricultu
Products
Industrial Export
w 2.1 Textiles and Garr
2.2 Petroleum Produ
2.3. Others
Mineral Exports
3.1 Gems
3.2 Others
4.
*Others
Total Exports
l
it includes re-expor

reflecting both essures and cost
1984
|nce of the ecost half of 1984 at the secnario of ment in Sri Lanka ewhat favourable is hope tends to
appear from certain key trends that have emerged which, if sustained and strengthened, should enable Sri Lanka to ease some of the difficulties described in the preceding sections of this review. These trends are mainly related to balance of payments and budgetary management.The final impact of these favourable developments
should be felt in terms of an
improved economic growth rate and reduced rate of inflation while
EXPORT EARNINGS
1983 Rs. Million (SDR Million in brackets)
1984
June January June January to June to June
rts 1,233.4 6,428.3 1 O56.8 10,045.2
(50.1) (261.7) (40.4) (381.1) 700.8 3,592.5 714.3 6,953.1
(28.4) (146.3) (27.3) (263.8) 230.5 1,280.3 180.7 1830.3
(9.4) (52.1) (6.9) (69.4) 184.5 76O.9 74.5 563.4
(7.5) (31.0) (2.9) (214) ducts 143.5 517.1 42.0 288.O
(5.8) (21.1) (1.6) (10.9) 41.O 243.8 32.5 275.4
(1.7) (9.9) (1.2) (10.5) al 117.6 794.6 87.3 698.4
(4.8) (32.4) (3.3) (26.5)
S 730.5 4,055.0 995.7 6,098.4
(29.7) (165.0) (38.1) (231.4) ments 3856 2,142.7 644.6 3.304.3 (15.7) (87.2) (24.6) (1254) CtS 246.3 1,226.3 210.8 1861.7
(10.0) (49.9) (8.1) (70.6) 98.6 686.0 1403 932.4
(4.0) (27.9) (5.4) {354}
77.5 481.6 48.2 482.0 (3.2) (19.6) (1.8) * * (183) 55.2 388.4 31.4 383.7
(2.2) (15.8) (12) (14.6) 22.3 93.2 16.8 98.3
(0.9) (3.8) (0.6) (3.7)
109.8 283.3 78.6 4484
(4.5) (11.5) (3.0) (17.Ο)
2,151.2 11248.2 2,179.3 17,074.0
(87.3) (457.9) (83.3) (647.8)
t:S
Source : Customs, Sri Lanka,
State Gen Corporation, Ceylon Petroleum Corporation

Page 14
possibly contributing to a modest expansion in employment. At the same time however, there are key production sectors that are the cause for concern due to their unanticipated decline in performance so far this year. These trends should be arrested and remedial measures must be taken to prevent further deterioration in the years to CO116.
The latest Annual Report (1984) of the World Bank for instance, is optimestic about Sri Lanka's prospects for a better economic performance. This Report notes that "most economies in the South Asian Region which are heavily dependant on the performance of their large agricultural sectors benefitted from the gathering recovery in the major industrial countries'. In regard to Sri Lanka, the Report comments that “by early 1984, there were signs of improvements because tea prices remained very Strong with resulting improvements in public revenues and the foreign exchange position. “Among the other factors that the World Bank Report points to as being in Sri Lanka's favour, are the effective energy conservation measures that have been adopted and the initiation of policies to improve the tree crop sector's performance. This Report also anticipates that" a major boost to the economy should come in 1984 when the country's five year power crisis will be relived by the commissioning of the first major dam under the Accelerated MahaWeli Programme.”.
In light of the such emerging trends in the Sri Lankan economy in 1984, it can be safely assumed that the economic growth rate in the current year would surpass what was achieved in the past year. In 1983 the economy suffered a set back due to both external and internal factors and the growth rate decelerated. For example, as against an average growth rate of 6 nercent during the 1978-83 period, the GDP in 1983 rose by only 5 percent. The main reasons for the lower performance were the adverse effects of the July disturbances on industry, commerce, trade and related activities as well as the reductions in the levels of production and export earnings of tree crops which suffered due to the world recession and local drought conditions in the
12
past two yea Sectors. Of th manufacturin also performe ly in 1983.
believe that 1 have revived Overall growth improve. The benefit from tional economi during 1984.
Export Prospe
The most the economy been the tea contributed c pated increase Compared wi 1983, during period this y have shown a percent in te rose from SDR 648 million. W. ant SOurce: O earnings from contributions
dustrial export (See Table 5). 3,593 million 146 million- ea first half of 19, ing period tih have generated SDR 264 m. dramatic incre SDR terms. E have registere 3 l percent ov increasing fro) to SDR 69 industrial expc garments and also showed percent, risin; million in the to SDR 231 period this
important exp
including co minor agricul perienced decli in the first h comparison wi period last yeal
The hope í ance in export however be bast tea price boom

S. Two other major 2 economy, namely, and construction comparatively poorThere are reasons to lost of these sectors in 1984 and that the performance should conomy should also the better internaic climate in general
C{S
favourable feature of in 1984 so far, has
price boom which
a better than antici
in export earnings. h the first half of the January to June ear, export earnings
improvement of 41 rms of SDR, which
l 458 million to SDR hile the most import
f this increase was tea exports, the of rubber and in
s were also noteworthy.
Compared with a Rs. - equivalent of SDR nings from tea in the 83 in the correspondis year tea exports Rs. 6,953 million or hillion, recording sa ase of 81 percent, in arnings from rubber d a growth rate of Ver the same period m SDR 52 million million. Meanwhile, orts (led by textiles, petroleum products) an increase of 40 g from SDR 165 first half of 1983 million in the same year. Some other ort items, however, conut, gems and tural products - exines in their earnings alf of this year in th the corresponding
or a better perform2arnings in 1984 can 2d on the continuing Production levels
in the tea industry efficiently responded to the price incentives and the forecasts for the remaining part of this year as well as for next year in regard to tea should be favourable. The current high prices fetched by tea in the international markets have been attributed to the imbalance between the supply and demand consequent to the drop in production in 1983, followed by the decline in stock position since then. The ban on tea exports imposed by India due to the need to meet local consumption require
ments in view of her shortfall in production on the one hand, and also the upsurge in demand for tea in the consuming countries, mainly in the context of high coffee prices, appeared to have ronfirihuted to the imbalance in conditions in the tea market. The FOB price of tea appreciated from Rs. 44.82 (SDR 1.82) per kilogram in the first half of 1983 to Rs. 77.23 (SDR 2.93) in the same period this year. These prices reflected an increase of 72 percent in rupee terms and an improvement of 61 percent in SDR terms. It is note worthy that Sri Lanka could take advantage of the deficit supply situation and respond to attractive world market prices by expanding production and
exports.
The volume of tea exports by
Sri Lanka in the first half of 1984 amounted to 90 million kilograms compared with 80 million kilograms during the corresponding period in 1983. Over the same two periods, the production level of tea
reflected an increase of 37 percent,
from 85 million kilograms to 117 million kilograms. It appears that a good part of this production increase came from the small holders of tea who were able to derive a higher producer margin than the state plantation sector. It is obvious that though the tea price boom would contribute to higher gross earnings the margin that accrues to producers would depend on their cost of production. The cost of production of the public sector plantations rose appreciably since the wage revisions were effected in the middle of this
ECONOMIC REVIEW, May - June 84.

Page 15
year while the tea small holders would not have been subject to the same cost increases. However, the continuation of the attractive price level, coupled with favourable weather conditions so far this year have been a boon to tea growers, and the chances are that 1984 as well as 1985 should turn out to be quite successful years for Sri Lankan tea exporters. Import Capacity
Despite the low growth rate of exports during the past several years, the country's capacity to import has not been seriously affected due to the availability of foreign aid. However, a modest decelaration of the demand for imports was witnessed in the first half of 1984. This might be an early indication of the gradual saturation of the import demand which accelerated ever since the economy was liberalized
in 1977. In view of the preference of the government not to admit any
new major investment projects and also in view of the projected completion of major on going capital intensive projects, it is possible to envisage a furtherdecelaration in the demand for imports furthermore, the increased flexibility in the exchange rate adjustment should result in the rate approaching a realistic level thereby discouraging the non-essential and less productive imports. The projected low growth in imports therefore, should arrest any further deterioration in the balance of trade in 1984, particularly in view of the already improved export performance. See Table 6.
Import payments in the first half of 1984 had reached Rs.22,988 million or SDR 872 milion, reflecting an increase of 6 percent in SDR terms. Taking into consideration the slight reduction in the overall import bill in 1983, ompared with the previous years import expenditurc, in 1984 too it could also either decline marginally or not increase significantly. Another important feature that has emerged during the 1980's is the change in the composition of imports. This trend has been reinforced in the first half of 1984 with imports consisting main
ECONOMIC REVIEW, May - June 84
Table 6
hmmmmmmmmmmmmmmmmmmmmmmm
Ca
umamamasmuseum----
s Consumer Goods
1.1 Food and P.
1.1.1 Rice
1.1.2 Flour
1.1.3 Sugar
1.1.4 Milk and 479.6
1.1.5.1 Fish - d.
1.15.2 Fish - O
1, 1.6 Food - ot
1.2 Textiles and clot
1.3. Other Consumer
1.3.1, Motorca
1.3.2. Radio Re
1.3.3. Rubber T
1.3.4. Medical a
Products
13.5. Other
2. intermediate Goods
21 Fertilizer
2.2 Petroleum
2.3 Chemical Elemer
2.4 Dyeing, Tanning
Materials
2.5 Paper and Paper
2.6 Wheat and Meslit
2.7 Other
3. investment Goods
3.1 Building Materials
3.2 Transport Equip
3.3. Machinery and E
3.4 Other
4, Unclassified imports
Total
LSLS
source : Customs, Sr Ceyʼlon IFert, Celou Petr

CLASSIFICATION OF IMPORTS
gory Rs. Milion
(SDR Million in brackets) Percentage of Tota
January to June January to June 1983 1984 1983 1984
5936.2 48753 295 2.2
(24.1.7) (1850) "ink 2,741.8 2,150.0 13.6
(1116) (81.6)
452.5 1979 2.2 0.9
(184) (7.5)
33.1 10.3 0.2.
(14) (0.4) 1,042.9 5082 5.2 2.2
(425) (19.3) flik Products
326.2 2.4 1.4
(19.5) (12.4) ied 87.1 1748 O.4 0.8
(3.6) (6.6) her 570 146.3 0.3 O.S
(2.3) (5.6) tér 589.6 786.3 2.9 3.尋
(24.0) (298)
ning 1,206.0 1329.9 6.0 5.8
(49.1) (50.5) Goods 1988.4 1,395.4 9.9 6.1
(81.0) (52.9) 's and cycles 307.4 106.4 15 0.5
(12.5) (4.0) ceivers and Telivision 440.5 24霄,4 2.2 1.1
(17.9) (9.2) 'yres and Tubes 805 109.3 Q.孪 O.5
(3.3) (4.2) nd Pharmaceutical
247. 234.2 1.2 1.0
(10.1) (8.9) 912.9 7041 4.5 3.1
(37.2) (26.7)
8,902.1 11,284.0 44.2 49.1
(362.4) (428, 1) 240.7 423.6 1.2 18
(98) (16.1) 3,787.5 5,407.5 18.8 23.5
(154.2) (205.2) hts & Compounds 431.8 5250 2.1 2.3
(17.6) (199) and Colouring
122.7 136.3 0.6 O6
(5.0) {5.2} Boards 421 9 3148 2.1 辑、4
(17.2) (11.9) n 951.4 1282.7 4.7 58
(38.7) (48.7) 2.946.1 3,194.1 14.6 13.9
(1199) (121.2)
4,974.9 5,387.1 24.7 23.孪
(202.5) (2044) s 472.1 386.8 23 1.7
(19.2) (14.7) nets 1,227.6 1023.5 6.1 4.4
(500) (38.8) quipments 2,429.6 2,793.1 12.1 12.1
(989) (106.0) 845.5 1,183.6 4.2 5.1
{344) (44.9) 303.9 1,442.0 1.5 6.3
(12.4) (54.7)
1ηρorts 20,117.1 22,988.3 100.0 OOO
(819.0) (872.1)
i Lanka. Food Commissioner's Department; ilizer Corporation and other major importers. pleum Corporation and Central Bank of Ceylon

