by Kelum Bandara, Sandun A Jayasekera and Yohan Perera, Daily Mirror, Colombo

Government announces massive rate cuts

The government yesterday announced massive rate cuts on many items, including fuel and gas, which will take effect from today. The announcement was made with the provincial council elections scheduled to take place in five weeks time.

The ‘economic stimulus package’ for consumers, industrialists, exporters and the plantation sector, worth a total of Rs 16 billion, came after a special Cabinet meeting summoned by President Mahinda Rajapaksa last night.

Accordingly, the price of diesel was to be reduced by Rs. 10 a litre from midnight, kerosene by Rs. 10 a litre and furnace oil by Rs. 10 a litre. The petrol price was to be cut by Rs. 20 a litre for three-wheel owners according to a coupon system. They can buy up to four litres of petrol per day at this subsidised price, subject to a limit of 75 litres a month. For other sectors, the price of petrol will be reduced only by Rs. 2 per litre.

Trade, Commerce and Consumer Affairs Minister Bandula Gunawardane told a news conference last night that this relief package was granted to the people on New Year’s eve. The minister said that Cabinet had also decided to reduce the charge for refilling a Laugfs gas cylinder by Rs. 276 and a Shell gas by Rs. 166 from midnight.

At the same time, Cabinet decided to reduce state expenses by five percent, MPs expenses by five percent, ministers’ expenses by ten percent and the President’s and Prime Minister’s expenses by 15 percent. Also, the monthly rent allowance of Rs.100, 000 given to ministers will be cut by 50 percent. A sum of Rs 3 billion would be saved by these cuts according to the government.

Investment Promotion and Enterprise Development Minister Dr. Sarath Amunugama said that the government’s objective was to sustain the country’s economic growth rate at six percent during the next year as well, despite the impact of the global economic meltdown.

To achieve this target, the minister said, a relief package was given to the plantation sector which had been hit hard by the global situation today.

Dr. Amunugama said that capital loans would be provided to the tea industrialists at a concessionary interest rate, and the recovery of already granted loans would be suspended for the next year. The cess levied on tea imports would be increased to protect local production.

“We will purchase tea through State Trading Institutions to be supplied to Iran and Russia on credit. Mixed fertiliser will be issued to tea smallholders at Rs. 1000 per bag of 50 kilos. These facilities will make the tea industry a viable one,” he said.

For the tourism sector, debt relief will be given. The government will guarantee a stable price of Rs. 150 for a kilo of rubber next year, and an additional five percent cess will be imposed on rubber imports to sustain the local production. There will be concessions for the cinnamon plantation sector as well, he said..

Non-Cabinet Media Minister Lakshman Yapa Abeywardane said that plans would be put in place to give a stable price of Rs. 45 for a kilo of tea leaves, and Rs. 300 for a kilo of manufactured tea.

Export Development and International Trade Minister Prof. G.L.Peiris said that incentives were given to the industrial sector to ensure that there would not be any loss of employment in any of the sectors.

The concessions given to the industrial sector were the removal of the 15% electricity surcharge and a 5% allowance on the value of exports if the industrialist was able to maintain his former production level. Earlier in the evening President Rajapaksa, speaking at the Sri Lanka Transport Board (SLTB) golden jubilee ceremony at the BMICH, said the government was serving a large majority of the people and not just the 4% of 5% who comprise the affluent minority.

“The policy of the government is to fully participate in the economic activities. A country cannot achieve economic progress without the active participation of the government in the economy. We will never let unscrupulous traders to control the economy,” he said.

Those who destroyed the country’s economy by selling state assets like the Embilipitiya and Valaichchenai paper factories, the Thulhiriya textile mill, Air Lanka, the CWE and state plantations for a pittance are now trying to become saviours. Not satisfied with that, they even attempted to sell the Sinharaja forest and the water in Kala-Wewa. The people helplessly watched all these acts of destruction to the national economy, he said. President Rajapaksa said the government subsidised diesel and kerosene using the profits collected from the sale of petrol and that the government always acte in the larger interests of the public and the overall economic situation in the country.

“We must consider whether the country would benefit more from the price reduction of petrol or diesel. We have to confront challenges, if the government does not reduce the price of petrol. It is natural that any government faces many challenges when serving the people. Buses, trains and other public vehicles run not on petrol but on diesel. If the government is to give relief to the people it is through the reduction of diesel prices,” he said.

The year 2009 will be the year of victory and the year of unity, integrity and peace for all citizens. The day is not too far when people in the south will travel to the north to spend a holiday in a peaceful atmosphere and vice-versa.