The Economic Strategy Of Sri Lanka Economics Essay

Introduction

Sri Lanka faces a historic chance to come on from a lower-income state caught up in struggle, to a middle-income state in lasting peace. Sri Lanka ‘s growing has reached a important phase. Thankss to reasonably rapid economic growing that pushed per capita income over the US $ 1800 by 2010 and with traditionally high degrees of homo development, Sri Lanka is on the threshold of going a full-blown middle-income state. Until 2009, Sri Lanka ‘s growing had been controlled by three decennaries of struggle regardless of the state ‘s extremely educated population. The decision of the struggle with the separationist LTTE ( Liberation Tigers of Tamil Eelam ) in 2009 offers an chance for the authorities to get down on reforms and work with foreign sector together with private sector to set up a more dynamic and energetic economic system.

Sri Lanka had innate from the British colonial governing a commercially good structured plantation sector when the clip of independency in 1948. Tea, gum elastic and coconut contributed 90 per cent of the export gross. About 40 old ages ago, Sri Lanka was measured as a Eden in Asia. It had the best communal indexs in the part. What a letdown that this beautiful state which was the extreme promises of the most demanding continent on the Earth, Sri Lanka was integrating into south Asiatic regular market and Colombo was lifting as an of import regional seaport as have turn out to be the greatest bad luck. Sri Lanka ‘s growing over the old ages took topographic point under a traumatic milieus. It could non vie with the development successes of South Korea and Malaysia and Singapore which states that had similar GDP degrees to that of Sri Lanka in the late 50 ‘s. In early 80 ‘s Sri Lanka was ready for an economic revival. More than 40 foreign dress houses had invested in board of Investments of Sri Lanka ( BOI ) controlled free-trade zone North of Colombo, and office towers been built on the metropolis of Colombo in outlook of new economical revolution. Now the state that desired to be an economic Centre of southern Asia has plunged behind such states similar to Singapore and Malaysia.

Since 1983, the danger of assaults by the Liberation Tigers of Tamil Eelam ( LTTE ) came into position as the separationist outfit fought for a autonomous Tamil province in the North and the E of Sri Lanka. The Sri Lankan armed forces defeated the LTTE in May 2009. The public violence caused important agonies for the public, economic system and environment of the state, with over 80,000 people officially listed as killed during its procedure. The cost of armed struggle had a great impact on the economic system. It has two divisions in direct costs and indirect costs. Direct costs have a consecutive ascription to the struggle such as loss of capital assets and labor, other military disbursals. Indirect costs are the loss of foreign capital ; occur due to the security state of affairs of the state, out-migration of skilled work force and tourer escapes.

With the terminal of struggle, immense portion in the North and East of the state, abandoned for about 30 old ages, stand to accept a considerable encouraging motive. Peace is loosely expected to present a new life into the touristry sector, which so far could non obtain its full potency. The state besides rises to pull more Foreign Direct Investment through BOI particularly in the quickly increasing concern procedure outsourcing sector ( BPO ) which embraces considerable warrant.

After over a one-fourth century of civil war, Sri Lanka is eventually witnessing an upswing in touristry. The island with abundant natural beauty is enticing visitants, peculiarly from India, non merely with Sun, sand and sea but besides with new attractive forces like Ayurveda and escapade. ( Irish Sun, 2010 ) With the successful decision of the decades-long war last May 2009 and the gap of the chief north-south A9 main road local and foreign tourers have flocked to Sri Lanka ‘s North and East to see topographic points of worship and natural attractive forces. ( Colombo Page, 2010 ) Security state of affairs in the state gives a fresh hope for the civilians ; particularly in north and east. With the flow of visitants to their parts, they have involved in micro concerns ; get down doing an income for their lives instead than being in clasps of LTTE.

Kulasekara, T. and Pathiraja, ( 2010 ) citing Major General Hathurusinghe, the commanding officer of Jaffna peninsula provinces that they were people who are experts in Agriculture and fishing. The Government ‘s purpose is to reconstruct these lost supports of the people of the North as a consequence of the war. Although the North can non he developed in a haste given the desolation it has suffered during the past 30 old ages, the Government is committed to reconstructing the destroyed economic system every bit good as societal and cultural life every bit rapidly as possible. Additions in foreign direct investing and touristry, along with improved employment and large-scale Reconstruction undertakings in the North, are expected to prolong and speed up Sri Lanka ‘s growing in the coming old ages. ( World Bank, 2010 )

Harmonizing to U.S Department of province, despite a barbarous civil war that began in 1983, economic growing has averaged around 4.5 % . In 2001, nevertheless, GDP growing was negative 1.4 % — the lone contraction since independency. Growth so recovered to 4.0 % in 2002. Following the 2002 ceasefire and subsequent economic reforms, the economic system grew more quickly, entering growing rates of 6.0 % in 2003 and 5.4 % in 2004.

Official Wire, 2010 provinces, that they are calculating Sri Lankan existent GDP growing of an mean 6.12 % per annum between 2010 and 2014, with the 2010 estimation being growing of 5.40 % . Population is expected to spread out from 20.2mn to 21.0mn over the period, with 2010-2014 GDP per capita to increase by 72 % and a 7.8 % one-year growing during 2010-2014.

President Rajapaksa ‘s wide economic scheme was outlined in his election pronunciamento “ Mahinda Chintana ” ( Mahinda ‘s Thoughts ) , which now guides authorities economic policy. Mahinda Chintana policies focus on poorness relief and maneuvering investing to disfavor countries ; developing the little and average endeavor ( SME ) sector ; publicity of agribusiness ; and spread outing the already tremendous civil service. The authorities has developed a 10-year development model to hike growing through a combination of big substructure undertakings. The Rajapaksa authorities rejects the denationalization of province endeavors, including “ strategic ” endeavors such as state-owned Bankss, airdromes, and electrical public-service corporations. Alternatively, it plans to retain ownership and direction of these endeavors and do them profitable.