Inclusive development is a necessity for Sri Lanka
Inclusive development means combining aspects of social development with economic growth and this is often done through political intervention implemented through various subsidy schemes and normal market guided production systems combined with environmental sustainability.
The monthly public lecture organised by the Centre for Banking Studies, Central Bank (CB) was held on Monday in a webinar presentation by CB Governor Prof. W.D. Lakshman on the topic “Financial Inclusion for the Overall Inclusive Development: Case for Sri Lanka “where he made the above statement.
“We have approached development which goes beyond the so-called trickle-down means of development in which it is because the process of economic growth – in the sense of growth of gross domestic product accompanied by a process of trickling down the benefits of growth to the lower strata of society,” he said.
Such a beneficial process is believed to have economic growth simultaneously by employing the benefits in poverty elimination and fair distribution of incomes. The history of development has shown over and over again that it has not just happened and effective intervention of the state in the market processes were needed to ensure a fair sharing of economic growth benefits, he indicated.
Prof. Lakshman stressed the need to have a wide range of financial services. These financial services might be provided by a variety of financial institutions operating in a sound and sustainable manner and the range of financial services includes deposits, payments, savings, long term credit, mortgaging, insurance, pensions, local money transfers, personal remittances and so on.
Economic development cannot just be a gradual increase in production, but rather a spontaneous process of production and this definition of economic development has been written some decades ago offering many lessons.
In the sphere of economic development, credit has played a key role in promoting all these new ways of paying debts. Credit particularly from development banks from the very early days of evolution of development theory, politicians and economists alike emphasised the importance of the financial system for the rise of capitalism, industrialisation and economic development, he said.
The emphasis placed on the role of money in lowering transaction costs, permitting greater specialisation by introducing technology and innovation is well known, he said. Steering economic growth was highlighted by many arguing that intermediaries play a pivotal role in economic development because they use the opportunities available.
He said that financial intermediaries can boost the technological innovations by identifying the entrepreneurs promising projects and these institutions have dealt with, in resource allocations by monitoring the performance of enterprises.
Prof. Lakshman said the existence of a secure financial market could assist the country’s economic growth by helping consumers and investors.
The emphasis placed on the role of money in lowering transaction costs, permitting greater specialisation by introducing technology and innovation is well known, he said. Steering economic growth was highlighted by many arguing that intermediaries play a pivotal role in economic development because they use the opportunities available.