PROPOSALS

01. HONOURABLE SPEAKER, I WOULD LIKE TO SPELL OUT THE BUDGET PROPOSALS FOR 2015 WITHIN 201517 MEDIUM TERM BUDGET FRAMEWORK AND HOW THE GOVERNMENT WILL ENGINEER THE FISCAL POLICY TOWARDS FURTHER STRENGTHENING PUBLIC FINANCE, DEVELOPMENT AND WELFARE OF THE PEOPLE.

02. GOVERNMENT REVENUE

2.1 We need t o strengthen Government revenue efforts in view of increasingly high commitments of the Government to provide a wide range of public services, welfare programs and public investments. I propose to impose Excise Special Provision tax on motor vehicle imports tax in lieu of all multiple taxes at the point of import. This simplified taxation will generate additional revenue of Rs.5,000 million. It is proposed to fix the taxfree threshold applicable for VAT and NBT on supermarket scale retail businesses at Rs.100 million per quarter, while increasing the tax free threshold for VAT and NBT to Rs.15 million a month to create tax free environment for small business. I have also increased the Excise Tax on cigarettes and liquor to raise Rs.14,000 million of additional revenue in 2015. I also propose to levy a US$ 100 per person Entrance Fee to premises where casino entertainment activities take place and raise the Gaming Levy to 10 percent of turnover to raise further revenue of Rs.2,500 million.

2.2 Honourable Speaker, it has become customary among some that tax due to the Government and EPF contributions are disputed to delay or evade such payments. Therefore, I propose to introduce a refinance facility to provide 5-year credit at 6 percent interest from all banks to enable liable taxpayers to pay their tax arrears, in terms of prevailing taxes operational from 2010 and Provident Fund payments up to 31 March 2014 to facilitate them to meet their statutory compliances. I expect to recover Rs. 40,000 million of arrears through this measure. I invite the Judiciary, the Tax Department and default taxpayers to assist to conclude the settlement of disputed tax and EPF payment arrears accordingly within 6 months. I propose to vest in the State, property corresponding to such arrears of default taxpayers who do not make use of this opportunity.

2.3 I propose to fix the maximum PAYE tax rate at 16 percent to ease the burden of wage earning employees and professionals. It is proposed to reduce the Value Added Tax to 11 percent.

2.4 Foreigners can have access t o state and private land only through long lease arrangements subject to payment of a land lease tax. As such, I propose to strictly enforce the payment of 7.5 percent or 15 percent tax and other provisions contained in the Act. I expect Rs.2,000 million from this new land alienation tax on foreigners next year. I propose to enforce exchange control regulations to prevent foreigners from engaging in illegal land transactions through the use of local names and local companies. I also propose to amend the Finance Act to strictly enforce the transfer all surplus funds other than those committed expenditure of all spending and other agencies of the public sector to have a better control on public financial management.

2.5 The Inland Revenue Department is being computerized to link all relevant agencies to improve tax administration and to enable the use of a Personnel Identification Number to co-ordinate all transactions. I am pleased to announce that with effect from tomorrow the Inland Revenue and Customs will go online to simplify income tax registration and export and import transaction related payments.

03. STRENGTHENING STATE BUSINESS ENTERPRISES

3.1 Ceylon Petroleum Corporation has contained its losses and has also reduced its debt to banks. The recent reduction of prices of petrol by Rs.5 per litre, diesel by Rs.3 per litre and kerosene by Rs.20 per litre, is a reflection of its improved financial position. Therefore the Government will convert Rs.150 billion of CPC debt to equity and guarantee its financing to rebuild the pipeline network, storage facilities and capacity expansion of the oil refinery to 1,500 MT. The CPC will form a joint venture to protect its interest in the Trincomalee oil tank farm that had been sold to the Indian Oil Company, to develop storage facilities.

3.2 I propose to convert previous loans and interest payments of the Water Supply and Drainage Board to the Treasury amounting to Rs.60 billion to government equity, to strengthen operational profits and service their own project financing arrangements. I propose to reduce water charges for households consumption up to 25 units by 10 percent. Following my budget proposal last year, a National Community Water Supply Department has been established to regulate and develop community water supply schemes. I propose to allocate Rs.750 million for the rehabilitation of community water supply schemes and develop new schemes under this Department with particular emphasis on villages affected by kidney and waterborne diseases.

3.3 Following the Budget proposal to improve rural transport services, arrangement has been made to deploy 400 small buses. I propose to import further 500 small buses to expand these rural services. In order to strengthen the bus fleet of Sri Lanka Transport Board with a further 2,000 buses, a public investment of Rs.1,000 million has also been provided to SLTB. Salaries of CTB employees were raised to equalize minimum salaries of the public service salary structure. I also propose to allocate Rs.10 billion over 2015 -17 to rehabilitate the national airports at Rathmalana, Trincomalee, Anuradhapura, Palali, Batticaloa and set up new airports at Kandy and Nuwaraeliya to promote domestic travel and tourism and to ease traffic congestion.

3.4 The government owned Kurunegala and Chillaw plantation companies have performed well and paid dividends to the Treasury. On this success, I propose to set up a separate government owned Planation Company to develop all JEDB and SLPC plantation lands with a capital infusion of Rs.1,000 million. In order to strengthen state construction companies, I propose to allocate Rs.3,000 million to provide the capital contribution to State Engineering Corporation, Central Engineering Consultancy Bureau and State Development and Construction Company. The sugar plantation industry, which had been neglected and used largely to manufacture liquor was taken over by the Government in 2012 and has been revived to increase sugar production. Further, it also helps about 25,000 families in Uva and Eastern Provinces to improve their livelihood earnings. Therefore, I also propose to allocate Rs.5,000 million to build modern sugar manufacturing plants at Kantale, Hugurana and Pelawatta and develop smallholder plantation under Sri Lanka Sugar Company during 2015-16. I propose to increase the farm gate price of sugar cane to provide a greater incentive to be involved in sugar cultivation, to Rs.4,500 per MT.

04. STRENGTHENING BANKING AND FINANCIAL INSTITUTIONS

4.1 Honourable Speaker, the capitalization of the Central Bank with Rs.50 billion this year laid a solid foundation for the financial system stability m this country Similarly following the last year budget proposal, consolidation of finance companies has witnessed progress As part of financial sector strengthening, the two Development Banks are also being merged to create a strong development bank in the country, next year. I also propose to provide Rs.10 billion capital to strengthen the Bank of Ceylon. In order to provide greater security to deposit holders of the banks, I also propose to increase deposit insurance by 50 percent.

4.2 Honourable Speaker, the Central Bank manages the Employees Provident Fund, which has an asset base of Rs.1 trillion. Central Bank in recent years has invested about 10 percent of its assets in income earning commercial assets, which has gained capital appreciation of around Rs.10 billion this year. I therefore propose to distribute dividend to members of Provident Fund who has over 10 years of active accounts. This is the first ever dividend distribution by the EPF and I see this as a special benefit to members. In addition, the Fund has got stronger to pay all members of the fund an interest income in excess of 10 percent each year.

4.3 Honourable Speaker, Sri Lanka has membership in the IMF, the World Bank and the ADB. This year, we supported the initiative taken by the People’s Republic of China to set up an Asian Infrastructure Investment Bank to meet infrastructure financing needs of Asia. I am pleased to inform this house that today we signed as a founder member of AIIB with several other member countries to set up this Bank.