Page 16
ly of intermediate and investment goods. For example, compared with 30 percent in the 1983 January to June period, the proportion of consumer goods in the total imports have further droped to 21 percent in the corrosponding period this year. Accordingly, the share of intermediate goods consisting of items such as fertilizer and petroleum have risen from 44 percent to 49 percent over the same period while the ratio of investment goods including machinery and equipment have remained relatively stable. The capacity expansion effects of such imports, that have already been used in capital formation in the country, should enable a greater output in the production sectors of the economy in the years to come. Growth Potential of Different Sectors
On the basis of the performance in the first half of 1984, it appears that the paddy sector which was responsible for much of the improvements in the agricultural sector in the 1978-83 period has fared poorly this year. As against an increase of 15 percent in 1983 over the previous year’s production level, the first half of this year registered a significant decline in paddy production, in relation to the first half of last year. The main reason for this has been the adverse weather conditions that prevailed in the early part of 1984 even causing floods in some major rice growing areas. Similar problems appear to have caused poor harvests in the case of subsidiary food crops in the first half of this year which might eventually contribute to a decline in the growth rate of the overall agricultural sector.
The industrial sector which grew at a marginal rate of only one percent in 1983 over the level of production of the previous year seems to have revived in the first half of 1984. This trend was also evident in the growth of industrial exports while the public sector industries reflected an increase in the output level. For example, the output index of some public sector
1ndustries (1977 = 100) which re
mained almost static at 102 last year, is estimated to have risen to
14
1 21 in the fi This improve result of the the refinery C poration whi down for rep months of 1: public sector which record production ir this year ha Distilleries C tional Textile output grew 10 percent re with the sanne regard to priv the main con tion increases the industria
| the Katunayal
tion Zone. W of the indust by the July might be a growth in the tries in the se a result of t situation, with the national Mahaweli hyc the Victoria ing an additi« should be a fur expansion of commercial s availability of also enable petroleum col possible reduc power. Simila on-going in such as telec expansion of transportation widen the inv in industry ar inducing a hig the other sect
1984.
In the co
that have eme of 1984 an
considratior growth in m
creation and government fil it is possible t in the rate of i indicator alre lombo Consu which in the

rst half of this year. ment was mainly a recommissioning of f the Petroleul 1m Corh had been closed airs during the early ast year. The other industrial ventures ed improvements in the first half of ve been the State orporation and NaS Corporation whose by 21 percent and spectively, compared : period last year. In rate sector industries tributions to producare expected from l establishments in ke Investment Promoith the rehabilitation rial ventures affected disturbances there further impetus to private sector induscond half of 1984. As ..he improved energy the strengthening of grid by adding the dro power (i.e. with power project providonal 210 MW), there ther impetus for the the industrial and actors. The increased hydro-power should some saving in the nsumption due to the :tion in use of thermal rly, the completion of
frastructure facilities ommunications, and
commercial space and
service etc, should stment opportunities d commerce thereby her rate of growth in ors of the economy in
text of these trends rged in the first half l also taking irto the trends in the oney supply, credit
developments in lance so far this year, predict a reduction flation in 1984. One dy is the Co
mers" Price Index,
first six months of
this year had a growth rate of about 8 percent compared with an increase of more than 10 percent during the same period last year. In terms of the wholesale price index, the growth rate in prices have been only 3 percent in the January to
Junc 1984 period as against a more than
six times higher growth rate of 19 percent during the same period last year. Assuming these trends would continue in the second half of the year, it should be possible to experience a lower rate of inflation in 1984. compared with the rates of 14 percent and 25 percent that were revealed by the Consumers Price Index and the Wholesale Price Index, respectively, in 1983.
In the first half of this year, the broad money supply increased
by 7 percent consequent to the improvements in external assets in
view of the higher tea prices.
Domestic credit creation. however. declined by 2.4 percent during the
January to June, 1984 period
reflecting the tight monetary policy adopted to curb inflationary pres
sures. Meanwhile, it is anticipated that the budgetary outlook in 1984
would be satisfactory due to both improved revenue performance as
well as better expenditure management. The tea boom and higher rubber prices have also contributed towards an increase in the export duty revenue of the government in
the first half of this year. The modest growth in government ex
penditure coupled with a sizable increase in revenue should enable a surplus in the current account
thereby contributing to arrest a further expansion in the overall
budget deficit in 1984. This should in turn, mean a reduction in expansionary sources of financing thereby helping to curtail the inflationary impact of budgetary
policy, in the current year.
If the trends that emerged by
mid 1984 should continue it is possible to predict that a combination of greater price stability, more stable conditions for economic growth and more employment opportunities should be realized towards the end of 1984. The international economic environment, indicating a moderate economic recovery in the western industrial countries, also seems to favour
such an outcome for Sri Lanka in
1984.
ECONOMIC REVIEW, May - June 84

Page 17
FEATURES GOVERNMENT'S INVESTMENT PRIORITIES AND EX OF THE PRIVATE SECTOR
Ronnie de Me
(An address to the Ceylon Chamber of Commerce at it's annua
meeting on July 27, 1984 Hon. Planning)
It is indeed an opportune time for me to speak to the leaders of industry and commerce as the Government is about to launch the second phase of its development programme. As you all know, introduced a series of far reaching reforms in 1977 which stimulated the economy by removing restrictions and providing inducements for the private sector to assume a major role in promoting economic development. As a result we doubled real economic gtowth in the period 1977 to 1982. We also doubled investment as a percentage of GDP. Unemployment was also halved from 26 percent of the work-force to about 13 percent of the work force during this period. Per capita incomes increased by 70 percent in dollar terms. inflation has been reduced from 35 percent in 1980 to 18 percent in 1981 and 10 percent in 1982. The Central Bank and the Director of Census and Statistics claim that we reduced inflation to 9 percent but prefer to take the more conservative figure of 10 percent. This is a combination of achievements in the period 1977 to 1982 of which any country could be proud of Few countries in the world could boast of such a combination of economic achievements during this period which was marked by the worst international economic recesion since 1932. There was some slippage after the ethnic disturbances and the severe drought last year. Inflation rose once more to about 20 percent and our growth rate declined to 4.9 per
cent. Our recovery however, has sur
passed our expectations.
Paddy Farmers show theway
The paddy sector showed even more remarkable progress. From a
ECONOMIC REVIEW, May - June 84
R.J.C. de Mel, Minister of Finar
situation where we wer percent of Our rice r 1977, we have come where, given reasonab are unlikely to import This remarkably demo possible. If the prodi of the people are no restrictive policies,
that the performance sector can be emulate too. The productive C economy must be ex country is to achieve si and development. Th entrepreneurs must der edynamism business managerial capacity. Ti a more far sighted
increase the time-frame ment decisions. The pa this country have cert the way, by patriotical the incentives which w you will follow suit.
Disappointing Private In
Capital formation the source of sustain development of an achievements of the pi to a significant extent, on a masive increase i ment. Though there increase in private overall performance disappointing. The ter to choose easy option activities which yielc With less effort and e there is a significant c es on the part of th munity, we will not b economy firmly on sustained growth an
 

PECTATIONS
l general ce and
te importing 46 equirements in to a position le Weather, We any rice at all. nstrates what is uction energies it hindered by am confident of the paddy d in other areas apacity of the (panded if the ustained growth is means that monstrate greatacumen and ney must adopt approach and of their investaddy farmers of ainly shown us y responding to ve offer. I hope
Vestment
investment is eo growth and economy. The ast six years have been dependent in public investhas been some investment, the nas been rather dency has been s such as trading quick returns nterprise. Unless hange in attitude business comeable to put the a path of self d development.
The liberalised economic policies can be continued only if there is dynamism in the productive sectors of the economy. Our debt servicing has reached a point where we can no longer afford to borrow to support our balance of payments. Unless we develop the priority sectors of export and efficient import substitution, the pressure on the balance of payments will compel us to revert to controls and the stagnation inducing policies of the past. In this context the private sector has a major role to play in the development of these sectors.
In the beginning it was necessary to provide a wide range of fiscal and other incentives to reactivate a stagnant economy. The time has now come when we have to be more discriminating in the tax exemptions and other incentives that we offer. In future propose to confine such benefits only to exports and efficient import substitution to ensure that resources will be channelled to the productive
sectors of the economy.
Though Sri Lanka is a relatively
poor country, we have an abundance of resources that still lies untapped. Later on in my address will identify some of these areas. The Government for its part will try to create an environment that is conducive to increased investment in sectors that have the greatest potential for development. The private sector must support these measures by becoming more responsive to the opportunities that
are made available.
It is indeed a truism that sustained
development is only possible in a context of political and economic stability. Our Government is making every possible effort to ensure political stability in the future. Given the necessary goodwill on all sides, it is not impossible to achieve a lasting solution to the ethnic problem.
Ensuing Financial Stability
You are all aware that the impressive economic progress made by the country has not been
15

Page 18
easy. We have had to face very serious problems. Our efforts to null Sri Lanka out of the low investment/low growth/high unemployment syndrome, to which it had become accustomed for over 20 years, placed great strains on the Budget and the Balance of Payments, particularly in the context of an extremely hostile external environment. We have, however, taken a number of corrective measures to ensure domestic and external financial stability. The Government Budget this year will be deflationary. The Central Bank has tightened monetary policies to contain inflationary pressures. A better balance in the Budget will be achieved this year. The improvement in the fiscal position, combined with our monetary and exchange rate policies are expected to result in a substantial surplus in the balance of payments and a manageable rate of inflation by the end of 1984. It is also heartening that the donor community continued to demonstrate its confidence in the economic policies of the Government at the recent Aid Group Meeting in Paris by increasing its pledges by 18 percent, in real terms, over last year.
The economic fundamentals of the country are in reasonable order. must, however, warn you that there is absolutely no room for complacency. The buoyant tea prices that we have enjoyed are undoubtedly the major explanatory factor behind the current improvement in Sri Lanka's macroeconomic indicators. But many important structural problems have yet to be resolved. We have learnt some painful lessons in the past regarding the viciousness of the commodity price cycle. It is, therefore, of paramount importance that appropriate policies are adopted to use the buoyant export prices to build up our reserves in order to enable us to make the necessary structural changes in the economy in the medium term. If we fritter away this temporary advantage, we are likely to face dire consequences when the commodity boom ends. We must,
16
therefore, cont financial disci resource alloca y worked ou“
Fundamental O
The Gove to push forwa plans for the f the economic a the people of t mental objectiv mic growth price stability necessary for medium term spelled out in investment 19 investment of next five year ment Will I aCCO While the Priva invest RS.96 bi 5.6 percent i period, which growth rate fo five - year plar projects a grow hope to furth deficit in the c balance of pay more viable. W. down inflation to make it co of inflation partners.A nun also been ta institutional S' these objectiv Efforts are bei the whole proje
The Gove taken a very in of crucial imp private sector. no project Wil State sector, if by the privat ment is to be means of prov facilities neces entrepreneursh

nue to maintain strict line and ensure that on is based on a clear
system of priorities.
jectives
nment is determined "d vigorously with its rther improvement of nd social conditions of his country. The fundaes will be rapid econo2mployment creation, and structural change further growth. Our programme has been the document 'Public 84-88'. It envisages Rs.202 bilion Over the s. Public sector investunt for Rs. 106 bilion e sector is expected to llion. A growth rate of s projected for this
think is a sustainable r Sri Lanka. The next of India for example th rate of 5 percent. We er reduce our budget urrent account and the ments to make them e also hope to bring to single digit figures mparable to the rates of our main trading hber of decisions have ken to strengthen the tructure within which es Will be pursued. ng made to strengthen ct cycle.
}rnment has recently portant decision that is ortance to you, in the It has been decided that
be undertaken by the it can be better handled sector. Public investviewed basically as a iding the infrastructure sary to support private ip. Only in the case of
the plantation sector, where the large majority of the estates are vested in the State, will the Government embark on investment in directly productive activities.
Public Investment Priorities
A major objective in our medium term programme will be to increase emphasis on rehabilitation and maintenance of the country's capital assets. in the past few years most of our resources were diverted to large new projects like the Mahaweli Dams. As a result, existing assets were neglected and now require urgent attention. The Government will therefore undertake new infra-structure projects only where such projects are absolutely essential for example, the power sector. Emphasis will be focussed more on the rehabilitation and improvement of existing capital assets such as roads, buildings, and irrigation systems. The road system in particular, will benefit from a major rehabilitation program
ՈՈe.
Another important feature of the development programme in the period ahead is the greatly increased investment envisaged in our plantation industries. One of the most disturbing aspects of Sri Lanka's development process has been the steady decline of our plantations. The Government proposed to take urgent action to rectify this. A detailed investment plan has been prepared for the plantation sector and substantial resources will be earmarked in our | nvestment Programme for the rehabilitation of the plantations and modernisation of estate factories. We also propose to draw up a similar investment programme for the Private Sector.
Investment Potential For Private Sector
I have outlined very briefly the priorities for public investment. The
ECONOMC REVIEW, May - June 84

