Raise rupees not dollars to rebuild economy

by JUSTIN KEPPETIYAGAMA-August 3, 2020

jdkgama02@gmail.com

Speaking at a series of election rallies in Trincomalee and Kinniya, on July 19, former Prime Minister Ranil Wickremesinghe has said he has an economic plan to rebuild the economy by raising $6,000 million from the International Monetary Fund and friendly countries.

If the Sri Lanka Podujana Peramuna comes into power at the August 5 election the incumbent Prime Minister Mahinda Rajapaksa would not be able to raise $6,000 million from the International Monetary Fund and friendly countries, because he has proved he was not so close to international communities as the former Prime Minister.

So in case the Podujana Peramuna comes into power at the upcoming general election, an alternative arrangement has to be found to drive the economic development of Sri Lanka and bring prosperity to the nation. Otherwise, the President and the new government would have to face a vicious challenge of recovering the country against a crippled economy. Whether we receive or not receive IMF funding or friendly country loans, the national economy has to be strengthened.

 Not only ours, but the entire world economy is in a perilous state due to the COVID–19 pandemic. The current global scenario is an unprecedented one. Conventional methods cannot be used to revive the economy. We will have to think out of the box to break free from this situation. Today, the world community cannot help Sri Lanka, because they themselves are faced with similar economic issues. Hence, the reconstruction of the economy should be done with resources mobilized from within the economy.

To jump start the economy without IMF funding and loans from foreign friends, the government should try to raise not dollars but required rupees from our own people to rebuild our own economy.

According to the 2019 Presidential election results, Sri Lanka had 15,992,096 registered voters. This is the number of the adult population in the country. To this number expatriates who returned after Covid-19 also have to be added. If the government can raise Rs, 1000 from each of these Sri Lankans, then it can easily raise Rs.15, 992, 096,000 to be used to rebuild the economy. If the government can add an equal amount to this collection, the total funds available to rebuild the economy would be around Rs, 31, 985, 392,000. For the purpose of this government investment, the government can use the Euro 22 million grants decided by the European Union to Sri Lanka to combat the COVID -19 pandemic and mitigate its after effects.

I propose the following mechanism to raise this fund from our own people to rebuild our own crippled economy.

1. Promote one Multi-Purpose Peoples’ Company per Grama Niladari Area of the country to provide all the economic needs of the people living within the particular Grama Niladari area. There are 14,022 Grama Niladari divisions in the country. Accordingly 14,022 multi-purpose companies have to be promoted to cover the entire country. The above mentioned 15,992,096 Sri Lankans and their families, plus the expatriate Sri Lankans returned to the country due to the loss of their foreign employments because of the COVID 19 pandemic, also live in these 14,022 Grama Niladari areas. They should be requested to be the share holders of the company promoted for their particular Grama Niladari area by buying only shares valuing Rs.1,000. All of them should be equal shareholders of the Multi- Purpose Company promoted for the particular grama niladari area. To supplement this equity capital raised from villagers and to keep these companies within the government policy framework, the government also should invest in the share capital of these companies. The government investment should be an equal amount to the total investment made by other village shareholders.

This company should be an umbrella organization of social and economic character, and a forum for the development of rural economic activities promoted by the villagers for the benefit of villagers. It should be the village level agent for all state owned enterprises such as Paddy Marketing Board, Milk Board, Fisheries Cooperation and Sathosa etc. It should be a Rural Bank to accept deposits from and provide loans to its shareholders. It should purchase, store and distribute agro-products. These companies should pay attention to develop indigenous industries and other production sectors at the respective village level, encouraging shareholders of these companies to cultivate uncultivated lands.

These isolated individual companies at Grama Niladari levels will be able to handle only small scale village level economic activities. When it comes to divisional level, district level and national level, economic activities that have to be handled, it would be of a large scale. Hence macro level-structures would be required to handle at these levels. To meet this requirement the following proposals are made.

1. All Grama Niladari Level Multi-Purpose companies in a divisional secretaries area should get together to promote one Multi-Purpose Company for the division. Sri Lanka has 320 divisional secretaries. Hence the total number of divisional multipurpose companies will be 320. The promoter shareholders of these companies will be Grama Niladari level Multi- Purpose Companies. These Grama Niladari level companies should use 50 % of their share capitals to buy shares of the divisional level companies. These 320 divisional level companies should provide all economic needs of the 14,022 Grama Niladari level companies.

2. Our next hire level is district level . We have 25 districts. Divisional level companies under each district should form one district level company using 50 % of its share capital; these companies should provide all economic needs of divisional companies.

3. Next level is the national level. 25 district level companies should form one national level company to provide all economic needs of 25 district level companies.

The capital base of these divisional, district, and national level companies can be strengthened by offering their shares to State Owned Enterprises also.