DEVELOPMENT PROGRAMME OF CEYLON

of priorities will be done, as in the past, at Ministerial level in the Cabinet. The Ministry of Finance is consulted at an early stage in the preparation of plans, and the actual work is executed under the normal financial control of the Government. Government and Private Investment 11. In formulating their programme the Government have concentrated in the agricultural field on the production of food. It has not been considered necessary to make specific financial provision in the programme for improvements in the cultivation of tea, rubber and coconut. The production of these three commodities is carried on by private enterprise ; the tea plantations are mainly owned by United Kingdom companies, but 60 per cent, of the rubber and nearly all the coconut lands are owned by Ceylonese. It is the Government's policy to encourage and assist improved production of these three commodities. There are two State-sponsored credit institutions which give long-term loans for agricultural development, and private enterprise makes full use of these facilities. While, as indicated earlier, the Government are taking the initiative in establishing certain new industries, this does not exclude private enterprise in this field. It is part of the Government's policy to welcome foreign capital. Limitations on the Programme 12. The successful implementation of the programme will depend primarily on adequate external finance, but also on the availability of technical experts. In many of the projects the initial period of ' running-in' will be left to foreign contractors, whose expertise and managerial skill will be available on mutually agreed terms until the projects are well established and local personnel have been trained. Most of the demands for ordinary technicians and skilled labour can be met locally. Financing the Programme 13. The programme is estimated to cost R5.1,359 million (£lO2 million). Of this, government loans and planned budgetary surpluses are expected to provide about Rs.Blo million (£6l million) over the period. The balance, R5.550 million (£4l million), is the external finance needed to carry out the programme. Of this, some R5.520 million (£39 million) represents the cost of actual developmental imports ; the remainder would allow a slight increase in the volume and range of imports and ease the task of the Government in raising internal finance. Part of the internal finance for the programme will be raised from loans which are expected to total R5.450 million, an annual average of R5.75 million. This would compare with domestic borrowings of R5.46 million in 1948-49 and of Rs.3o million in 1949-50. It is the view of the Ceylon Government that, having regard to the dependence of the economy on world market prices, it would be unrealistic to count on any higher level of borrowing during the development period. The balance of about R5.360 million will be provided by budget surpluses which, at the current rates of taxation, would provide funds at an average annual rate of Rs.6o million, if the present level of prices for export commodities were maintained. 14. The annual revenue of Ceylon is now running at the rate of about R5.650 million. Direct taxation accounts for over 20 per cent, of this, and indirect taxation for about 60 per cent. Of the latter by far the greatest part is export duty, the yield from which depends upon prevailing prices. The revenue from income tax also varies with the incomes derived from

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