05. EQUITY AND DEBT MARKET

5.1 Following the incentives in the 2013 Budget to promote equity and debt market, the market capitalization has surpassed Rs.3 trillion. Net Foreign inflows have reached nearly Rs.100 billion. The value of unit trust has increased beyond Rs.70 billion. Many companies have also listed their debt and total value now stands at around Rs.100 Billion showing that the market has become a low cost source of raising money for capital formation. In the context of low interest rate regime that we have restored, I am sure that more equity and debt finance will be raised by our business community, for their business development.

06. LEGAL AND JUDICIAL REFORMS

6.1 Honourable Speaker, steps have been taken to establish an International Arbitration Centre in Colombo and to setup dedicated Courts t o deal with tax matters and contract management disputes to expedite early dispensation of cases and prevent denial of revenue to the Government due to laws delays. As a step towards raising professional attraction to the judicial service, Personal Allowance of judges has also been raised and their residential facilities are being rehabilitated. I propose to allocate extra Rs.750 million for such rehabilitation expenditure and to provide knowledge enhancement of Judges.

07. IRRIGATION DEVELOPMENT

7.1 Improving irrigation systems, providing quality drinking water and the conservation of wild life are priorities in the 2015-17 medium term Budget framework. Accordingly I propose to increase the irrigation budget by further Rs.15,000 million for the early completion of Yan Oya, Uma Oya and Moragahakanda development programs and to commence work connected with Gin river, Nilwala river, Kelani river, Howpe dam scheme, Ma Oya and Badulu Oya - Ranella, Malwathu Oya, Kalinga Nuwara, Veli Oya, Kalugal Oya, Maha Galgamuwa Weva and Thalpitigala reservoir development and to further develop downstream and livelihood activities associated with Weheragala, Rambaken Oya and Deduru Oya reservoirs. I also propose to allocate Rs.2,000 million to build small dams across rivers flowing through dry zone plains, to create water reservoirs.

08. PROVINCIAL AND RURAL ROADS

8.1 Honourable Speaker, a new initiative has been undertaken to develop provincial and rural roads and bridges to connect 1000 well populated villages with the assistance of development agencies. In order to accelerate this rural centric development initiative, I propose to raise the Government contribution by Rs.20,000 million to provincial and national road development authorities to rehabilitate access roads in rural areas.

09. SRI LANKA RAILWAYS

9.1 Honourable Speaker, the Northern railway infrastructure destroyed by LTTE was fully restored and Yal Devi train service was put back in operation. Matara. Kataragama railway extension is under construction. Further, I propose a medium term development strategy to expand railway infrastructure by introducing double tracks to Vavuniya, Anuradhapura, Polgahawela and Kandy sections as well as to the Kelani Valley section together with connectivity to major townships in the Greater Colombo area to improve commuter transport. I also propose to restore the cadre of Sri Lanka Railways to its 1993 position of 13,000 employees and work out a rational recruitment and salary structure in terms of new Service Minute to make it a special service. This will correct the longstanding salary anomalies among railway employees. I propose to allocate Rs.2,000 million of additional provision in 2015.

10. POSTAL DEPARTMENT

10.1 Honourable Speaker, Postal Department that has a near 25,000 workforce, which was once a heavy financial burden to t he Treasury has made significant improvements in recent years. In this background, the rehabilitation of post office building complexes with sufficient client facilities is essential for its expansion. The department also requires new machinery and equipment as well as improvements to its distribution system. Reflecting the unique nature of this service, I propose to establish a Separate Service minute for the Postal Department to develop its human resource skills and service delivery. l propose to allocate Rs. 2,500 million over 2015-17 for the modernization of postal services. I also propose to give motor bicycles to all postmen in 2015, at an affordable cost

11. WILDLIFE CONSERVATION

11.1 Honourable Speaker, in order to cultivate animal fodder in reserved areas and the rehabilitation of water tanks and such other facilities to prevent animals from entering villages, I propose to continue to allocate Rs.10 million to each relevant Divisional Secretariat to expand Wildlife Conservation and Community Protection Schemes taking into consideration the specific needs in such areas. I propose to give a special recognition to such Divisional Secretaries who give leadership to community base conservation programs by giving them priority in foreign training. I also proposed to allocate Rs.200 million to the Wildlife Conservation Department to purchase required utility vehicles and equipment I also propose to extend the insurance scheme introduced in the 2013 Budget to compensate losses to human life and property to cover crop damages from elephants as well, from 2015.

12. AGRARIAN DEVELOPMENT

12.1 Honourable Speaker, we consider that our rural centric development strategy must focus on agriculture for food security and a higher income to the rural people. Therefore, I propose to continue with the fertilizer subsidy scheme to provide all varieties of fertilizer at Rs.350/50 kg bag for paddy cultivation. Since farmers were badly affected by the recent drought, the Government has already decided to give paddy seeds to all small farmers free of charge iii 2014/15 Maha season. I propose to increase the guaranteed price of paddy to Rs.34 - 40 per kilo. I also propose to strengthen the guaranteed price scheme to farmers for potato, onion, dry chili and maize by linking Divi Neguma and Agrarian Service purchasing centres with Lanka Sathosa, while expanding their storage facilities. it is also proposed that high taxes prevailing at the point of import on these items during harvesting times should be continued.

12.2 In keeping with our Government policy, we have begun to implement a three-year rehabilitation program to restore abandoned paddy lands and put them back to use for the cultivation of paddy, fruits, vegetable and floriculture using organic fertilizer. It is proposed that aquaculture, cultivation of grassland for animal feed, water reservoirs, community parks and walking tracks will also be developed along these lands. I propose to allocate additional Rs.2,300 million in 2015 for these land development initiatives. I propose to extend agricultural credit to those who cultivate in such lands. We have already increased the cadre of Agrarian Service Department, the Department of Agriculture and provincial agricultural divisions to expand extension services while providing required training for the staff.

13. SMALL HOLDER PLANTATION

13.1 Honourable Speaker, following the last year budget proposal, I propose to continue the Rs.5,000 per acre grant assistance to support land preparation towards water retention, soil conservation, the use of organic fertilizer for smallholder tea cultivation to increase production. The subsidized price of Rs.1,250 per 50/kg bag will also be continued for all these crops. The prevailing high taxes on edible oil, coconut oil and palm oil at the point of customs will be maintained in the long-term interest of coconut plantation. The CESS applicable on the export of tea, rubber, coconut, cinnamon and pepper in primary form will be further strengthened to channel such revenue to encourage cultivation and related improvements of these crops.

13.2 I propose to increase the replanting subsidy to tea small holders from Rs.875,000 to Rs.1 million per acre and the new planting subsidy from Rs.625,000 to Rs.750,000 from next year. Financial assistance will be extended to fully modernize smallholder tea factories with modern machinery and processing equipment. In order to encourage rubber growers, I propose to increase the CESS on rubber imports by Rs.10 per kilo and also implement a guaranteed price of Rs.300 per kilo for encourage small rubber growers from November 2014. Rainguard instruments will be provided for small rubber growers in the wet zones and lands will be provided in other areas to grow rubber. Therefore, I propose to increase the allocation to the Department of Rubber, by Rs.3,500 million.

13.3 I propose to increase new and replanting subsidy for coconut from Rs.7,000 to Rs.10,000 per acre and the subsidy for the rehabilitation of coconut land from Rs.15,000 to Rs.20,000 per acre. I also propose to increase Kapruka investment loan up to Rs.3 million to cover soil improvement and water retention in coconut lands. I propose to allocate Rs.1,000 million for these initiatives. I propose to increase the planting subsidy for minor export crops by 25 percent and accordingly increase the allocation by Rs.250 million to the Department of Agricultural Exports. It is proposed to increase the subsidy granted for the cultivation of fruits and vegetables as well as operating dairy farms by 50 percent.