Page 19
private sector will be expected to taken the lead in the other sectors of the economy. There is tremendous scope for rapid expansion of both exports and efficient import substitution. It is, however, essential that
areas identified for import substitu- .
tion are competitive. It is often argued that we must protect our domestic industries. Sri Lanka's experience with such protection in the past has been far from happy. Consumers have been confronted with poor quality goods at exorbitant prices while a few inefficient entrepreneurs made large profits behind protectionist barriers. The effects on the consumer are much more invidious in dc veloping countries
than in developed countries, where
there are well developed consumer protection institutions and stringent quality controls. Further more, protective barriers make inefficient Sectors attractice and lead to a misa|| Ocation of resources. As a result, Sectors which could yield real returns are squeezed for funds. This leads to a loss of efficiency in the economy which results in losses in Output, incomes and employment. Hence, it is in the country's interest to ensure efficient allocation of resources by developing only those import substitution industries that are competitive. In doing so, the need may well arise to protect nascent industries which have the potential to become Competitive Once established. Such protection must eventually be phased out so that the discipline imposed by competition is brought into play once these industries have found their feet. Another plank of such a strategy must of Course be strong action against dumping.
Great potential exists in the fields of agriculture, animal husbandry and fisheries and also in resource based industrialisation. Major initiatives have already been taken to boost sugar production in the country and thereby reduce our heavy dependence on sugar imports. We must also make a major effort in the next five years to increase
ECONOMIC REVIEW, May - June 84
milik production in development of mi is another area V potential for develo try has already rect pepper, cardamoms nuts and tropical frt sed into fruit juices as crops with favou pects. It is most fisheries developme rather step-mothers successive Governm Less than 1 percer ment's total capita a located to fisherit that our priorities determined effort fisheries developme mendous scope n( expansion of our but also for the Lanka's in and fishe cular, for the more ing and farming of of brackish water and swamps for th prawns and lobsters
|n additiOr tC fisheries developme scope for the expar processing. Greater V ed to both Our tra traditional exports. in the packeting of sing of i ubobe innus and built upon. E
must be developed
sector by produc domestically. Othei dustrial processing aggressively.
Over the past
| heen following pra
tic policies after
dogma and ideolog have taken a bala opportunities for bo Substitution and ex a longer term view, export-led econom essential for Susta development in an
 

the country. The nor export crops Vith Considerable pment. My Minisommended coffee,
cloves, cashewJits (to be procesand concentrates) rable export prosunfortunate that
2nt has received / treatment from ents in the past. it of the Governall expenditure is es. It is essential are revised and a is made at rapid nt. There is trept only for the deep-sea fisheries expansion of Sri ries and, in partisystematic cultur - the large extents lagoons, estuaries he production of for export.
) agriculture and int there is also hsion of industrial
alue must be add
ditional and nonThe progress made tea and the proces
it be consolidated
3ack Ward linkages in the garments ing more inputs
avenues for inmust be pursued
six years, We have gmatic and realis
several years of y. This is why we nced view of the th efficient import ports. If one takes
it is apparent that C diversification is lined growth and
economy like Sri
Lanka which has a small domestic market and a relatively narrow resource endownment. Our export sector must become more dynamic. An Export Development Plan has been drawn up which seeks to double the rate of growth in the export sector. A number of lines of activity with export potential have been identified. Many incentives, both fiscal and monetary, have been provided for investment in the export sector. The Chamber of Commerce must play a leading role in the implementation of this plan.
Financial Resources and Investment
The Government also hopes to provide an environment that is conducive to the development of the priority sectors. The system is not perfect, but we are constantly seeking to improve it and we will always entertain any constructive suggestions that may come from your Chamber. One of the major constraints to new investment has been the high interest rate structure. On numerous occasions in the past, have deplored the instability introduced into the system through the Government's fiscal operations. The Rudslet has heen pre-empting a large share of demostic resources. Interest rates have been kept high because the National Savings Bank which has been a captive source of budgetary financing, has in effect determined the level of interest rates in the economy. As the budgat deficit is brought under control, foresee more resources being made available to the private sector at a lower cost. This presumes of course that strict financial discipline will be maintained in budgetary operations.
The level of investment in priority sectors is influenced not only by the cost of funds but also by the availability of financial resources for such investment. It is regrettable that the banking
community has not been sensitive enough to the needs of a developing country like Sri Lanka. Conventional
17

Page 20
banking practices, evolved in a totally different social and economic milieu, at a very different stage of world history, still dominate much of our thinking regarding banking. It is for this reason that I have recently introduced legistation to strengthen the hand of the monetary authorities. The new Banking Act will I hope lead to a greater flow of credit to the productive sectors of the economy. The Rural Development Banks and the efforts to set up 'bare-foot' banking in Sri Lanka are all part of a sustained thrust to create a banking system that is in harmony with the development priorities of the country. hope that in future the banking community will adopt more development oriented perspectives to ensure the success of the Government's policies.
Private Enterprise Promotion
I have also taken a number of direct steps to foster private sector development in :: this country. The Private Enterprise Promotion Project which is being implemented through my Ministry by Sri Lankan business leaders and officials appointed by me, is designed to accelerate the process of private sector development. I have been able to obtain assistance to the tune of US$ 4 million from USAID for this project. One of the key elements in the implementation of this project is the establishment of the Sri Lanka Business Development Centre (SLEs DC), a new organisation which is privately chartered and managed. It will work in partnership with the existing business organisations, government agencies and other institutions involved in business development activities in Sri Lanka. This institution is innovative in that it helps to mobilise resources available in both the private and public sectors to promote private sector development in Sri Lanka. am confident that this institution will nrit only raw a catalytic role in the development of the private sector in the country, but will also serve to break down the mutually suspicious, sometimes even antagonistic, relationship that prevails between the private and public sectors. These petty
18
divisions must b us must work to try on the path and development must not underof the task befc like Sri Lanka ha a harsh internat no easy options,
to achieve our
The most
the Sri Lanka Centre will be to
Support entre throughout the will be provides small towns anc play a more ac development. Th paddy sector, ample testimon when private means tO prospe programme will services renderec information on and market cd Cannot be an eff out cooperation hope everyone o innovative effor
sector developr
The Centre
liaison with the EDB in assisting tors to collabo partners. The C tinue to encour that helps Sri ment potential of technology
a CCeSS tO eXtern
The stage h
private sector til role in Sri Lank; The private sí carries with it action on the Any abuse of
serve to weaker beyond your o
If you are not enlightened ap private sector ( undermined. G all of you have

broken down. All of ather to put this counf self sustained growth At the same time we stimate the magnitude re uS. Small Countries e to learn to survive in onal system. There are so We must cooperate common objectives. nportant objective of Business Development identify, motivate and reneur development island. Opportunities for entrepreneurs in in the rural areas to role in economic e performance of the in recent years, bears if to what is possible hitiative is given the *r in these areas. This be supplemented by | to investors regarding business opportunities }nditions. This centre ective instrument with
from the Chamber. f you will support this t to promote private
nent in the country. will also work in close
FIAC, GCEC and the
tive
private foreign invesrate with Sri Lanka Overnment Will con
age foreign investment lanka fulfil its develop
through the transfer and the provision of
markets. is now been set for the
play a more dynamic 's development process. ctor oriented policies a need for responsible art of the beneficiaries. the system will only
it. You must now look vin im mediate interests.
able to adopt a more roach, then the Whole 'iented strategy will be 'en the great stake that in the success of private
sector oriented policies, I do not think that you should leave the role of policing the system entirely to the Government. We are taking steps to improve the operations of the Inland Revenue Department, Customs and other government agencies. These efforts must be supplemented by developing systems of self regulation by the private sector itsself. Self-regulation of this sort is found
in other countries. Your Chamber should give serious thought to this idea.
Of course such self-regulation must be devoid of all petty personality conflicts and It must be administered
in the interests of the private sector and the country as a whole. Investment,
production, sound business ethics and business morality is essential if the private sector is to grow and flourish.
The confidence of small investors all over the country must be built up.
There is money in the country. It is
not forth coming due to lack of confidence in the system. This is where a
proper Stock Exchange together with a
Securities Council Wii || helpo. But please do not put the cart before the horse.
This will be a futile and Worth less
operation. -
We must look to the future With
optimism and confidence. We must eschew negative thinking of all kinds. The programme of economic and social development that I have outlined requires the concerted, collective support of
all the people of Sri Lanka. No Finance Minister can or should advocate adven
turism or irrational risk taking. However, it is important that the entrepreneurs of Sri Lanka must be more dynamic. Your horizons must be videned.
There is need for a pioneering spirit. New ground must be broken and the
frontiers must be pushed back. If may borrow Prof. Joan Robinson's phrase 'Animal Spirits' must be activated. There must be a sense of excitement
about the possibilities before vou. No government has provided an environ
ment that is more conducive for the fostering of private initiative. All of
you as leaders of Industry and Commerce have a special responsibility.
hope that you will make maximum use of the opportunities that are becom
ing available to bring about development that will benefit all the people of
this country.
rival ies.
ECONOMIC REVIEW, May - June 84

Page 21
NUTRITIONAL STATUS OF SRI LANKA
S.A. C. M. Zu h y le
In this paper M. Zuhl'le, who is a Project Director of CARE-Sri Lanka, handling the Thriposha Program, sidcusses how nutrition interrention programs hare contributed towards a better y of life in Sri Lanka. The views expressed in this article reli his and hare no relevance to his official capacity at CARE. This paper is part of a larger study on Food Aid and Nutrition and emphasises the need for further research in this field.
The nutritional standards of a society are best understood by its indicators. The directly relevant indicators revealing the underlying character of the nutritional status of the country are Infant Mortality Rate (IMR) Maternal Mortality Rate, Neo - Natal Rate, and the morbidity rates. The levels of calorie and protein consumption indicate the causes of malnutrition. Though other indicators like birth weight, deficiency of Vitamin A, incidence of goitre etc., are important, the relevant data are not available for analysis. Though some groups have collected birth weight data, according to officials of the Department of Census and Statistics they are not scientifically collected and therefore the error factor could be high. Such data have not been considered for analysis in this paper,. Diseases such as defieiency of Vitamin A and goitre are included under the category of 'other diseases' in the table. Though there are other aspects to the status of nutrition they are either secondary indicators or the resultant effects of these variables. Analysis of the behaviour patterns of these indicators would reveal the Sri Lankan status.
VARIABLES Infant Mortality Rate
Infant Mortality Rate (IMR) in Sri Lanka is remarkably low as compared to countries with similar economic backgrounds. Sri Lanka is classified is a low income country, earning a per capita income of US $ 270. Most
ECONOMIC REVIEW, Maw - June 84
countries in this gr infant mortality ra 100 - 1 50 per th (Ghassemi; 1983 ;) Lanka, since the world war has bee with a few minol recorded rate of 3 is the latest figure low rate for an ec Sri Lanka (Ref. Tat
In a recent rev children. (it has be a strong focus or health care service: education, during is the most critical life expectancy of chances for surviva. in Sri Lanka was to 82 in 1950, 52
TABLE 1.
MORTA
H
Maí
No
1969 571
1970 53
1971 521
1972 514
1973 444
1974 37
1975 385
355 1976 ܢ
1977 383
1978 341
Death of the child wit
 
