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Sri Lanka Development Planning
During the early years of independence, successive
governments placed little emphasis on development planning, in
part because the immediate economic problems appeared to be
manageable. The National Planning Council was established in 1956
as part of the Ministry of Finance. Between 1957 and 1959, the
council and the Central Bank of Sri Lanka invited a number of
foreign economists to visit Sri Lanka and offer the government
both their diagnoses of the country's economic problems and their
prescriptions for the planning and implementation of recommended
remedies. These studies provided many of the rationales for
economic policies and planning in the 1960s.
In 1959 the National Planning Council issued a Ten-Year Plan,
the most ambitious analysis of the economy and projection of
planning that had yet been officially published. This plan sought
to increase the role of industry in the economy. Unfortunately,
its forecasts were based on faulty projections of population and
labor force growth rates. Moreover, attempts to implement it
collided with the exchange and price crunch of 1961 and 1962, and
the plan became increasingly out of touch with the changing
economic situation.
A new Ministry of Planning and Economic Affairs (no longer in
existence) was established in 1965. The ministry decided not to
draft another single long-term plan involving a five- or ten-year
period. Instead, it drew up a number of separate, detailed,
well-integrated, five-year plans involving different ministries.
The government targeted agriculture, especially wet rice, as the
area in which growth could best be achieved.
The UNP government that came to power in 1970 shifted toward
a more formal and comprehensive state direction of the economy.
The Five-Year Plan for 1972-76 had two principal aspects. First,
it sought to remove disparities in incomes and living standards.
Second, the plan sought to promote economic growth and to reduce
unemployment. It envisioned rapid growth in agriculture, not only
in the traditional crops of wet rice, tea, rubber, and coconut,
but in such minor crops as sunflower, manioc, cotton, cashew,
pineapple, and cocoa. Like the Ten-Year Plan of 1959, this plan
proved to be based on overly optimistic assumptions, and it soon
ceased to exercise influence on the government's economic policy.
In 1975 it was replaced by a Two-Year Plan that placed even
greater emphasis on agricultural growth and less on industrial
development.
After 1977 the government continued to accept the principle
of state direction of economic activity, but in contrast to the
1970-77 period the government encouraged the private sector to
participate in the economy. Its first Five-Year Plan (1978-83)
included an ambitious public investment program to be financed
largely by overseas grants and loans. Its immediate objective was
to reduce unemployment, which had risen during the tenure of the
previous government.
A series of five-year rolling investment plans was set in
motion by the Ministry of Finance and Planning in the 1980s. The
plan for the 1986-90 period envisaged investment of Rs268 billion
(for value of the
rupee--see Glossary)
with the emphasis on
infrastructure projects such as roads, irrigation, ports,
airports, telecommunications, and plantations. Of this total, 50
percent was to be spent by the state sector. Foreign sources were
to supply Rs69 billion. The target annual average growth for the
gross domestic product
(GDP--see Glossary)
was 4.5 percent, a
decrease from the 5.2 percent envisaged by the plan for the
1985-89 period and the 6 percent actually achieved between 1977
and 1984.
Data as of October 1988
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