14. LARGE SCALE PLANTATIONS

14.1 Large-scale plantations were privatized in 1992 on 50-year lease arrangements. However, only a few plantation companies shown notable development having increased their productivity. Therefore, each plantation company which has not responded to my budget proposal last year will be put on notice for 6 months to enable the Golden Shareholder being the Government to make appropriate decisions regarding the development of plantations under each company, including the cancellation of their lease holding.

14.2 I propose to implement a credit scheme with an 8-year maturity at 6 percent interest to all well performing companies that will commit, on an agreed area for planting and replanting, for social development of plantation workers and to increase the volume of value added tea exports. This facility will not be extended to plantation companies, which have not paid due lease rental value to the Government unless they pay such sum with arrears. Companies that have not paid their land lease rentals will not get this facility.

15. PROFESSIONAL SKILLS AND RESEARCH FOR PLANTATION

15.1 I propose to set up a Plantation Academy to develop a new generation of professional planters and smallholder planters, to extend training on best agricultural practices and technology skills. Public investments on Tea, Rubber and Coconut Research Institutes will be doubled to facilitate the private sector to fully benefit from triple deduction tax facility on research and development. I proposed to allocate Rs.3,000 million to develop Tea Research Institute at Thalawakele and Rubber Research Institute at Agalawatta as state of the art research institutes.

16. FARMER PENSION AND CROP INSURANCE SCHEME

16.1 I implemented a pension scheme to provide a minimum of Rs.1,250 as a monthly pension for farmers over 63 years of age, from January 2014. I have already made a capital contribution of Rs.1,000 million by the Government to strengthen this contributory pension fund. This fund will also extend compensation for crop damage arising from the Crop Insurance Scheme that was introduced. Arrangements will be made to allow those who could not contribute to this pension scheme during the time it was inactive, to continue to contribute. I propose to extend farmer pension scheme to all smallholder farmers engaged in all crops to support their old age. Therefore, I propose to increase the capital contribution to the farmer pension scheme by Rs.5,000 million, over next three years.

17. EXPORT INDUSTRIES

17.1 Honourable Speaker, manufacturers of exports are provided with a low income tax rate of 12 percent, a high depreciation provision for advanced machinery and Custom bonding and free port facilities. In order to further facilitate such exports, a one-stop service centre providing banking, quarantine, quality standards and other trade services through a computer network will be established at Customs. In order to encourage the modernization of export industries, I propose to grant accelerated depreciation provision and exemption from income tax on dividend provided they undertake over US$ 2 million investments on machinery and equipment. I also propose to implement a pension scheme for employees in the apparel industry to improve job attraction and security.

17.2 I also propose to expand triple deductions for expenditure on research, innovation and brand promotion for such industries. Export of high value products of tea, rubber, coconut, cinnamon and spices will be encouraged through increased cultivation of these crops and by maintaining a high level of CESS on primary commodity exports. I also propose to use 50 percent of the special CESS collected by the Tea Board to share with local tea producers to promote high value tea in global markets with a Sri Lankan identity and country image. In this regards, the Free trade agreement with China is expected be operational by mid2015 that will provide a greater boost for country’s exports. i also propose to reduce import taxes of packaging material required for exports suitably without affecting local industries that manufacture such material.

18. FISHERIES INDUSTRY

18.1 Honourable Speaker, the fish harvest has doubled within the last 5 years and has exceeded 500,000 MT. The production of dried fish and sprats, Maldive-fish, canned fish and fish food has increased while also reducing related imports to less than 70,000 MT. I propose to set up dried-fish processing zones around selected fishery harbours and implement a guaranteed price scheme to purchase the fish harvest of small fishermen. The inland fishery production has increased to 20 percent of total fish production. Aquaculture has gained considerable interest among small and medium term entrepreneurs. Therefore I propose a loan scheme to assist such entrepreneurs to develop their fish farms. I also propose to allocate Rs.200 million to develop 1,000 inland fish farm villages and Rs.50 million for the expansion of ornamental fish exports. Fish breeding centres of NARA at Udawalawa, Dambulla, Inginlyagala, and Polonnaruwa will be further developed to help SMEs.

18.2 I also propose to allocate Rs.1,500 million for the rehabilitation of cold room facilities and set up of marketing outlets to improve supply and distribution at affordable prices. Import duties on equipment required for the expansion of marketing facffities wifi be reduced.

19. SOCIO ECONOMIC EMPOWERMENT OF THE FISHING COMMUNITY

19.1 The improvement of living conditions of the fishing community requires special programs to improve the quality of life especially of women and children. Therefore I propose to implement a dedicated three-year program for preschool children, primary schooling children, livelihood opportunities for women and the elderly, skills development of youth and improvement of housing and sanitation conditions of the fishing community. I propose to allocate Rs.750 million each year, from 2015 to the Ministry of Fisheries to implement this in collaboration with respective Provincial Councils.

20. LIVESTOCK AND POULTRY INDUSTRIES

20.1 Honourable Speaker, local milk production has increased to 40 percent of local consumption requirements. Public sector and private sector dairy farms as well as small and medium enterprises have substantially increased their investment in this sector. Funds have been allocated for the expansion of the production of MILCO by doubling its capacity as well as to import 20,000 high quality cows to promote small and medium dairy farms as well as Government farms.

20.2 A special loan scheme is being implemented at a low interest rate, in support of SMEs to promote dairy farms, setup milk collection centres and procure equipment, increase animal feed production etc. A CESS of Rs.150 per kilo on imported milk powder and the high CESS on the importation of butter, yoghurt and dairy products to be maintained, to further support this industry. I now propose to increase the guaranteed price of liquid milk to Rs.60 per litre to increase local milk production and reduce the price of locally made milk powder by Rs.100 per kilo and yoghurt by Rs.5 per yoghurt, to popularize local products. I propose to increase allocations to Provincial Councils to assist small dairy farmers to promote cattle farms, and quality animal feed production at provincial level.

20.3 1 propose to allocate Rs.700 million to expand the capacity of training centres at Mahaberitenna, Thalpokuna, Kekunadura, Karandagolla, Sippilculama, Vavuniya, Vannigama, Kotadenlyawa, Udugoda, Uppuveli and Weeravila to increase training programs for field level officers as well as small and medium dairy farmers.

20.4 Poultry production has exceeded 155,000 MT eliminating the deficit production that prevailed few years back. The per capita consumption at 7.5 kg is almost double the consumption that prevailed 5 years ago. This industry has also entered export markets. In order to assist small poultry farms, I propose to introduce a supply mechanism to provide maize at Rs.40 per kg and provide export incentives for chicken and eggs. I also propose to allocate Rs.200 million to strengthen related veterinary services with modem facilities and equipment. I propose to recruit 500 Technical Assistants to the field of animal husbandry in 2015, to expand extension work.

21. HEALTH SERVICES

21.1 Honourable Speaker, people suffering from kidney diseases have increased in some districts. Therefore, a coordinated effort has been launched on an accelerated basis to provide health care facilities to kidney patients with doctors, medicine and equipment. Preventive care against kidney diseases has been taken through the provision of water purification plants scholl in affected areas. I also propose to grant a monthly living allowance of Rs.3,000 for those adversely affected by kidney deceases. I also propose to provide Rs.750 million to expand facilities at the Kidney Hospital at Maligawatta to be able to cater to an increased number of patients and to expand the facilities of the Anuradhapura and Hambantota Kidney hospitals.

