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Old 16-08-17, 09:22 PM
sriyanj sriyanj is offline
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Default Ranel Wijesinha FCA

Implementation, a national economic development imperative

Wednesday, August 16, 2017 - 01:00

Business
Ranel WijesinhaFCA

We need to move beyond policy dialogue and economic summits, towards time-bound action plans and implementation. There clearly is a mutually respectful dialogue between the public and private sector, today. The debates, arguments, criticisms, bouquets and brickbats, in any private or public fora, the analyses on electronic and print media and at the many workshops, seminars, and summits, demonstrate a healthy dialogue - in essence, people are empowered. That is a key component of good governance. However, we must recognize that time is of the essence.

1977 - an open economy begins

As we celebrate 40 years of an open or market economy today, the cumulative years of a middle-aged man or woman, we recall the period during which, our own, home-grown President J.R. Jayawardene ignited our transition from a closed, inward-looking, insular country, to an open outward-looking, export-led economy.

We set up free trade zones, and established the Greater Colombo Economic Commission; we modernized our harbour, built a new airport, and damned the Mahaweli and much more. India can only celebrate 26 years of an open or market economy, just 7 years past teen age (when I last made this comparison in print media, I referred to India as a 14-year-old teenager), although now we listen intently to them, whether about economic reform and liberalization, SOE reform, PPPs, bank reform (many months ago I was at the Central Bank, listening to the Chairperson of the now transformed State Bank of India), and much more. I admire them all.

1989-1994

As I recall the culture of a dialogue between the public and private sector, on economic policy, strategy and implementation and on investment and fiscal incentives commenced during the time the current Prime Minister was Minister of Industries during the President Premadasa era, when many of us in the private sector joined hands with the then Minister to develop the strategy for industrialization.

SL Economic Summit 2017

The Ceylon Chamber of Commerce (CCC), as they do in exemplary fashion each year, concluded the Sri Lanka Economic Summit, a key annual event of the 'voice of business' on July 26. I attended the event to be a part of and to encourage the participation of almost 18 senior bankers of the Bank of Ceylon. Chartered Accountant Lakshman Watawala was the pioneer of this annual event in 2000, when I was also on the Main Committee of the Ceylon Chamber and I recall being a presenter and panelist at many summits. It was as always, a pleasure to meet and talk with the many wonderful people of the CCC.

Indian thought leaders

While listening to the speakers from overseas, particularly the gentlemen from the public and private sectors in India, telling us what we have told ourselves many times before and what many presenters from overseas at many Annual Economic Summits previously had advised us, I performed a quick Google search of the topics and presenters of CCC Economic Summits, over the last 12-15 years. I noticed that several speakers and several topics were revisited. I then happened upon an example about India's private sector leaders, which I had shared with readers as far back as in December 2005, through the print media.

I thought this lighthearted article may yet be relevant today, for politicians both in government and opposition, policy planners, public officials, academics, protesters, detractors, and private sector leaders. Hence, I reproduce, below, that article in its entirety.

JRD Tata and lessons for Sri Lanka, By Ranel Wijesinha

During the course of an assignment for the Asian Development Bank, connected with the North Eastern State Roads Project, working along with road engineers, road planners and transport economists from Australia and New Zealand, where my role was on financial management assessments and institutional development and capacity building, I was stationed in Shillong, Meghalaya, one of the eight states of the North Eastern Region of India, which border China, Bhutan, Myanmar and Bangladesh.

I often stayed at the Taj Mahal at Mansing Road in New Delhi. Many Sri Lankans who have stayed there would agree with me that it is an indigenous Indian hotel that provides world-class service on a consistent basis, which perhaps prompts even other hotels to talk about it. No wonder then that political leaders, business leaders and celebrities of all types stay there.

JRD and the House of Tatas

This, of course, is not the only achievement the House of Tatas is famous for. Apart from diverse business interests, the Tata Group had great thought leaders. Presidents and prime ministers of India interacted closely with them.

Political leaders of India respected these business leaders for their objectivity, honesty and integrity and, above all, their leadership in thinking and doing. Reading Indian newspapers or Indian magazines, is always an intellectually stimulating experience for me.

On one such occasion a few months ago, I read an interview JRD Tata had given the Times of India in July 1981, which the Taj magazine, the magazine of Taj Hotels, Resorts and Palaces, had reproduced with these opening words from Fatma R Zakaria, now its Editor: "Twenty Four years later, the issues discussed and the views of JRD Tata are as relevant as they were in 1981. We therefore publish the long and comprehensive dialogue so as to initiate a debate on the subject once again."

What JRD said in 1981

Poverty alleviation? Free the economy and see the difference. In response to a question as to what the private sector's contribution to tackling poverty would have been if the private sector was allowed to play its legitimate role during the preceding 30 years and the Government had a more flexible policy towards it, JRD's view were as follows:

Private and public sectors are parts of a single dynamic organism.

India, after it became independent, practised what was then termed a mixed economy - where private enterprise would play an important and continuing role and the private and public sectors would be looked upon not as separate entities but as parts of a single dynamic organism. From the mid 50s to the 60s the mixed economy concept was good. Industrial production rose at an annual rate of 8 to 9 per cent.

Ideological opposition to private enterprise crippled the economy

Subsequently "due to an ideological opposition to private enterprise and misconceived interpretation of socialism, drastic policy measures and controls crippled the economy. For the misdeeds of a few, the business community as a whole was blamed and anti-private sector propaganda gathered momentum. The nationalization of major industries; government monopoly over finance; an absurd obsession about the dangers of concentration of economic power in private hands, etc., restricted initiative, investment and growth. With a flexible and pragmatic approach, the economic scene would have been different."

In particular, he says, "Investment in industry would have been much greater; employment would have grown more quickly in all sectors; production would have increased considerably and shortages removed; Government revenue would have materially increased, which, in turn, could have been used in development programmes. And these conditions could have gone a long way in alleviating poverty. In short I say free the economy and see the difference."

Rapid employment generation requires massive programmes of public works

When asked whether, in order to generate rapid employment, a Government has to protect the small sector - the cottage sector JRD had this to say: "I hold the view that the quickest way to provide extensive fresh employment in India is for Government to undertake massive programmes of public works - roads, water projects, afforestation, and building works. The forests of this country are being devastated; afforestation is a prime need all over the country. Housing - buildings of various kinds, schools and hospitals, all would require largely unskilled work. Generating massive and rapid employment by creating industries in every village is not a practical solution. Any industry however small needs skills. You have to first train and develop people. Develop them as fast as you can but it will still take years"
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