Economic effectiveness of the devolution of power to provincial councils in Sri Lanka: a resource-productivity analysis

S. T. Dilhara,T. L. Gunaruwan

doi:10.4038/sljer.v2i1.95

Abstract

The devolution of power through the establishment of Provincial Councils in Sri Lanka is a highly debated subject, but hardly on economic grounds. The present research addressed the subject through the analysis of recurrent and capital expenditure patterns of the Provincial Councils in comparison to those of the National Government. The outcomes of the study clearly shows that the Provincial Council system is still overwhelmingly dependent on Government grants, even for its recurrent expenditure requirements, after 24 years of its existence. The study revealed that the Sri Lankan process of devolution has not been founded on any enabling economic justifications, and has not been able to produce any cost economics, generally expected through economically rational devolution of power. But, the study found that the process has resulted in negative economic implications, particularly by its apparent retarding effect on public investment, to the effect that over half-a-percent additional GDP growth push could be secured annually if the Provincial Council system could be abandoned. The devolution of Power through the Provincial Council system, brought about by the 13th amendment to the Constitution, cannot therefore be concluded as justifiable on economic grounds.

Highlights

Devolution of power in Sri Lanka was a heavily debated subject ever since the introduction of the Provincial Council system in 1988 based on the 13th Amendment to the Constitution.1 Though the advocates of the Provincial Council system (PAFFREL, 2013; Siboti, 2013; Knutsen, 2004; Satyendra, 1988) attempt to justify devolution on the grounds that the centralised system of management has failed to satisfy the aspirations of the people while devolution will guarantee that the developing world economies mitigate the effects of corrupt management in central government and as such will grant these devolved systems the power to ensure their endurance in the competitive global economy (Siboti, 2013)
The highest percentage of total expenditure financed through the “earnings” of the Provincial councils during the period between 1990 and 2012 was 29% and the share of recurrent expenditure and capital expenditure of the Provincial Councils met through the National Government allocations were never less than 68% and 71% respectively (Table 1)
It is noticeable that the Provincial Councils, in some years, have invested less than the capital grants received from the national coffers, pointing at the possibility of misappropriation of funds,6 where the possibility of meeting recurrent expenditures through votes granted for development effort could not be excluded

Summary

Introduction

Devolution of power in Sri Lanka was a heavily debated subject ever since the introduction of the Provincial Council system in 1988 based on the 13th Amendment to the Constitution. Though the advocates of the Provincial Council system (PAFFREL, 2013; Siboti, 2013; Knutsen, 2004; Satyendra, 1988) attempt to justify devolution on the grounds that the centralised system of management has failed to satisfy the aspirations of the people while devolution will guarantee that the developing world economies mitigate the effects of corrupt management in central government and as such will grant these devolved systems the power to ensure their endurance in the competitive global economy (Siboti, 2013). Devolution of power in Sri Lanka was a heavily debated subject ever since the introduction of the Provincial Council system in 1988 based on the 13th Amendment to the Constitution.. Though the advocates of the Provincial Council system (PAFFREL, 2013; Siboti, 2013; Knutsen, 2004; Satyendra, 1988) attempt to justify devolution on the grounds that the centralised system of management has failed to satisfy the aspirations of the people while devolution will guarantee that the developing world economies mitigate the effects of corrupt management in central government and as such will grant these devolved systems the power to ensure their endurance in the competitive global economy (Siboti, 2013). Several others suggest continuing with the system, but with further constitutional amendments to remove some of its provisions

Methods

Results

Conclusion