21.2 The Maharagama Cancer Hospital has been developed to be able to manage an increased number of indoor and outdoor patients. Radioiodine treatment and radiotherapy units at Jaffna, Kandy, Badulla, Kurunegala, Batticaloa, Anuradhapura, Karapitiya and Ratnapura hospitals will be expanded. I propose to provide Rs.700 million for a cancer prevention program in women. Following the last year Budget proposal, work is in progress to set up a National Stroke Centre to manage stroke-related medicare. I propose to allocate Rs.300 million to set up special stroke centres with modern medical facilities at Anuradhapura, Ratnapura, Badulla, Ampara, Matara and Kurunegala hospitals.

21.3 As maternity care should be given special attention, I propose to allocate Rs.1,500 million to develop Karapitiya, Colombo, Kandy and Anuradhapura maternity hospitals as super centres in maternity care and develop Badulla and Beliatta hospitals as maternity and child care specialized centres. Steps have also been taken to accelerate the modernization of the two national children’s hospitals as centres of excellence capable of providing the next 10 year paediatric care needs of our country as well as medical research on paediatric care. The OPD treatment and ancillary facilities of the Colombo National Hospital expanding its outdoor patient care capacity, will be completed by 2017.

21.4 I propose to allocate Rs.500 million to i mplement accelerated medical examinations of all citizens through mobile medical clinics and expand testing related facilities to strengthen preventive health care. I seek the support of all religious places of worship to give leadership in organizing such clinics in each Grama Niladari division. I propose to commence a mobile ambulance service in all main hospitals through the National Insurance Trust Fund to provide emergency care at their doorsteps to persons who fall ill suddenly, to be taken to hospital safely.

22. INDIGENOUS MEDICINE

22.1 I propose to allocate Rs.500 million for the rehabilitation of Ayurvedic Hospitals and promotion i ndigenous medical research. I also propose to grant a monthly allowance of Rs.5,000 for indigenous medical doctors who serve in government Ayurvedic Hospitals. I propose to implement a loan scheme for indigenous medical practitioners be able to draw up to Rs.500,000 at 6 percent interest, to improve their dispensaries and to process required medicinal treatment.

23. PRESCHOOL CHILD DEVELOPMENT

23.1 Honourable Speaker, in order to provide greater attention to child development, preschool childhood development must be given special recognition. Therefore, I propose to support all preschools through the provision of child development apparatus and preschool material. I also propose grant a monthly allowance of Rs.2,500 along with a credit facility of Rs.10,000 to be used for incidental expenses, by teachers operating such schools. They will be given training facilities on child development and preschool education. I also propose to encourage the setting up of preschools close to every primary school in areas where no preschool facilities are presently available. I propose to set aside Rs.300 million for this initiative.

24. EDUCATION

24.1 Honourable Speaker, it is proposed to increase the allocation made for 1,000 schools in which Mahindodaya laboratories are l ocated covering each divisional secretary area by Rs.15,000 million, towards an overall improvement of such facilities over 3 years. An allocation of Rs.1,500 million will be provided for the ongoing initiatives to upgrade sanitation and other facilities in rural schools. I propose to increase the annual number of year 5 scholarships to 25,000 and to increase the allowance to those who pass the scholarship from Rs.500 to Rs.1,500.

24.2 A further Rs.750 million will be allocated to develop Maharagama Teacher Training College as a well-equipped training centre with regard to all subjects, while facilities in all other teacher training colleges in the country will also be upgraded. An allocation of Rs.300 million will be provided for the setting up of Faculty of Management Entrepreneurship as well as a Faculty of Technology at the Training College at Meepe, to expand training streams for teachers.

24.3 A new Service Minute for the Teacher Service has been already approved and promotions, salary increments and service related administrative problems of around 240,000 teachers are expected to be managed efficiently. The approval of leave and salary increments for teachers will be delegated to the level of Principals. I also propose to recruit 50,000 teacher assistants to rural schools next year in English, mathematics, science, information technology, aesthetic studies and sports. Once they complete their specialized subject training and leadership training, they will be absorbed to the respective schools. They will be required to complete the Degree in Education within 5 years before absorption into Sri Lanka Education Service, after which they will be required to serve in the same school for a further five years. They I will be given an Allowance of Rs.9,500 per month.

25. PIRIVENA EDUCATION

25.1 The Pirivena education has been revived to raise the related student population to be expanded by 25 percent by the year 2016. I propose to double the grant of Rs,500,000 given to each Pirivena, in order to upgrade Pirivena education facilities, In addition to facilities extended such as distress loans, property loans and Agrahara Insurance benefits, I propose to raise the student allowance for monks and other students, by 25 percent.

26. SKILLS EDUCATION

26.1 Honourable Speaker, the intent of the fast-track skills development program for our youth is to develop 100,000 Diploma Holders and Certificate Holders each year. For this purpose, Diploma Awarding Technical Colleges, Government technical training institutes and joint programs with private training institutes and work places are being expanded to accommodate a larger student intake.

26.2 In order to incentivize vocational education, I propose to implement a new student scholarship scheme for 50,000 students per year from low income families who pass ordinary level and advance level examinations but are unable to enter universities or other advance institutes for further studies. Each student will be given a Rs.3,000 monthly student allowance. This scheme will bring about Diploma and Certificate holders above level V of the National Vocational Qualification, in employable fields. I also propose to increase the number of student scholarships to 50,000 per year and

27. HIGHER EDUCATION AND RESEARCH

27.1 Honourable Speaker, creating a higher education system that provides critical knowledge and analytical skills to our children, to place the country on an advanced research drive, is our vision.

27.2 Therefore, we have implemented a hostel construction program for 25,000 students on an accelerated basis. Financial incentives will also be provided to house owners in the surrounding university township area to provide student accommodation facilities. I also propose to increase the Mahapola Scholarship monthly allowance to Rs.4,000 per student from January next year. I propose to further raise incentive payments of academic and non-academic staff, to ensure a successful transformation of the higher education system.

27.3 Within the medium term development program, funds have been provided for the establishment of an Engineering and Technology Faculty at the Jayawardanapura University, an Information Technology Centre at the Kelaniya University, an Advanced Medical Faculty at t he Peradeniya University and Electronics, Petroleum and Aeronautical Engineering Faculties at the Moratuwa University, to broaden subject streams. The capacity expansion to broaden subject streams in management, food technology, veterinary science and agriculture at Colombo, Wayamba, Jaffna, Rajarata, Eastern, Uva - Wellassa, Sabaragamuwa and Ruhuna universities. The expansion of advanced degrees in indigenous medicine, research on non-communicable diseases through Ayurveda Teaching Hospitals, is also a recognized priority.

27.4 I propose to allocate Rs.1 billion to develop the necessary residential and research environments at the Post Graduate Institute for Pali and Buddhist Studies, to attract our scholarly monks, historians and research students to work together with foreign students and researchers to be able to share our cultural and Buddhists values around the world.

27.5 As part of broadening horizons of our higher education, I propose to set up a school of Economics and Development Engineering that offers arts, commerce and science students qualifying from GCE A/L exam to learn multi-disciplinary subjects such as economics, law, engineering, science and mathematics being subject options in a single degree. Further, I propose to allocate Rs.500 million for research on cancer by the Colombo University, on kidney diseases by the Perademya and Rajarata universities and on diabetics by the Ruhuna University and another Rs.500 million to the National Research Council for research on other fields.