 
 
 

up would reveal an te in the region of ousand live births The IMR in Sri end of the second in steadily declining fluctuations. The 7.1 in 1978 which available is indeed a onomy like that of ble l ).
iew of the needs of 'en maintained that the expansion of and universal free the last fifty years, factor in increasing
children and their l. In 1930 the IMR 75 which declined 2 in 1969, 47.5 in
1979 and 40 in 1980. (Ghassemi, 1982). The rapid decline in the first two decades and the lower rate of cecline in the past decade need not cause anxiety. It is not possible to expect the trend to continue at the same pace. The improvements in the field of economy and education introduced in the 1930s, 40s, and 50s contributed to drastic changes in standards of health. Once the welfare facilities of the society were raised, the rate declined to a minimal level. This is broadly true in any society. If the current declining trend continues, within a short period of time, Sri Lanka would reach the rate of a developed western country.
Maternal Mortality Rates
Maternal Mortality Rate (MMR) for the ten year period from 1969 to 1978 had been declining at a minimal rate. The rate in 1969 had been 1.5 while it has dropped to .8 in 1978.
ALITY RATES IN SRI LANKAAS INDICATORS
OF MALNUTRITION
:ernal Mortality Infant Mortality Neo-Natal Mortality
Rate Rate No Rate
1.5 19,663 52.7 11918 32
1.5 17,466 47.5 10,914 29.7
1.4 17,155 44.8 11,352 29.7
13 17,562 45.6 11666 30.3
1.2 17,002 46.3 10,994 29.9
1.O. 18,724 51.2 10,664 29.1
1.O 16949 45.1 10,142 27.O.
O.9 16,633 43.7 9,955 26.1
1.O 16,511 42.4 1,087 25.9
0.8 15,019 37.1 10,136 25.0
hin One month of birth
Source: Bulletin on Vital Statistics 1979. Dept. of Census de Statistics
19

Page 22
Though it only a .7 drop, considering the range, it is almost a 50 percent reduction. If the trend continues then the MMR would come down to a zero level within a short period of time (Ref. Table 1).
Neo-Natal Mortality
Neo-Natal. Mortality (NNM) is the death of the child within one month of its birth. The recorded rates of NNM for the period under review, unlike the IMR and MMR, are negligible. It had fluctuated between 32 and 29.1 from 1969 to 1974 and declined only up to 25 for the four years up to 1978. (Ref. Table 1)
The slow rate of decline of Neo-Natal Mortality rate is dependent on the consumption of food at pregnancy The mother when pregnant should consume additional quantities of protein and calories. Insufficient quantities contribute to the birth of an undern ourished infant which does not survive more than a month.
Neo-Natal rate is a pre-determined situation due to the factors influencing the mother at the time of pregnancy. Maternal malnutrition and intrauterine nutritional environment are very closely related to chronic and seasonal hunger, early marriage, frequent pregnancies, frequent infections, hard physical labour and large family size. It is a firm belief that nutritional anaemia which is a major cause of malnutrition of infants is also a major puolic health problem, difficult to sitect and cure. It is mostly prevalent among the low income socio-economic groups, women and children. Though, in Sri Lanka nutritional anaemia had
been reported as a maior problem as far back as 1940, the records of 1981
show that it is the seventh leading cause or morbidity in government hospitals. The Medical Research Institute and World Health Organization have estimated 50% - 70% of the pregnant and lactating women in Sri Lanka as 'anaemic, and lack of iron is the primary deficiency (Ghassemi; 1983). It is surprising that the anaemic cases are not detected and cured before the greater damage is caused.
The declining trends of Infant Mortality Rates, Neo-Natal Mortality,
20
and the Mate illustrated in helps to und trends of IMR, slow declining lity. Life Expectanc
Life expec one year of th close to that o The Table II sh the Sri Lankan ria, India and America. A c countries show Lanka is much other LDCs a rate of the USA
TABLE II
co,
Sou
The Worl of the World commends th rate of Sri La major countrie Sri Lankan ra Even China c with the avera day Observer,
MORTALITY MALNUTRIT
Accuracy and
There are ing the accu Inaccuracies interpreting t tutions. Amo
(i) All registered in manner. The are not the ré recording the times by nor fic terms cla versally acce:

al Mortality are best Iphic form
'stand the declining hd MMR, but shows a te of neo-natal morta
incy rate at the age of child in Sri Lanka is a developed country. )ws the comparison of rate with that of Nigethe United States of mparison with these that the rate for Sri higher than that of d it is closer to the
(de Mel). Due to this kind of limitation in recording, the available classifications may not be accurate. However, there is no other dependable data for a considerable period of time available for analysis.
(ii) The other limitation is that the recorded data are available only for a few years from 1975-1978. There are no data available prior to this period. The more recent data have not been published by the authorities concerned. The analysis therefore is limited to the four years of data available for the purpose.
(iii) The classified causes of death registered are malnutrition, anaemia
IFE EXPECTANCY AT THE AGE OF ONE YEAR
try Nigeriaו
49
indja
Sri Lanka U.S.A.
69 72
rce : Development Digest, January 1980
i Development Report Bank released in 1983 : high life expectancy nka. Compared to the s in the Asian region the te of 69 is the highest. omes below Sri Lanka ge rate of 67 (The Sun6.10.1983).
CAUSED BY
ON
Limitations of the Data
difficulties of determinacy of data gathered. ccur in recording and e data at various insti, the reasons are :
uses of deaths are not
an orderly classified auses given sometimes, causes. At the time of causes of death, somerofessionals, the specified by WHO and unied codes are not used
of pregnancy, Protein Energy Malnutrition (PEM) and Anaemia. The PEM is referred to as Mandama by the Department of Census and Statistics. Anaemia is referred to as Pandu (De Mel). These two terms, Mandama and Pandu are in common usage both in Sinhala and Tamil and often broadly referred to as diseases of malnutrition. Therefore there are possible distortions on the recorded figure than what is actually referred to.
Behaviour Patterns of Variables
Considering the data within the limitations set out above, the figures available with the Department of Census and Statistics, show a declining trend in all cases of recorded diseases causing malnutrition. The declining rate is an indicator of declining malnutrition. The recorded diseases of malnutrition causing deaths at this declining trend should result in a drop of the malnutrition levels to a bare minimum in a short period of time, if the rate of decline of the past few years is maintained (Ref.Table II).
ECONOMIC REVIEW, May - June 84

Page 23
TABLE
REGISTERED DEATHS CAUSED BY DISEASES OF MALN
Anaemia of PEM Anaennia Pregnancy (Pandu)
(Nos.)
1974. 7 N/A N/A
1975 11 835 3,835
1976 7 586 2,995
1977 9 425 2,236
1978 4. 262 1,769
* Protein Energy Malnutrition
Related to Man utrition
Source: Bulle tin on l’ital Statistics 1
Sri Lankan Status Compared with low income and 1 Other Countries income groups. The their behaviour patt relation to consump higher the consumpt food, the higher the and vice versa. The consumption would between levels of n sumption of food.
TABLE IV
The declining indicators of malnutrition rates/ in Sri Lanka are best analysed in comparison with some of the neighbouring low income countries and some of the middle income countries. Though Sri Lanka records a very low GNP its position in quality of life as seen from the indicators are satisfactorily high (Ref. Table IV). It is evident from this Table that the Infant Mortality Rate is almost a third compared to two other countries in the low income groups of countries, namely India and Pakistan. It is almost equal to countries such as Chile and Venezuela in the middle income group of countries. Korea records 34 as against the 44 of Sri Lanka. The Infant Mortality Rate (IMR) compared to the other two countries is almost a sixth compared to India and
infant Mortality Rate (%)
NMR (%)
Maternal Mortality
Pakinstan and higher by one (or 10%) compared to Korea, Chile and Venezuela, all of which are in the middle
income group of countries. The NI
on the other hand is almost double the rates for Chile and Vene
zuela while it is only 10 percent and 5 percent of the extremely high rates for
(Per 100,000 live births)
DR (% of under 5 years deaths)
Consumption of Ca The calorie and tion requirements v
India and Pakistan respectively. Maternal Mortality per 100,000 Sri Lankans is the lowest among the three
ECONOMIC REVIEW, May - June 84

JTRITION
H All Others
N/A
3,070
1937
1549
1,039
97&&Z979
he three middle Se indicators and erns have a direct tion habits . The ion of nutritional nutritional level, analysis of food reveal relations utrition and con
to country. Similarly sizeable popula
tions in some of the less developed countries consume much less than the
minimum recommended levels. For example in Pakistan, Bangladesh and Morocco 28 percent or more households consume less than 90 percent of the FAO/WHO calorie requirements. Bangladesh and Morocco both have a relatively large proportion of their population consuming less than 1800 calories while their minimum requirements levels are 2020 and 2276 respectively . An estimated 35 percent of the Bangladesh and 21 percent of the Moroccan population consume less than 1800 calories which is much less than the required levels. Pakistan on the other hand has only 27 percent of the population consuming at this level (World Bank Staff working paper No. 328; May 1979;). With regard to Sri Lankan calorie requirements, there appears to be a dispute with regard to the recommended quantities. The FAO/WHO classification suggests 2000 calories while the Department of Census and Statistics has considered 2200 as the recommended level for the purpose of the nutritional status survey conducted in 1969/70 (Austin, 1981 :) Dr. De Mel, one of the wellknown nutritionists in the country, has taken the view that 2200 calories and 48 gram protein levels are accept
MORTALITY AND MORBIDITY IN LOW AND MIDDLE INCOME COUNTRIES
Low income Groups Middle income Group
Sri Lanka || India || Pakistan | Korea i Chile Venezuela
44 123 126 34 43 42
3 17 18 2 2 2
49 - 450 600 N/A 131 68
4. 40 2O N/A 1.7 1.94
Source : UNICEF June 1983
ries and Protein
rotein consumpy from country
able levels (Jayantha;1983;). However, for the purpose of this analysis, and in order to avoid controversy the widely
21

Page 24
used classification of 2200 calories is taken for analysis.
(i) Table V provides the per capita calorie and protein supply for six years from 1976 to 1981. The calorie data since 1977 is steadily declining and picks up slightly in 1981. The protein supplies had been declining with the exception of 1978 and 1981.
TABLE V
SUMMARY OF FOOD BALANCE SHEET- PER CAPITA CALORIE,
PROTEIN SUPPLY PERDAY
Calories Proteins
1976 2,172 46.28 1977 2,343 49.20 1978 2,325.41 52.21 1979 2,316.6 48.15 1980 2,169.4 45.97 1981 2,200. 12 4.7.10
Source: Pocket Book of Statistical Data
of the Republic of Sri Lanka 1976-1981
(ii) The decline in calorie and protein supplies should contribute to the deterioration of the nutritional standards of the country. But, on the contrary, as illustrated earlier, all other indicators are showing positive signs. The reasons for the contrasting rates are that the protein supply, though declining, has not dropped lower than the suggested average of 48 grams per person per day. The lowest ever decline had been 45.97 in 1980 which is only 2.03 less than the standard per capita calorie supply. On the other hand consumption by most people had been more than the suggested level of 2200 calories per day. The decline, therefore had no remarkable effect on the society. In other words most people received their minimum requirements of calories.
(iii) Comparing Sri Lankan consumption patterns of calories with other countries it is remarkably high. As much as 84 percent of the population is consuming 2400 calories, 7 percent of the population consumes less than the minimum level of 2200 (Table VI). Therefore, comparatively, the Sri Lankan consumption patterns
22.
TABLE VI
Consumption
Percentage
have been suffi a drastic increa nutrition.
Findings of Survey
The declin tors are further ings of a recer the Ministry of The findings of compared sat survey conduct Disease Contro 76. The compal data could rest since both Sur same sample fra inter-related a done in 1975/ S.H.S. (Super Services) areas conducted in 1 on Administrat shows that du the sample fra distortion, par Eliya district v other areas w with great vari cover a wide Therefore, for son possible di
What is in from the com
TABLE VIII
Ho-H
1975/76
Kandy SHS Mannar SHS Jaffna, SHS
s-ms m