28. NENASALA

28.1 Honourable Speaker, I propose to allocate Rs.1,000 million to set up a fully equipped Nanasala centre at each such Grama Niladari division in 2015 to mark our journey towards a knowledge centric economy by 2020.

28.2 I also propose to allocate Rs.500 million for research lab facilities, equipment and research work at field level by universities located at provinces, with successful ventures in dairy, poultry, aquaculture, food technology and handloom designing household decor and gift item designing, to be provided to small entrepreneurs at village level through the Nanasala network.

29. ART AND CULTURE

29.1 Honourable Speaker, with the widespread development witnessed across regions it is necessary that the Government expands modern infrastructure facilities for performing arts and culture. In this context, as I have proposed in my last Budget, the work of the two performing arts and cultural centres in Kandy and Anuradhapura is being completed. Further, steps have been taken to modernize the cultural centres in Jaffna, Trincomalee and Galle. The modernization of the Lionel Wendt Art Centre and the Lumbini Theater is in progress. I propose to allocate Rs.300 million for the improvement of parking facilities, sanitation and waste management at each of our cultural and heritage cites. i propose to expand the concessionary loan scheme that was extended to media personnel to purchase motor vehicles, to cover expenditure connected with facilities required to cover their professional development.

30. HOLIDAY BUNGALOWS FOR ARTISTS

30.1 I proposed in my last Budget Speech, to build 5 holiday bungalows exclusively designed for artists. The Sri Lanka Tourism Development Authority has commenced the construction of these bungalows to be ready next year. I also propose to provide a half-tax holyday for a period of 5 years and financial assistance, to film and play producers to promote the production of films and plays capable of winning awards and recognition at international festivals, to elevate this industry to international repute.

31. DIVI NEGUMA

31.1 Honourable Speaker, Dlvi Neguma initiative has attracted over 2.5 million households and has now embraced almost all villages in Sri Lanka. I propose to provide loans up to Rs.50,000 at an interest rate of 3 percent without requiring any collateral to the best 5 home gardens in each Grama Niladàri division developed with the participation of the entire family, to put up green houses, poultry farms, livestock sheds, fish farms, handloom or small industries. I also propose to implement a five year credit facility at a 3 per cent interest rate to 5 cottage industries in each Grama Niladari Division, to be developed to commercial enterprise scale.

31.2 An allocation of Rs.1,000 million will be provided to set up a Revolving Fund to provide loans up to Rs.100,000 to pensioners’ associations, senior citizen clubs and death relief societies to promote social development activities. I propose that an amount between Rs.5,000 and Rs.250,000 not exceeding a maximum of 50 per cent of their savings in Banks, be used to give small loans to them at a low rate of interest on the strength of a group security, to empower them economically. I also propose to increase the Divineguma monthly allowances, in the case of a family with 4 or more members to Rs.3,000, in the case of a 3 member family to Rs.2,500 and for the rest to Rs.1,000 - per month.

32. CHILD NUTRITION

32.1 Honourable Speaker, I propose to allocate Rs.500 million for the provision of nutritious food for children, to improve nutritional standards of mothers and children by engaging nutritional specialists in each district and to carry out community level mobile clinics to distribute Threeposha and Samaposha nutrition supplements to all lactating and pregnant mothers and for the provision of meals to children attending pre schools. The Dlvi Neguma/Samurdi programs are directed to popularize consumption of homegrown vegetables, milk and eggs towards improving nutrition. I promoting breast feeding through these initiatives. I also propose to give infant milk food at concessional prices through Lanka Sathosa outlets. Since infant milk food is totally free from taxes, I request all super markets and traders to reduce the price of infant milk food.

33. RATAVIRU EMPOWERMENT

33.1 Honourable Speaker, as of now nearly 2 million of our people, a relatively large number being engaged in high earning skilled jobs, are working in overseas destinations. Therefore I propose to allocate further Rs.500 million to develop 5 dedicated vocational schools in Badulla, Kunmegala, Hambantota, Vavuniya and Ampara districts to increase skills of those seeking foreign employment. I also propose to introduce a pension scheme for overseas employees, similar to the Farmer’s Pension Scheme.

33.2 I propose to grant dual citizenship or 5 year work visas to young Sri Lankans living abroad and do not have a Resident Visa to that permits them to serve their motherland. I also propose to grant concessionary duty permits similar to those given to public servants to high income earning Sri Lankans working overseas for the importation of a motor vehicle to the value of 60 percent of foreign exchange they remit to Sri Lankan banks.

34. WOMEN ENTREPRENEURS

34.1 The Regional Development Bank, which is dedicated for Women Enterprise Development implemented a Women Enterprise Credit Scheme to provide working capital loans up to Rs.250,000 without requiring any security to 25 women entrepreneurs from each divisional secretary area under the coordination of the Ministry of Child Development and Women’s Affairs, this year. I propose to extend this facility to a further 25 women entrepreneurs each year, during 2015 -17, those who have successfully developed their businesses through the Divi Neguma initiative or on their own strength will be assisted under this scheme. Industrial Development Board and Export Development Board will provide technical and marketing assistance for their development.

35. LAND OWNERSHIP OF THE GENERAL PUBLIC

35.1 Honourable Speaker, to ease the burden of small land owners specially in urban areas in having to pay a heavy lease rentals to the State, I propose to exempt those earning less than Rs.25,000 per month or Rs.300,000 per year from having to pay any such lease rentals. Further, I propose that introduce a sliding scale ranging from 0.5 percent to 4 percent for each income slabs of Rs.100,000 in excess of Rs.300,000. The 4 per cent slab will only if the income is in excess of Rs.600,000 per year.

35.2 The value of land alienated in terms of the State Land Ordinance will be based on the underdeveloped valuation as at the date of alienation. No arrears will be imposed when implementing this new structure. They will also be permitted to use such lands for small business, in addition to residential use. This will relieve over 100,000 land owners who are expecting state land ownership. I also propose an additional allocation of Rs.500 million to the Ministry of Lands and Land development to accelerate the implementation of above initiatives and to survey lands to issue proper title registration to ensure ownership.

36. SMALL BUSINESSES

36.1 Honourable Speaker, small restaurants, shops, tailor shops, saloons, groceries, traders using pavements, weekly fairs etc. provide a large number of self-employment opportunities in our economy, at least cost. A large number of consumers also benefit from these widespread service providers. I propose to exempt small traders engaged in businesses with a monthly turnover that is less than Rs.50,000 from all levies imposed by local authorities. They need a tax and levy free environment. Arrangements will 1 made to provide suitable space facilities to payment hawkers and small traders involved in mobile businesses along new roads and weekly fairs in metropolitan areas. I propose to provide loans up to Rs.50,000 at 6 percent interest to small tailor shops and saloons to introduce sewing machines and saloon equipment and tool kits to modernize those services. Floating Market City in Pettah has already accommodated 85 small pavement traders of Petta. I also propose to allocate Rs.1,200 million to build a mega market with parking and other community facilities in the 9 acre Chalmers Grannery Land in Pettah to provide trading facilities to around 1,500 small traders in Colombo Fort, to improve their livelihood and business environment.

37. WOODEN FURNITURE AND HOME DECOR

37.1 Sri Lanka has a unique advantage in developing its traditional wooden furniture manufacturing industry for exports, considering the skills of craftsmen who are engaged in this industry, particularly from well-known places such as Moratuwa. In order to assist this industry for exports, outsourcing arrangements will be made to enable small and medium scale manufacturers to supply larger orders with the National Timber Corporation and other reputed manufacturers. The process on the importation of advanced machinery and equipment will be made easier for the industry, to facilitate production for export.

37.2 I propose to set up a credit scheme to promote small craftsmen engaged in the manufacturing of unique artefacts, home decor, designer fabrics, embroidery work, pottery and production of items using precious metals to enable them to acquire material and machinery needed. The restriction on the importation of household and office furniture will be strictly enforced to encourage the local furniture industry. Hotels and property developers will be encouraged to use locally manufactured furniture to the maximum extent possible, by placing a condition in investment approvals.

38. GEM AND JEWELLERY INDUSTRY

38.1 Honourable Speaker, I propose to reduce the duty on importation of gold by exporters using their foreign currency accounts for the purpose of exports to 3.5 percent by way of a 50 percent duty waiver, to encourage jewellery exports. I also propose to reduce the service fee imposed by the Gem and Jewellery Authority to 0.25 percent of FOB value of exports. Bringing a new dimension to the industry, I propose to set up a gem and jewellery processing zone and a gem trading centre in Ratnapura as a global attraction to Magampura Ruhuna development.

39. THE NEW WAVE OF INDUSTRIALIZATION

39.1 Honourable Speaker, I propose to provide lands on long term leases to set up 300 factories in every divisional secretary area in the background of improved prospects for export and import competing industries. Provisions will be made to permit lump sum depreciation for the importation of plant and machinery in addition to exempting them from dividend tax and providing a half tax holiday for a period of 3 years. I also propose to provide modern machinery and equipment for small and medium handloom industries to expand this industry to cater global markets. Investors undertaking new investments in excess of Rs.500 million will be given a 7 year half tax holiday provided such investments are registered with the Inland Revenue Department before end of 2015.

40. RECOGNITION OF PIONEERING ENTERPRISES

40.1 Honourable Speaker, the entrepreneurs who started industries in Sri Lanka even before the opening of the economy in 1977, have made impressive performance by sustaining their capacity to compete with imports as well as entering export markets. Therefore, I propose to give a 10 percent discount on taxes payable by them. 41. ENVIRONMENT AND WASTEMANAGEMENTIN GREATERCOLOMBO

41.1 Honourable Speaker, I propose to increase the allocation granted to the Land Reclamation and Development Corporation by Rs.1,500 million for the acceleration of the development of Weras Ganga, Kalu Oya, the Beire Lake and the Hamilton Canal for the promotion of bio diversity and environmental development in the Greater Colombo area and to improve flood protection systems. As solid waste management in the Greater Colombo area is equally an important priority to ensure proper sanitation and a healthy living environment, I propose to allocate Rs.10,000 million over 201517 to complete this initiative parallel with other urban development programs in the Greater Colombo area to the relevant implementing agencies.

42. TOWNSHIP DEVELOPMENTPROGRAM

42.1 Honourable Speaker, I propose to allocate Rs.3,000 million for the development of modern urban Sati Polas and related community facilities in townships and semi townships connected with urban development programs t o transform Kandy, Badulla, Kurunegala, Galle, Ratnapura, Anuradhapura, Jaffna, Batticaloa and Trincomalee, as modem environments.

42.2 As proposed in the 2014 Budget, with regard to housing schemes being built to meet requirements of nearly 50,000 families who are living i n Colombo City areas without proper housing, one third has already been completed. it is expected that these new housing schemes will be completed in 2015, so that all shanty dwellers would have decent housing and living facilities. I propose to i ncrease t he allocation by Rs.750 million for the accelerated development of housing schemes, including Zoysapura, Elvitigala, Andorson housing complexes, Jayawadanagama, Maththegoda, Andarawathta and 34 other housing schemes that commenced in terms of a 2012 Budget initiative. I also propose to provide a further Rs.750 million to double the housing improvement program of the National Housing Development Authority, for low income people.

43. PLANTATION COMMUNITYHOUSING ANDSANITATION

43.1 Honourable Speaker, the construction of 50,000 housing units has already commenced, to replace the poor quality housing presently available in the plantation sector, over the next three years. I also propose to allocate Rs.2,000 million to the Plantation Trust to improve existing houses with sanitation and toilet facilities. In order to increase the number of housing units jointly developed by the owner and Cooperative Societies on housing loan schemes a further Rs.750 million is proposed to be allocated.

44. SOCIAL SECURITY

44.1 I propose to increase the Rs.1,000 allowance granted to elderly people to Rs.2,000 from January 2015. Elderly clubs will be set up in all Grama Niladari areas to create an enabling environment for elderly people to spend their leisure time watching TV, reading and being engaged in other facilities available at day centres. Medical clinics will also be organized at these centres. An accelerated program will be carried out to ensure eye care as well as primary health care of the elderly. I also propose to allocate Rs.250 million to provide financial assistance to reputed social organizations, which promote elderly care in our society. Rs.200 million will be allocated to rehabilitate elderly homes at Saliyapura, Katharagama, Mirigama and Jaffna. I also propose to allocate Rs.100 million to provide financial grants to film producers and artists to make films and teledrams promoting success stories of traditional family values towards elders.

44.2 I propose to extend a Rs.3,000 monthly living allowance to all differently abled people and a monthly transport allowance of Rs.750 to children with disabilities to help attend school. I propose to provide Rs.100 million to modernize vocational training schools located all over the country to improve such facilities. I also propose to give railway season tickets, festival advances, Agrahara insurance benefits to teachers in these schools.

45. PROTECTION TO CHILDRENANDWOMEN

45.1 Honourable Speaker, the coordinated effort of Sri Lanka Women s Bureau, Child Protection Authority and Sri Lanka Police have reduced child abuse and violence against women, considerably. I propose to allocate Rs.300 million to strengthen field level officers at Divisional Secretariats to expand awareness programs in schools through parents - teachers associations, Divi Neguma community based organizations and to engage retired public servants in family counselling.

46. SPORTS

46.1 Honourable Speaker, our country is privileged to host the 3rd Asian Youth Games an international multi-sports event. We must make every effort to mobilize our youths from all corners of Sri Lanka to take part in this international event, particularly from rural schools. This is a good background to popularize multi sports at school level from next year in addition to developing our youth with multi skills. Therefore, I propose to allocate Rs.750 million to appoint sport instructors from the Sports Ministry, to all schools that do not have such instructors, from next year. I also propose to provide Rs.2,250 million to extend financial assistance for the preparation of our school children, athletes, youth and sport clubs to take part in multisports events by utilizing the already built sports related infrastructure around the country and to rehabilitate Sugathadasa and Keththarama Stadiums and related facilities in Colombo. As our country move well in the area of sports, I propose to set up a state of the art Academy for sports to train instructors and professionals in sports.

47. EMPOWERMENT OF PRADESHIYA SABHAS

47.1 Recognizing the inadequate income sources available to many Pradeshiya sabas to provide basic community facilities such as sanitation, waste management, maintenance of drainage systems, access roads, children’s parks etc., the Government in the 2014 budget provided tractors, small construction equipment and machinery to every Predeshiya Sabha to strengthen their maintenance units. I propose to increase the grant aid being given to low income Predeshiya Sabhas t o maintain such community facilities in an orderly manner, to Rs.2 million a month in 2015. As per the recent review of cadre of these agencies to operate their maintenance and sanitation units, an additional sum of Rs.600 million is allocated to recruit 15,000 field level employees to engage in such work, instead of having to contract-out such work.