CALORIE REQUIREMENTS
SRI LAN KA 2000 Minimum Leve||
low 2400
84
22OO 2OOO 2000
41 O7 O
Source: World Bank Staff Working Paper No.323 May 1979
ently high to prevent e in the rate of mal
he Nutrition Status
ng rates of the indicasupported by the findt report published by Plan Implementation. chronic malnutrition is sfactorily with the ed by the Centre for (of U.S.A.) in 1975/ ison of the two sets of ult in Some distortion Teys have not used the ame, though both cover reas. The first study 76 had been based on intendent of Health while the second one 979/82 had been based ive Districts. Table VIII to this difference in me there can be some icularly in the Nuwara hich is large, while the Il not alter the picture tions, as the SHS areas area of the districts. he purpose of comparitortion is ignored.
portant for this analysis arative figure is not the
f
magnitude of the rate by which it has declined but the fact that there has been a decline. The declining trend is proof that the nutritional standards in the country have been improving. Sri Lankan nutritional status on estimation, using PQLI technique, rates high among LDCs.
Comparison of the Quality of Life Method
Though the analysis of Gross National Product provides a good indication of the economic levels of a country, these calculations do not provide for the non monetary social welfare measures in sufficient detail. The Physical Quality of Life Index method developed in the recent past, quantifies those indicators and assesses them accordingly. These calculations show that some of the low income and middle income countrics have a higher level of nutritional and social status than what they ought to have within their poor GNP. The indicators such as infant mortality rate, and the life expectancy at the age of one year are brought down to a scale and the Physical Quantity of Life Index Rate for the country is determined. (Morris 1981). The rates of these indicators are resultant factors of the welfare measures provided by the country for its people. Therefore, the economi
CHRONIC MALNUTRITION
1979/82 Deviation
.6% Nuwara Eliya District 34.6% 15% 9.6% Mullaitivu District 28.1% 1.5% 4% Jaffna District 25% 3.4%
Source: Food and Nutrition Policy Planning Division,
Ministry of Plan Implementation, F983
ECONOMIC REVIEW, May - June 84.

Page 25
cally quantifiable variables have been brought into focus to determine the social status of the country.
Sri Lanka’s Position
The PQLI technique assists in analysing the status of a country or countries comparing both with the GNP terms and in PQLI rates. The countries with a high GNP have not always proved to have a high level in terms of quality of life. The welfare measures in those countries have not sufficiently developed to have a high
welfare state. Some countries and
States with a lower GNP, on the other hand, have developed a welfare state and record a high level of PQLI. Sri Lanka with a low infant mortality high life expectancy rate and high
literacy stands out above most of the Less Developed Countries. The Table VII shows Sri Lanka’s per capita income at a very low level of US$ 179 but has a PQLI of 82. U.S.A. with the highest rate of PQLI records, 94 while
Qatar with a per capita income of US$
1 1,779 and United Arab Emirates with US$ 14,368 record PQLI rates of 31 and 34 respectively. The rates of these two rich countries are much less than even the average of 40, for the low income countries. Sri Lanka's rate of 82 on the other hand, stands out much above these rates. Compared to a selected number of countries in the low and middle income group, only three countries namely Cuba, Guyana and Western Samoa record greater points on the scale, than that of Sri Lanka.
The Sri Lankan welfare society has maintained a healthy society with satisfactory levels of almost all vital indicators. Behaviour of the indicators has been influenced by various schemes of health, education, subsidised food, etc. Further improvement of the indicators should be its concern and should be constantly under surveillance. The benefit schemes presently available should be either inproved or if changed, should be substituted with well planned out schemes considering all implications to society. The nutrition intervention programs may have substantially contributed to the better quality of life in Sri Lanka. Some of
ECONOMC REVIEW, May - June -84.
TABLE VII
COMPARISO LOW INCOME
Ali Low-income Countri
Sri Lanka Kerala State, India I ndia
All Lower-Middle-incom
(average)
POL of 77 or over
Cuba
Guyana Grenada Korea, Republic Western Samoa
POL of 63-75
Mauritius Paraguay Albania Colombia Ecuador Philippines Thailand China, People's
All High-income Countr
United Arab Em Kuwait . Ouatar
... Libya ... Saudi Arabia
NOTE: The figure of G LLSSMSMMSMMMSLLLSL
the intervention pro examination, could results. Since the T) affects the variables
lity rates, Neo-Natal
the Maternal Morta detailed analysis of relation to the prog out some interesting tributions. Nutrition country should be v

N OF PER CAPITA GNP AND POLI FOR SELECTED
MIDDLE INCOME AND HIGH INCOME COUNTRIES
Per Capita GNP US$
ies (average) 155 179 126 133
he Countries 340
640
559
465
of 464 3OO
552 533 530 526 505 342 318
Republic of 3OO
ies (average) 4,404
hirates 14,368 13,787
11,779
4,402
3,529
NP and POL are based on 1970 data.
POL
40 82 68 43
67
84 85 77 82
71 75 75 71 68 71 68
92
34 74 31 4.
Source: Morris & D. Morris
Physical Quality of Life Index (PQLI)
Development Digest Vol. XVIII No. 1 Jan.1 980
grams, on a close to the nutritional intervention proeveal the desired grams. The effectiveness of the prohiriposha Program grams in operation should influence of Infant Morta- the behaviour indicators. | Mortality rates, Though it may not be possible to lity Rates, etc., attribute, conclusively all credit to a the variables in single program, it could as one in the gram could bring package have contributed to the better and useful con- standards. A closer study of the proLal status of the gram would help to understand its
iewed in relation contribution.
23

Page 26
A STUDY OF HIRED LABOUR PAYMENT FOR HARVESTING OPERATIONS IN THE GALOYA
A.S. Widanaparthirana
Unlike most other crops, paddy requires relatively large amounts of labour inputs in different stages of production. Evidence shows that the labour cost alone accounts for about 46 percent of total paddy production costs. Because of the increase in wages, the labour cost is bound to go up further. With the advent of New High Yielding (NHY) paddy varieties, the labour inputs associated with paddy production is also bound to increase. Tractorization in a way will help cut down part of the expensive labour inputs associated with paddy production. However with the frequent increase in cost of fuel, there will naturally be a limit beyond which it may not be profitable to replace labour inputs with tractor power. Unlike most other operations associated with paddy production, harvesting activities cannot be tractorized completely under existing conditions of paddy production in Sri Lanka. Moreover, complete mechanization of all the operations cannot be achieved as those which are mechanized will also require some labour inputs. Because of these reasons, it may not be possible to cut down on labour usc in harvesting be
yond a certain level.
This paper presents the mode of payment, the wage rate and different systems of payments for hired labour involved with paddy harvesting operations in the Left Bank of the Gal Oya Scheme, during 1983/84 Maha season.
24
Harvesting
Paddy har operation invo from the stag winnowing. Th activity which harvesting are bundling, trans stacking, thres
Hired labour
intensity in all ment for hired for each of the a few operation
Cash and Non-c
Hired lab either by cash throughout t there is a sp. mode of payin of the Scheme cash whereas i by kind. Cash latter area. T the head and t the socio-econd prevail in the S there is usual and because o ages and subse crop yield e season is very sumption nee from one Mah quent Maha usually over C expenditure til curred on the sequent Maha
1. “Gal
Yala S
2. The
TeServ
3. The ti adequ
i4. One
 

ADDY CHEME
2sting is defined as an ving all the activities of reaping through e seven sequences of nake up the process of reaping, collection, bort to threshing floor, ning and winnowing. is used in different these stages. The paylabour is made either seven operations or for s combined.
ash Payment
pur is generally paid | or by kind (paddy) he Scheme. However, atial difference in the lent; in the head area , it is usually made by in the tail area (3), it is payments are rare in the his difference between he tail area is linked to omic circumstances that cheme. In the tail area, y no Yala cultivation f frequent water shortquent crop failures, the ven during the Maha low. Hence, both conds during the period a harvest to the subseharvest (this period is ne year) as well as the at may have to be incultivation of the subcrop have to be met out
of the proceeds of Maha paddy harvest. The opportunities for outside employment too are rare particularly throughout the long Yala season. Therefore, the conditions of living without some form of outside borrowings is extremely difficult in the tail area. The borrowings for the consumption needs throughout the year are usually obtained from local money lenders, who insist that the repayment be done only in the form of paddy. Therefore, the farmers in the area who also work as hired labourers upon completion of their own harvesting operations, demand paddy from which a major portion is utilized to settle the existing loans. The farmers in the head area, on the otherhand, have no such loan commitments due for settlement soon after harvest. Since, there are usually two crops, in an year in the head area, the income position is not as bad as in the case of tail arcas.
Wage Rate
The rate of payment for each of the activities connected with paddy harvesting ranges from Rs.25/- to Rs. 35/- per labour day in the head area. In other words, there is no difference in the wage rate among activities. In the tail area, however, the rate of payment is different among activities. For instance, reaping labour is paid with 2 marikkars (4) whereas for threshing it is as high as 6 marikkars
per labour day...;
System of Payment
The system of payment associated with paddy harvesting different in the head vis-a-vis the tail area. It is also found to be dependent on the activity
Oya Water Management Project
Seasonal Report for 1983
eason', ARTI Occasional Publication.
2ad area refers to that part which is in close proximity to the ir, which has no serious water problems.
il area is that part further down from the reservoir. It has neither ite nor reliability in the supply of irrigation water.
arikkar is equivalent to 0.25 bushels of paddy.
ECONOMIC REVIEW, May - June 84

Page 27
concerned. The different systems of payments adopted in the area are discussed below.
Paddy reaping
There are four seperate systems of payments associated with paddy reaping. The system adopted most frequently in the head area is the payment of a daily wage at the end of the day. The labourer is expected to work for a minimum of eight hours and lunch and refreshments are usually provided by the employer. Second, the contract system of payment is adopted both in the head as well as in the tail areas. This is normally practiced when ever wage labourers cannot be contacted each day. It is observed that the thoroughness of the operation has been unsatisfactory with contract labour. The number of individual labourers to be employed will be decided by the contractor and the payment is made by cash and by paddy in the head and tail areas, respectively. In this case the owner is not involved with the work and he has no commitment with regard to the provision of meals, refreshments etc. Third, the alli system is employed in the tail and some parts of the head area. In this case, each hired labourer is required to reap paddy in an approximate area of 6' x 16”. The area will be measured by the owner with a 'special stick. A labourer is paid with 2 marikkars of paddy or Rs.25/- for reaping the crop in one alli area in the tail and head area respectively. A labourer usually can reap the area equivalent to 2 allis in one day. Refreshments and lunch are also provided by the employer. The paddy stand is usually thinner in areas where this system is practiced, as such the labourer may have to spend some time in walking' in order to reap a bundle of paddy of given weight. It can therefore be considered that this system envisages to increase the turn over per labourer should the paddy stand become thin.
The final system of payment for reaping is practiced in some parts of the area which is based on the amount of seed paddy used in the establish
ECONOMIC REVIEW, May - June 84
ment of paddy stan of seed paddy use have to be given as
collection, bundling addition, meals ar. also provided by
cases where more the corresponding
thicker and the lab be required to rea also be greater. envisages maintaini over per labour day
Collection and Bun
These two acti ed a single operat payment is concerr collection of reape spread over the ar into bundles of e transportation to There are two sy levied, namely co] The contract systen lar and in case it is will also be done The daily wage f around Rs. 25/- whereas a payment made in the tail area
Transport
This involves fih bundled reaped pac and stacking them floor. The system c in the case of trar the collection and b the amount paid. I each labour day a marikkars is made area, the cash paym per bundle of padd
Threshing
Threshing con tion of paddy gra seperation of Stre paddy, cleaning of debris, etc. The Ope either manually ( involvement of hire of threshing is

l. For each bushel d, 1.5 bushels will he cost of reaping, and transport. In d refreshments are the employer. In eed paddy is used stand will also be pur inputs that Will p the harvest will lence the system ng a specific turn
ling
vities are considerion as far as the ed. It involves the d paddy which is ea, arranging them qual size and the threshing floor. stems of payment ntract and Wages. 1 is not very popuadopted transport by the contractor. or the activity is in the head area t of 3 marikkas is
.
e transportation of ldy from the field
on the threshing if pay arrangement sport is similar to undling, except for in the tail area for payment of 3 - 4 while in the head ent is either Rs. 4/- or the daily wage.
prises the Seperains from panicles, w from threshed threshed paddy of ation is performed r by tractors. The di labour in respect or two purposes,
namely, in arranging bundles of paddy on the threshing floor on which the tractor is operated, frequent mixing in order to facilitate seed seperation and to seperate threshed paddy grains from straw, debris etc. In some tail areas, threshing is also done manually. Threshing is considered an arduous activity and the payment levied per hired labour day is 5 -6 marikkars in the tail area whereas it is Rs.25/- to Rs.35/- per labour day in the head area. Threshing is done either during the night or day time and the remuneration for night threshing is higher than for day threshing.
However, some farmers do not prefer night threshing particularly with contract labour because the owner finds it difficult to ensure quality threshing. Threshing is also done by contract labour as in the case of other operations discussed above.
In addition to the system of hired labour payment discussed above, there are also several contract systems where shade or harvesting activities are involved. For example, in some tail areas, a payment of 1.6 avanams (5) of paddy is made in respect of reaping, collecting/bundling and transport of paddy in an acre. These systems are based on thickness of paddy stand, availability and cost of labour and other local factors.
Conclusion
The paper presents the mode and systems of payments for hired labour involved with paddy harvesting. In the head areas the payment is by cash while in the tail area it is in the form of paddy. The study identifies several systems of payment in different parts of the Gal Oya Scheme. The nature of the system practiced in tail parts of the Scheme are complex and varied whereas there are no such variations in the head areas. The variable nature of laboitransactions can be attributed to the pattern of agricultural production and socio-economic curcumstances that prevail in the tail area.
(5) One Avanam is equivalent to
7.5 bushels of paddy.
25

Page 28
THE CONCEPT OF THE INTERMODALTARIFF STRUCTURE FOR SEABORNE EXPORTS,
M.H. Gunarathna
M.H. Guneratne who has wide experience both in the public and private shipping sectors discusses the issue connected with international tariff structures for sea-borne exports. He has post-graduate qualifications in this area and a published thesis on a "A concept of countervailing power in maritime affairs'. He originally worked with the Central Freight Bureau of Sri Lanka before moving on to specialised consultancy work in freight and shipping.
At the outset it is necessary to define inti
modalism to understand the inter-modal tariff str cture. The definition is found in the concept of total transport chain from the point of producti to the point of final sale/use. It would therefo mean that sea transport which provides a Vital li in the international transport of goods is . COI nected with Canal, road or irail,
It tJOuld also imply pre-Carriage by Canal, road rail to the main point of transport and on-carria by the same modes to the final place to which goo are destined. It should be remembered that the por provide the most important interface in the fl of commodities between countries. This concept the total transport Chain has been increasing importance as a result of technological develop
ments, particularly containerisation. Incidental many goods are nou moving under a single contral ujith a single document covering sea and inila transport.
It is nou accepted that different modes of tra port Complement one another and advantages of C plementarity are embodied in the concept of t total transport chain. It should, however, be rem bered that competition among different routes ul different combinations of modes has also increas This would however not reduce the advantages inter-modalism. There is also a great aujareness standardisation of containers, transport equipr in so far as they relate to freight containers, development of infrasticture facilities.
The majority of the containers used are built ISO specifications permitting their ease and quitious use on an international scale. The b: containers most commonly handled are built of s or aluminium with modular or either 8' x 8 or
26

نے
OIT
ge ds
tS
OU
of
in
-
ly
d
iiiC el
8.6 the latter being applicable to the Nt American trade. Their length is 10 ft., 20 ft., 50 ft., 35ft., or 40 ft., 10ft. and 35 ft. not being very Common and usually found on the short sea tradesThe most popular size is of lengths 20ft. and 40ft. and modular or either 8' x 8.5' or 8' x 8".
Cubic measurement, weight and utilization factors may be enunerated as follows for guidance. (General Purpose Containers).
In explaining the inter-modal tariff structure it should be remembered that essentially it is differentitated to Cover the main transport sector and inland transport sector and the former is further differentiated on the basis of the organisation of the main transport, sector On liner terms Or : non liner terms.
Let us commence with the main transport sector. Life are auare that Under the system of Liner ences providing a conventional service, the general level of tariff rates are determined by the capital Value of investments and Operational costs. The latter housever, have the following three Cost elements:
1) Line haul Costs (voyage related costs)
2) Costs incurred-in ports when cargo is loaded and
discharged (cargo related costs)
3) Insurance costs of goods during handling and transit (Item 3 is generally included in 1).
In Order to COAler Costs the most remunerative Cates are determined. Plany Variables influence the rate formation, they include the storage factor of the commodity, the value of the commodity, elasticity of demand for the conmocity, tonnage, alternative Cornpetitive sources of supply etc., substitutes and inter alia Characteristics of the lineT ser Vice. The influence of each variable is invoked On account of technical features of Jessels for di SCrisninat07.y pricing policy. The technical features of the Vessel require that the loadability factor should be in
the ratio of 1 M = 1 W. as the most ideal relationproduct etc. A discriminatory pricing pattern is em
bodied in the Concept of 'What the traffic C3Ո bear', normally followed under the Liner System. It may further be pointed out that under the Line I
System certain products are carried at lower than average cost which perhaps is One reason for disCriminatory priCing.
This brief description is introductory to unde Tstand liner tariffs based On Container Wessels
ECONOMIC REVIEW, May - June 84.

Page 29
baeCause Container S ha V e InOuj beCOMme an important additional feature in the Service and C. Container Costs should therefore be added. These Costs could tJie enUFTnerated as foll OuJS:
Cost Per Container
(a) Capital Cost which includes,
(i) depreciation (ii) interest (b) Others costs which include,
(i) maintenance
(ii) insUIance
(iii) inspection The ShipOulner has tuo Jays of acquiring containers, by purchasing or leasing. Fost shipping COrpanies OuJn Some Containers and lease these to others. Leasing fees cover all the above cost items, plus interest. The leasing fee is normally paid per annum or per number of days. Normally the leasing fee per day is Small, the longer the period the container is leased. For instance, the leasing fee for 100 days is less than 100 times the leasing fee for one day. The leasing fee can be used as a guide for determining container costs. In principle the annual cost for Containers would be the same whether it is a leasing company or a shipping Company. The leasing fee itself, however, also includes interest uhi Ch should not be included in Shipping Company's cont
ainer Cost.
The detailed approach of estimating annual container "ost Could be indicated as follous:
find Value of Container decide interest-provide rate to be used estimate annual interest on (a) obtain annual leasing fee for container deduct (C) from (d) to find leasing fee excluding interest f) divide (e) and (d)
obtain leasing fee for a number of days in
Service h) multiply (g) by (f) to find container cost for
a given number of days in Service.
The influence of Stouage in tariff formation as explained earlier in respect of Conventional vessels is nou replaced by the uJeight Volume Constraints of the container and the shipowners attempt to maximise these constraints depending on the measUresnent weight character of Commodities. The influence of other factors housewer do not vary So long as the shipping services are provided On ! isler terms.
ECONOMIC REVIEW, May - June 84
s

it may be mentioned that Conferences specify inimum box rate and would not attempt to lift any :Ornmodity less than the minimum. It should houjewer e remembered that incomes derived from the bunker surcharge or currency adjustment factor, are outside he specified minimum box rate fixed for containers
having explained sea freight let us nou consider ariff rates applicable to the inland sector. It may be recalled that at the Outset use referred to prearriage to the main point of transport and -onarriage from the destination point of main transJort, that is, loading and discharging ports.
re-carriage of containers (FCL) for loading, in tially to container yard either by rail or truck is on shippers account (merchant haulage) and would not enter the fraight cornponents. Lifting of te ontainer from chasis and placing at container yard tally)loading container on board Vessel, lashing and sacuring are on the shipouners account, uhich, JOuld normally be recouped by him as service and handling charges.
As regards LCLS, bringing cargo to assembly shed :ontainers, bringing container from CFS to ship's side, loading Container into ship, lashing and seCUing Will be On shipOuJners a CCOUnt. Service and hand ing charges Jould therefore be part of a multinodal tariff structure. The tariff will specify
Jhether these charges are subject to CAF and BAF.
enerally a stevedore Company Or Companies will atend to all stevedoring work whilst a tally company Companies will attend to related work on the basis f separate stevedore tariff and tally tariff resectively. From among the different Cost itoms enuerated it is easy to identify stevedoring items. t is assumed that the Stevedoring company is the erminal operator and these services are provided in behalf of the shipowner.
S regards On-Carriage, after discharging at the man port, the Consignee may pick-up the FCL COntainer Om the Container yard at his Oun expense (mernant haulage).
he shipOwner will however bear Costs related to scharging the container from vessei and pola Cing COntainer yard, tally, lifting Container or chass, and uOUld TeCOver these charges as enumerated |OVE o
Ien the shipOuJner, at his Ouyn expense, undertakes bring the Container to the Consignee's site, this called carrier's haulage and it would be On Con