48. DEVELOPMENT EXPENDITURE OF PROVINCIAL COUNCILS

48.1 Honourable Speaker, I am very pleased that the Finance Ministry was able to engage with each of the 9 Provincial Councils for the first time since Provincial Councils were set up, to formulate a well-coordinated expenditure programs in accordance with priorities in the context of 2015 — 17 Medium Term Budget Framework.

48.2 In this context, the transformation of provincial schools to be child friendly environments with sanitation, teacher facilities and accommodation as well as strengthening provincial hospitals and dispensaries, strengthening provincial services on agriculture, livestock, fisheries and small industries, the improvement of commuter transport facilities, access roads, market facilities and sanitation, need to be done. Therefore I propose to augment the allocations provided in the budget estimates to provincial councils by Rs.7,000 million to expand these activities. I also propose to provide motor bicycles to schools teachers in semi urban and rural schools, at a concessional price of Rs.50,000 each.

49. PRIVATE TRANSPORT

49.1 Honourable Speaker, I propose to set up a Transport Training Academy to expand facilities to train drivers and conductors of the private bus service to improve the quality of such service as it provides 60 percent of commuter transport. The prepaid card scheme in operation will be exempted from taxes. I propose to allow duty concessions to import new buses, an engine and a gearboxes for any bus that has operated at least for five years. I also propose to introduce a credit scheme at 6 percent interest to encourage investments in new buses by private bus owners who have operated for at least for 5 years. I also propose to exempt income tax from the sale of used buses by private bus owners.

49.2 In order to facilitate the transportation of school children, tourists, small entrepreneurs and goods, the taxes at the point of imports on vans, small buses and truck will also be reduced with effect from today. I also propose to introduce a new insurance and pension scheme through the social security arm of the Divineguina Development Department for those engaged in self - employment, with a reinsurance by the National Insurance Trust Fund.

50. ELECTRICITY TARIFF

50.1 This rich power generation and distribution asset base with its efficiency gain in management, enabled us to reduce the cost of electricity to household consumers by 25 percent in September this year. I propose to create a separate tariff band for those industries and services consuming below 300 units a month to extend a 25 per cent cost reduction to encourage economic activities of SMEs, restaurants and small shops. The charges on KV connections will also be reduced to facilitate such business development and improve competitiveness of their economic activities. I also propose a tariff reduction of 15 percent for all other industries from November 2014.

50.2 In order to reduce fuel imports and promote environmental friendly living, the customs based taxes on all electric cars will be reduced to 25 percent.

51. RANAVIRU PARENT GRATITUDE

51.1 In appreciation of the blessings of parents for their children to join our security forces to liberate our motherland from the terrorism, this government granted a monthly allowance of Rs.750 for each of the parents of our security personnel. I propose to increase this allowance to Rs.1,000 per month. I also propose to extend this allowance to parents of the police and civil security service personnel, from January 2015.

52. JULY STRIKERS

52.1 Honourable Speaker, in my 2013 Budget I provided a monthly retirement payment of Rs.5,000 to each of the victims from both the private and public sectors due to 1980 July Strike who have passed 65 years of age and who became helpless. I propose to increase this allowance to Rs.6,000 750 from January 2015 and reduce the connected age limit to 63 years. I also propose to extend this to any surviving spouse of such Striker, to assist their living.

53. THE SRI LANKA POLICE SERVICE

53.1 The Sri Lanka Police service has made an admirable progress in dealing with high traffic volumes, crimes, tax and financial frauds, illicit liquor and drugs business and civil security responsibilities in liberated areas. We took steps to extend a special allowance t o strengthen t his service. Modern technical equipment and mobile vehicles have been provided to make traffic police services more efficient and effective. Steps have been taken to expand facilities at the Police Academy to develop professional skills and to construct three new housing complexes in the greater Colombo area, to solve housing problems of police officers working in Colombo.

53.2 I now propose to grant a non-resident living allowance to any police officer who is attached to a Police Station outside his residential districts, if such police stations does not have sufficient residential facilities. I propose to give a motorcycle at a concessional price of Rs.50,000 to each police constables and sergeants. I also propose to introduce a separate service minute to formulate a service specific salary structure and strength the administration of the Police Service.

54. TRI SERVICES

54.1 Sri Lanka Tn Services have performed well in providing national security as well in maintaining high standards of conduct. The devotion of human and financial resources for nearly 30 year to counter terrorism did not enable the hi services to develop their infrastructure and other resources required to provide peace time security and to manage a verity of risks that can be seen in the modern environment. The capacity development in hi services to address security at sea, air and ground is essential for economic development and peace. Therefore, I propose to commit Rs.10 billion of capital expenditure in 2015-16 to develop required infrastructure, logistics and professional skills of the tri services conducive for a upper middle income economy by 2020. I propose to increase foreign training facilities for their services and implement a new salary and allowance structure from January 2015. I propose to extend the grant of Rs.100,000 which is given at the birth of the third child to those in the hi services to promote their family environment, for a further 3 years. This grant will also be extended to those serving in the Police Service.

55. STABLE INTEREST INCOMEFORELDERLY PEOPLE

55.1 Honourable Speaker, I propose to offer a 12 percent annual interest rate for deposits of pensioners and elders, who maintain their deposits in State Banks. In order to enable State Banks to pay this interest rate on such deposits, I propose to issue Rs.30 billion worth of Government Bonds at 12 per cent to subsidize the elderly. Central Bank will exempt the statutory reserve requirement on individual deposits maintained by the elderly people in all commercial banks. Central Bank has also permitted Finance Companies to pay 11 percent interest on such deposits. I propose to exempt interest income of deposits held by elders and reduce the withholding tax on interest to 2. 5 percent from next year.

56. MARKET FACILITIES

56.1 Honourable Speaker, the revival of the Paddy Marketing Board and market outlets of Lanka Sathosa, Osu Sala, Fisheries Corporation, MILCO and Laksala have assisted producers as well as consumers by providing stable prices. Therefore, I propose to expand market outlets and storage facilities of all these institutions and set up a Lanka Sathosa People’s Supper Market chain covering the entire country, to provide infant m pharmaceutical products, milk food, chicken, egg, fish and essential food items under one roof, to ensure fair competition in the market. The dedicated economic centres and Sathi Polas in urban areas will also be expanded to promote market competition. I propose to provide Rs.3,000 million for these initiatives.

56.2 Organized super markets and large retail traders have excessively expanded their own inhouse brand products along with excessive margins being imposed for products of other suppliers affecting local SME producers and suppliers unfairly. Therefore, I propose to amend the consumer protection law to ensure that super markets will provide equal treatment to all suppliers in their outlets and to limit charges imposed by them, not to exceed more than 25 percent of the maximum retail price marked on such domestically supplied products. I request super markets and the business community to reduce prices of all essential goods by at least 10 percent in view of the reduction in VAT by 1 percent, electricity by 15 to 25 percent and lending rates of banks by significant margins.