Page 30
signee's account, for inland transport to be pa by the merchant to the carrier ujill be aCCOrdi to inland haulage tariff of the Conference.
If the Container is delivered to an inland destin tion by Toad, the factors uhich uill influence t tariff will be the service time of container, it weight and size, trailer Unit with the prime move. the drivers time and the distance covered. If the factors determine the norm of inland rate Conce sions, additional charges are made on the basis alternative aTrangements for return of the coi tainer loaded or additional delay in dischargi the cargo. It may happen that the prime mover in make a futile trip without the container if the is a delay in discharging.
If the merchant wishes to perform his own haulag the carrier may by prior arrangement release co ainers to the merchant at terminal or yard subje to certain handover Conditions.
The factors determining the cost of delivery container to the merchant's warehouse would undou tedly relate to the factors enumerated earli under carrier haulage.
As regards LCL containers, Unpacking of containe in the terminal shed will be done by a Termin Operator and tally by a tally company on differe tariff rates whilst bringing goods from termin shed to consignees warehouse will be by the truck ng Company or Railways.
In examining the cost of delivery inland by rai for example, Over the U.S. "Micro Bridge' OT 3 other European service, it should be mentioned th the railuJays are linked to container yards and t actual cost of transport is generally measured units of ton miles per hour. This is houjever t product of cargo tonnage and average speed of train in m. p.h. Cargo tonnage Lill depend On vai ous characteristics of the vehicle, size, type : number of cargo carrying units and commodity t carried; whilst the speed of the trade is determi by motive power of the vehicle, the vehicle d force characteristics and the variety of de causing factors. It should be remembered that to weight of train freight cars will be the sum cargo weight of the individual freight cars, whi the gross weight of the individual freight cars, ilst the gross uJeight of a locomotive is rela to its horsepower and number of axels.
The cargo tonnage transported by the train Certa ly affects the ton miles per hour by the vehi
28

in
cle
and the gross weight of the train affects the speed at which it travels. The rail line haul Cost could therefore ba investigated by deriving family short run average cost Curves analogous to the plant Unit
cost Curwes of a firm. Here, however, the plant is a railroad freight train and the plant's scale varies
as the size of the locomotive changes. It is therefore possible to infer determination of the cost of Irail transport of the containers.
Conclusion Inter-modalism in Irelation to Sri Lanka's Own local sector is limited in scope. This is partly due to the traditional trading systern Of the Country. Container Freight Stations or Inland Container Depots are the main link in the promotion of a multi-modal system with facilities available for the carriage of containers, handling and positioning of COntainers at inland depots.
The development of hinterland container facilities in Sri Lanka has hitherto been restricted to areas in and around north of Colombo ujithin a radius of approximately 15 miles from the port. It has been reported that fifteen organisations have received approval of the government to establish Container Freight Stations (CFS) and some are in Operation. It is to be expected that the main industrial areas of the metropolis in the south will have their CFS' in the near future. With the rapid development within the country Inland Container freight stations uill become a requirement in the movement of Containers by rail or road. There is no rail movement of containers in Sri Lanka at present though experiments had been carried out by the railway authorities and a lending firm Also, occasionally a COntainer on a trailer or a heavy vehicle Could be seen on the main trunk roads lifting goods for big deelopment projects.
It needs to be mentioned that the movements from the CFS to the port does not at present form part of an intermodal movement in the sense of forming a single transaction with regard to the responsibility of the carrier. The position would, however, change in the future with the issue of house Bills of Lading and PMTO documents. At present the movement of containers from a CFS to the port is strictly merchant haulage requiring the shipper to bear the cost separately from that of Ocean freight.
At the consignees and particularly in the UK, Continent, USA and Red Sea destinations requests for inter snodal rates are accommodated. In the UK the inland leg is undertaken both by rail (freight liner)
ECONOMIC REVIEW, May - June 84

Page 31
and truck, using the grid system for purposes of COInputing the inland transport COSt, in respect of the latter for the shipping line to absorb any difference in cost. Some of the favoured inland Locations for the Sri anka SחiםDiםח Corporation's containers have been Leigh, Leeds and Birmingham, and also destinations such as Bristol, Avonmonth Manchester and Liverpool served from Feliittoue.
In the US, legislation forbids absorption of inland charges by shipping lines but all OuJS
DOTt equalisation. Favoured ihland destinations for Siri Lanka's cargo in the USA are
St. Louis, Cincinaati, Uaklahama, Nashville, Uenuer, Dallas, Uetroit 381 d. Ponghkeepsie.
As regards Carriage of containers from the Red Sea port of Aqaba to inilang destina — trucking
til OfnS competitive
charges have been negotiated by the CSC against moving regularly on the Ceylon Տhipping Corporation Da Cliff iC
InterCon Lines Service to these
shipments
de Stinations
It uOU10 thus appear that the liike Ly beneficiary is the
A BUFFER ST
Chandrakanthi ).ha
F4 Schilerple to rra gold to assist je vel produce for export the initiative of the other official inst, Chandra kanthi Dha ector at the EDB, ciples, and operatic coincludes that if increase exports of 30 percent in the im
ജ്ഞmജ്ഞmi-mത്ത
Jewellery has be product with much Sri Lanka. The Ex Board (EDB) has crease the quality a of je wellery exports of its establishment i
The insufficiency lery production wa major constraint in port development
EDB has the refore ta
Out a Satisfactory Sol lem .
A series of meeti foi e finally formula whereby the State
(SGC) maintains a E meetings co-ordinat
Were attended by t of six institutions, na Bank of Ceylon, Der Industries, Custom Bank, the SGC and th
The objective of
Shipper, fİTO'n the intermodal facilitate the import System, who uJOU ICd Сјеal uJith that the requirement Only one part and reduce the ing exporters are me different legs of the journey as quality maintaine to one transaction. It uOULO was agreed to hold : alSO result in Unimodal Carriers gold for use by the r becoming through transport Poးပူဇု- State Gem SpecialistS and together Uith hold the buffer Stock Freight - OIouJal`OjeICS evolving thority of imports an into giant Consortia. the purpose. The Co
Volume Utilization uJeight Capacity Factor Factor 8x8x2O 30. O cbm 21.5 cbm 18, UOOk( B"×8.5"x2D" 31.0 cbn 23.0 obra 18, 720kg 8"x8" x 40 SS.5 Cbin 43 O. chm 27, O70kg Ց" Ց.5 "x401 63 - 1 Cbrin (4 G. O Clbfin 27,53Oleg
ECONOMIC REVIEW, Maw - June 84

ICK OF GOLD FOR PRODUCER EXPORTERS
madasa
intain a bitsfer stock of rvo manufacturers 1'ho as been formulated on 1)B together vith fire lt fioriS. 11 f/lis 1ote nadasa, Assistalt DirOmments On the prinas of the scheme and is expected to help gold je vellery by 20 - ediate future.
قسصمسسص----سسسسحسنسسسسسس--
an identified as a X port potential in ort Development aken Steps to ins well as quantity from the first year n 1979. of gold for jewelS identified as a the je wellery exprogramme. The ken steps to work ution to the prob
ngs were held beating the scheme Gem Corporation uffer Stock. The ed by the EDB. he representatives amely the Central artment of Small , the People's le EDB. the Scheme is to of gold to ensure s of manufacturon time, as well i. To this end it buffer Stock of hanufacturing ex
Corporation will and have the ausales of gold for rporation would
obtain a block permit from the Import Control Department to import, and monitor the use of gold sold to the manufacturing exporters.
According to the Monetary Law, Section 70 of 1950, only the Central Bank has the power to import gold. The gold imported by the Central Bank is sold to genuine users as craftsmen, through the Department of Small Industries.
However, this system did not bring under its umbrella the development of the export industry. The difficulty in obtaining the necessary types of gold at the required times resulted in many exporters losing export opportunities abroad.
The non-availability of gold has contributed towards large scale smuggling of gold and adulteration, which is detrimental to export production.
These factors were taken into consideration before introducing the Gold Buffer Stock Scheme.
The Gold But I er St OCK at Lne State Gem Corporation will be solely for the use of manufacturing exporters.
The GSC Will import gold periodically according to the demands of the trade; and the EDB will, in consultation with the trade, advise the SGC regarding the requirements of the exporters. The Jewellery Manufacturing Producers’ Association, established under the auspices of the EDB, would assist the Board in assessing the gold requirements of exporters.
A problem area in making gold freely available is the price of gold. On the one hand, gold prices are heavily subject to price fluctuations. On the other hand there is always a great disparity
Utilization
FactOIs
17,500 kg
17,500 kg in the Uk
It must be emphasised that before SI i Lanka is affected by such a giant stride planning should commence to accept the likely Changes.
29

Page 32
between the Central Bank price of gold and the market price of gold.
The exporters were the refore faced with the dilemma of either losing their export orders or holding on and meeting the orders by purchasing gold at exhorbitant prices.
It is expected that by placing the responsibility for the Buffer Stock
An independent Assay Office will be established with World Bank assistance to make it compulsory to get all exports from Sri Lanka to be hallmarked and assayed, within the next 3-5 years.
Educating the jewellery manufacturers, particularly with regard to quality, an aspect often neglected, will be given emphasis. Jewellery exports unable to meet quality standards; have been rejected at international markets. Quality requirements are not met, it is understood, mainly because our manufacturing.exporters are unaware of the differences in quality.
In the 9 carat range there are as many as 14 different varieties, 6 different varieties in the 14 carat range and 9 in the 19 carat range - according to a chart published by the reputed firm, Johnson Marufacturing Co. Ltd., London. -
The mixing process reduces the quality, and by importing different varieties of gold it would be possible to preserve the required quality in production for export.
In countries where production for export is much advanced, the parts known as “findings' in the trade, re
quired for large scale manufacture, are
imported. This leaves room for quality and design improvement.
The Buffer Stock Scheme would initially restrict, imports to a few varities of gold but in future it is expected to assist the Sri Lanka jewellery industry to expand by diversifying the imports of raw materials.
The availability of gold regularly, .
through the Buffer Stock Scheme, is expected to result in the immediate
30
TOWARD IN
Asoka Bandarage
Spurred t ment in the W has rightfully issue. The feminism is on sial intellictua ments of our ti world have be old, deep-seat male subordin to overcome it
In 1975 augurated the Decade at the Many govern men’s bureaus mid-decade col in 1980. Ext now under w decade confere in Nairobi.
future, in a 20 of Sri Lanka’s e now around RS
Scheme on the available with C the Central Ba
The gold wi facturing expc market price. T any losses suff to price fluctu: In the Op Stock Scheme the difference fluctuations o Gem Corporat a subsidy fro ment Fund. give the manu at the prevai
 

ERNATIONAL FEMINISM
y the women's moveest, women’s liberation
emerged as a global internationalization of of the most controver
and political developme. Women around the gun to address the ageed phenomenon of feation and the strategies
the United Nations inlinternational Women's Mixico City conference. ments established Woin preparation for the nference in Copenhagen ensive arrangements are ay for the end of the ence Scheduled for 1985 Meanwhile, a new field
to 30 percent increase xports, where output is 20 million. - SGC, gold will be made ut posing a problem to nk.
Il be sold to the manu- : rters at the prevailing he EDB will underwrite :red by the SGC owing tiOnS.
ration of the Buffer the EDB would meet of prices due to market gold prices. The State on’s loss will be met by the Export Develop
his action is taken to
acturing exporters gold ng world market price.
known as ''Women in Development”
has emerged giving legitimacy to aca
demic inquiries and policy planning pertaining to women in the Third World. Women social scientists and international aid agencies including the World Bank and the U.S. Agency for International Development are identified with this field. Their ideas and
stratigies are exported to the Third
World to integrate women into the processes of economic modernization.
Many non-governmental organizations
and networks have also begun at the international, national and regional levels to deal with issues specific to women such as reproductive control and sexual violence. Even the multinational corporations now give the liberation of women as a reason for their expansion overseas.
However, it is expected that stocks would move fast as imports will be made after assessing the requirements of manufacturers.
The scheme ensures that the jewellery thus produced will be exported as the gold purchased by the manufacturing je wellery exporter will be processed and e Onverted to je wellery under
a bonded manufacturing scheme.
The gold imported at present is subjected to a 100 percent duty. Imports under the Buffer Stock scheme will not be subject to a duty. Manufacturing exporters will have to make jewellery in bond and will thereby not be required to pay any duty. The Customs bepartment has agreed to this Schemce
ECONOMIC REVIEW, May - June 84