57. A NEW SALARY STRUCTURE FOR PUBLIC SERVANTS

57.1 Honourable Speaker, the new Pay Commission, which I appointed last year, has recommended some changes to the salary structure introduced in 2006. Therefore, I propose to introduce a new pay structure with effect from January 2015. Accordingly, the special allowance given to public servants will be absorbed to the salary structure and raise the minimum salary to Rs.15,000 per month. I propose to maintain a salary ratio of 1:4.25 between minor employees and Secretaries t o accommodate higher annual increments. I also propose to raise the Cost of Living Allowance by Rs.2,200 to Rs.10,000 per month from January 2015 to all public servants. Accordingly, t he minimum monthly income of a public servant will increase to Rs.25,000.

57.2 It is proposed to clear anomalies of those in the lower rank categories in the public services. The new salary structure will recognize specialized services such as education, health, police, railway and postal and service specific allowances will be incorporated accordingly. Service specific allowances of University Lecturers, Doctors and Judicial Officers will be raised appropriately. The professional allowance granted to professional categories will be extended to class 1 and above officers of the Sri Lanka Administrative Service, and all other All Island Services and any public servant with 20 years of service with a recognized professional qualification, by paying a professional allowance of Rs.15,000 per month. The Uniform Allowance of Nurses and Midwives will be i ncreased by Rs.500.The Uniform Allowance of other services will be increased by Rs.300. I also propose to create the required cadre positions to absorb all casual employees who have been in employment for over 180 days in public corporations and statutory agencies.

57.3 Honourable Speaker, the new salary structure, allowances and other salary related benefits will provide public servants a pay increase of Rs.3,500 to 15,000 per month from January 2015 with a minimum monthly income of Rs.30,000 to lowest rank employees. I also propose to allow public servants to borrow up to 40 percent from of t heir gross salary, i ncluding all allowances. Grade 5 and Mahapola Scholarships will be extended to children of public servants as well. All public servants will be given a bank card with a credit limit of Rs.10,000 on interest free basis to be paid in 10 instalments, to meet festival advances. This credit facility will be guarantee by the National Insurance Trust Fund. I also propose to increase the insurance coverage under Agrahara Scheme for surgical operations from Rs.350,000 to Rs.500,000.

57.4 I propose to permit public servants particularly serving in transferable services such as education and health who have served in several places during their services, to be able to draw 75 percent of their last drawn salary from a bank of their choice, immediately after their retirement. Upon retirement, the Department of Pensions will make necessary arrangement to transfer related to the respective divisional secretariat to be able to expeditiously process the pension entitlement with a maximum period of 3 months. I propose to secure pension rights of members of the civil security service as well.

58. PENSIONERS

58.1 Honourable Speaker, I propose to place pensioner’s salaries not on the 2006 salary structure as was requested by all pensioners but on the proposed 2015 salary structure to once and for all correct the inherent anomalies affecting pensioners when salaries of public servants are revised. All pension payments will be adjusted in accordance with the 2015 new salary structure and hence there will be no pension anomalies hereafter.

58.2 I also propose t o grant a l oan of Rs.50,000 each, to at least 100,000 retirees from public services to develop their own backyard economies and for them to generate self-income in addition to their pension income. Such loans could be drawn from bank branches from which they draw their monthly pension without sureties.

58.3 Since all these conversions of salaries and pension payments would take time, I propose to grant an interim allowance of Rs.2,500 per month to all pensioners and Rs.3,000 to all public servants with effect from November 2014, in addition to their salaries and allowances. Full salaries and pensions will be paid with arrears in July 2015 to all those in the non-staff categories and to all those in the staff categories in September 2015, once the conversion of individual salaries and pensions are adjusted.

59. MINIMUM WAGES OF THE PRIVATE SECTOR

59.1 Honourable Speaker, the National Salaries Commission has drawn my attention to the minimum wages of the private sector employees guided by the Minimum Wages Board. While the overall emoluments of private sector employees have increased satisfactorily, such increases have taken place t hrough variety of allowances and not in the minimum wage itself. However, in the context of declining trend i n unemployment and with t he economy growing at around 8 percent per annum with diversified economic activities, I believe it is time to consider a revision of minimum wages in our country to provide incentives to the labour force itself through better remuneration.

59.2 Therefore, I propose t o raise t he minimum wage of t he private sector employees to Rs.10,000 per month from January 2015 and to increase all minimum wages above that threshold at least by Rs.500 per month. As new sectors have been emerged in the economy, I propose to extend Minimum Wage Boards to those sectors within a rational economic cluster arrangement. I also propose to increase the employer contribution to EPF by 2 percent to 14 percent so that each employee will have 22 percent savings from their salaries.

60. YOUTH EMPLOYMENT IN PUBLIC SERVICE

60.1 Honourable speaker, in the background of vacancies in particularly in the provincial and rural centric services, a large number of retirements from the public service is also witnessed. I propose to recruit 50,000 youths as trainees who have GCE A/L qualification but have not been able to secure university admission for technical services of provincial services and management and accounting assistants to serve in rural areas. They will undergo professional and leadership training at the professional training institutes for selected jobs for a period of 6 months. They will be paid an allowance of Rs.8,000 during the training period and will be confirmed after a successful completion of the training. Therefore, I propose to allocate Rs.7,000 million for this program. This program which has been initiated on the suggestion made by representatives of youth organizations and will be coordinated by the National Youth Services Council and the National Youth Corps.

61. PARLIAMENT

61.1 Honourable Speaker, you have brought to my notice, the need for a salary revision of the staff of the Parliament. Therefore along with public service salary revision I propose to raise minimum salary of parliament employees including the special allowance given to public servants to Rs.16,500 per month and place the salary scale of Secretary General on par with Ministry Secretaries. Parliament specific allowance for attending the sessions will be increased by 10 percent. Allocations have been provided to refurbish the parliament and build new housing facilities to members of Parliament.

61.2 The underlying fiscal framework incorporating the impact of these budget proposals is presented in annex I to this budget speech. The relevant amendments to borrowing limits to the Appropriation Act 2014 on account of bond issue to the state enterprises and for accounting of disbursement of foreign finance and revised borrowing limit for the 2015 Appropriation Bill are given in technical notes.

62. CONCLUSION

62.1 Honourable Speaker, having restored security and peace during the first five years and having got important infrastructure and economic activities in place during the last 9 years to satisfy basic needs of the people, our next phase will be to double our efforts towards strengthening education, skills and human resource development so that our economic progress will be driven by knowledge and skills. For all these, it is essential to further consolidate hard won peace and national security. That is the prime responsibility of all of us.

62.2 Let us commit to give a better life to all our children. Let us devote all our efforts towards their betterment. This budget within 2015-17 has laid the foundation to enable our people to cross their boundaries beyond US$ 7,500 by 2020 on the strength of human resource development it is a valuable opportunity for our children, to enjoy the transition to an advanced economy.

62.3 Our resolute in this budget is also to address the remaining facets of poverty and prevent people from developing noncommunicable diseases. The creation of an awareness in the people on the importance of consuming quality food and priority attention on mother and childcare as well as a good education for the new generation while creating new livelihood opportunities for our people must be given special emphasis by public servants, health sector employees and teachers. The vulnerabilities to droughts in dry zone districts can be addressed only by water conservation, advance technology and diversion of water from wet zone rivers to dry zone lands.

62.4 Let your vote for this budget be a vote to drive poverty out of our nation. Let that vote be a vote to enable our people to go from strength to strength as a truly integrated community free from religious or language differences. Let all Sri Lankans enjoy equal opportunities through human resource development and have equal opportunities in economic advancements as well. We being true representatives of our people, cannot let these be compromised. Let us make Sri Lanka the Emerging Wonder of Asia.