Page 33
But the solidarity among wonnen is tenuous. At every international women's gathering the divisions of race, class, nationality and ethnicity erupt, tearing at the unity that prings women together. The official U.S. delegation is already discussing strategies to avoid the infiltration of such divisive issues at the Nairobi conference. indeed, we car pretend that differences do not exist, or we can explore them and, in the process, reformulate feminism itself. The latter is more difficult and painful, but indispensable. if sisterhood is to become more than a slogan.
In spite of all the conferences, declarations academic treatises and women's projects, many women around the world have yet to hear of feminism or the women's movement. It is unlikely that they will until opportunities for literacy and a general improvement in living standards are available to them. But it is also the ease that some women who know of the women's movement show great antipathy and resistance to feminism. Such negative reactions are more apparent in the United States, the center of modern feminism and the women's movement. But why should any woman oppose feminism's at tempts to eradicate those social constraints placed by sex which inhibit women (and men) from realizing their human potential Indeed, why do so many women who stand to gain So much from feminism see it as either irrelevant to their lives or are threatened by it'?
To a large extent the anti-feminism of Such vonen is attributable to dominant interests, especially male ideologies which succeed in manipulating these women's fears about the risks and dangers of feminism. The new right in the U.S., which depicts the women's movement as a threat to the alleged security of women's lives, and reactionary nationalist movements as the one in Iran, which denigrate feminism by the media of constituting mostly the pranks of bra-burning, white, middle-class women has also played its part in alienating some potentially Sympathetic women from the fundamental concerns Of feminisn).
ECONOMIC REVIEW, May - June 84
Does this mean are alienated from f. with "false consciou minist Vanguard W. these irrational won ive conditions of namely male domina based, international be launched?
Obviously, the simple. We need to familiar factors of r media distortion an consciousness of the Being careful not for the deteriorati Πη 3η V WΟηl C η a YO 11 must ask neverthelic theories and strateg able are f anc d changing the O women and the ali from feminism. H. cultural biases of cor lism and the Women example, contribute the Successes of an annong certain group reactionary blacklas Of the hard-won vic men’s movement Wu productive rights are a reasse SS ment of th strategies of feminism Sary.
We need also to : Women are oppose ideals of feminism - and phychological f men - Or if their res particular brand of out of the white, m. ence in the West, bi jected as “the Won by the media and m dle-class feminists th Studies which have consciousness of pool Women without resc feminist concepts are They have revealed a for and acceptance of
ples and objectives of
such disparate groups WOnnen in India and men in the United St:
It is necessary clear distinction bets a universal ideology p

that W Onnen Who mini Sinn are ridden ne SS?” If the fe're to enlighten en of the objecttheir oppression, hce, could a massfeminist struggle
answer is not that move beyond the hale manipulation, the implied false masses of women. Ο blame feminism ng conditions of ld the world, we SS if the feminist es currently availDr comprehending ppression of most
enation of many
ave the class and temporary femin's movement, f - r d in any way to ti-feminist forces is of women? If nes against Some
tOries Of the Wo
ch as women's reto be countered, Le objectives and
1 is clearly neces
lsk if in fact most i to the broad
increased social reedoms for wostance is to that feminism arising ddle-class experit popularly proen's Movement’
st Western, mid
mselves? Those nquired into the and Third World ting to Western Juite instructive. Breat enthusiasm ..he broad princifeminism among Suntouchable pOOr black woCS. hen to make a een feminism as tentially accept
ment.
able to most women and the middleclass, predominantly Western feminism which has become synonymous with the contemporary women's moveThis distinct is at the root of many of the conflicts that break out among different groups of women at international women's conferences.
What is problematic of course is not that there are differences among women but that there are inequalities and conflictive interests among us, as among men, based on the hierarchies of social class, race, nation, ethnicity etc. For example, it is obvious that imperialism (Western economic, political and cultural hegemony) has given white women a highrer social status in the world over Third World women (women of color in Asia, Africa, Latin America as well as the racial minorities in the West). Similarly, women from the privileged social classes in the West and the Third World, thought themselVes subordinated to their men, are placed in relations of dominance vis-a-viv poor women and men. The radical feminist assertion that all women are oppressed by all men, developed around issues of sexual control and violence, needs qualification in the context of such realities as the racist use of the rape charge against black men in the United States. In the last forty years or so four hundred and fifty-five men have been executed for rape Four hundred and five of them were black. No white man has ever been executed for raping a black woman in this country.
Note too that the contrasting racist and sexist images of white and black Women here depict the former as passive, dependent and delicate creatures to be protected and the latter as strong matriarchs or bad black women to be cast aside. These stereotypical images alone should raise questions about the prevalence of uniform models of Womanhood and manhood for all groups.
Not surprisingly perhaps, feminist analyses and the women's movement arose within the ranks of the relatively deprived white, middle-class women in the West rather than the absolutely depraved majority of poor Third World women. What is important to note is
31

Page 34
that the analytical categories and social change strategies produced by Wistern middle-class feminists, while couched in universal terms, are derived from the unique historical experience of their own social class and culture.
WESTERN FEMINISM AND MIDDLE CLASS VALUES
Both the nimeteenth-century women’s suffrage movement and the contemporary women's movement in the U.S. have emerged largely as responses by white, middle-class women to the contradictions created in their lives by the processes of capitalist industrial development in particular can be seen as the challenge of educated middle-class women already engaged in 'public' activities, notably the abolition movement, to the ideology of feminity that confined them to the “domestic'sphere. Their aim was to legitimize their integration into public life through the vote and eventually to become the legal and social equals of the men of their class.
Similarly the contemporary women's movement emerged among middle-class women (some confined to the home and others already in paid employment) seeking greater integration into public life through satisfying careers and eventual equality with their men. This movement must also be seen in the context of increasing commercialization of domestic services and rapid absorbtion of women into the wage labour force.
The liberal integrationist strategies and their emphasis on legislative change unite the two women's movements in the U.S. What distinguishes them is the emergence of a newer more radical branch of feminism in recent decades which has politicized personal relations between men and women within the family. Extending its critique to other social institutions, radical feminism argues that women's liberation cannot be achieved without the overthrow of
male dominance or patriarchy, which is .
the very foundation of social life everywhere.
Many of the popular categories of
feminist analysis today, such as the private-public dichotomy and the patri
32
V Omer
archal nuclear fa lated by white, r the process of r historical exper capitalism. Like scholarship then practices too a class and West thinking which
experience as thi irrelevant and : men, but the s emanating from
negative consec Third World wo
In this rega. how the nimet movement in t from within th later capitulatec politics of the t macist politicia women against the suffragists, cent for the v white, middle-c with tehe racist decades of the feminist searchi paign for birth supporting the able’ elements as blacks, fore the lower classi to the eugenics
 

| working in a processing plant
mily, have been formumiddle-class feminists in eassessing their unique tence under industrial much of Western male feminist analyses and e ridden with middleern biases. Feminist takes the middle-class è norm may not only be lienating to most WOocial change strategies such thinking may have uences for poor and men and men.
'd, we should remember Benth-century women's e U.S., which emerged e abolition movement,
to the racial and class me. When white suprens pitted the vote for the vote for black men, in their exclusive conte for women - that is ass women - went along forces. During the early wentieth century, some ng for allies in their cam
control took positions reduction of 'undesirin the population, such gners, (immigrants) and s. Such positions fed inmovement and the racial
hysteria of the time. Unless the scope of feminism is broadened, the contemporary women's movement (in spite of its roots in the civil rights struggle) can again be aligned with white male politicians seeking to keep women, minorities and the working classes divided and conquered.
Perhaps the most important strategy of liberation advocated by contemporary liberal feminism is the incorporation of women into the paid labour force as the equals of men. Indeed, for middle-class women formerly confined to domestic chores, a professional career can offer greater self-fulfilment despite the new stresses that come with those careers. Women from the priviliged social classes in the Third World have also benefited from higher education and integration into paid employment.
But for the majority of other women, integration into the wage labout force entails at best working as a factory or field labourer and at worst as a maid or a prostitute. Can absorbition into the prevailing structures of employment bring liberation to most women? In the absence of changes in those hierarchical structures at the international and national levels, integration results merely in prestigious careers for a few women and men but continued underpaid and undervalued work for the majority that
ECONOMIC REVIEW, May - June 84

Page 35
unequal integration further deepens the class, racial and national cleavages among women rather than helps build sisterhood.
Demands made in the name of wo
men's liberation by liberal feminist organizations in certain. Third World countries only exacerbate this trend. Take for example the cry for imported luxury kitchen equipment that would supposedly lighten the household chores of busy professional women. It is no secret that the conspicous consumption of the privileged classes diverts scarce foreign exchange from the survival needs of the masses of poor women and men in those countries.
Turning briefly to radical feminism now, it can well be argued that some of its basic postulates such as the 'personal is political' are broadly applicable everywhere. But a closer analysis of some of the specific institutions, such as the male-headed, nuclear family against which radical feminism directs its critique, helps recognize the limits of this analysis. Research into social classes and cultures outside the Western middle class reveals a diversity of family structures. At least one third of the households in the world today are headed by women. Reaearch also shows that the family is not tehe primary focus of women's oppression everywhere. In some communities, especially those subjugated by racism as under slavery in America or apartheid in South Africa, black women have experienced family life as essentially supportive rather than oppressive. Women in such situations may consider labour for their families as their only labour of love.
It should also be noted that while sisterhood may be a new discovery for Western, middle-class housewives isolated in their suburban homes, it has long been a reality for women in many sexsegregated societies whether in Asia, the Middle East, in the female-headed, kin networks of the Caribbean and perhaps even in working -class communities in the United States. Of course it could be argued that the sisterhood prevailing in such communities is essentially conservative and directed toward women's survival rather than the overthrow of male dominance. Lesbianism, when it
ECONOMIC REVIEW, May - June 84
exists in thes cized that the is not the ce men in many
that their em marily throug other women.
these alternati texts may be p men, especiall Western, mi Women's libel uniform expo) be defined an
My purpo either the legi middle-class w find freedom oppression bu Western femi movement in C perspective. men’s moveme portance. It prove the qua elsewhere. But diversity and among women an inductive a framework wit of wider group quately addre legitimacy of movement is CAPITALISM ARE THEY CC
Where do tical direction sive definition gies for broade women's move native theoret women's netw carry the po feminism relev
WOmmen.
Socialists most women, a cannot find lit equal and expl under capitalis) the liberation bourgeois wom their absorptic duction within The growing bc on the effects ment on wom

situations, is not politiconjugal role relationship tral relationship for woof these communities and tional needs are met pritheir relationships to o To this extent, women in ve class and cultural conhychologically freer from t their spouses, than their udle-class counterparts. ation than cannot be a table ideology. It has to d achieved contextually.
se here is not to denigrate imate concerns of white, omen or their efforts to from their own particular t rather to begin placing hism and the women's !omparative and historical The contemporary wont is of world historic imhas the potential to imity of human relations : given the tremen dous deepening inequalities we must work toward hd comparative feminist hin which the concerns is of women can be adessed. If not, the very feminism and women's seriously threatened. AND FEMINISM -
DMPATIBLE?
we turn then for theore
towards a more incluof feminism and stratening the concerns of the ment? Few of the alterical frameworks and orks now emerging do :ential toward making ant to wider groups of
have long argued that nd men for that matter, peration within the unoitative social relations m. The prerequisite for of women, that is nonen, they point out, is n into economic pro
a socialist economy. dy of feminist research
of capitalist develop2n, particularly in the
Third World, gives much credence to this position.
The processes of capitalist development in the Third World have led to the marginalization of women in the least productive and least remunerative sectors of Third World economies. W While a handful of women have gained access to prestigious jobs, most women are confined to either unpaid or underpaid and exploitative work as subsistence producers, maids, prostitutes, etc. The expansion of private property, wage labor, new technology and the cash nexus have disadvantaged women categorically. In many places in Africa for example, these new developments have robbed women of the relative independence and mobility traditionally associated with their role as the central subsistence producers. In India, the disparity between the sexes with regard to both employment and chances for physical survival have steadily increased with the socio-economic changes of the recent decades.
At the mid-decade conference in 1980 women accounted for half the world’s population; two-thirds of the world’s work hours; one-tenth of the world's income and less than a hundreth of the world's property. Less than one-third of women are literate and in many African and Asian countries only one in ten females even enters school. “Feminization of poverty' is a structural feature of capitalism in the Third World. It is fast becoming so in the United States (and Europe) too where women are pushed into the permanent underclass’ in larger and larger numbers as somestic work is subsumed by capitalism and the nuclear family weakens.
The structural analysis of women's oppression and long-term vision toward liberation presented by socialists are highly compelling. But in the absence of pratical strategies leading to social revolution, the socialist vision can result merely in an evasion of the daily realities of poor women's lives.
The concluding part of this paper will be published in our next issие.

Page 36
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