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Despite the constraints of war and problems of the global economy, Sri Lanka's economy could be seen in the steady rise of the country's per capita income from US $ 680 in 1994 to the current level of US $ 870, President Kumaratunga, said, last evening. In a special television interview on the state of the economy, the President said that the Government intended to further raise per capita income levels to US $ 2500 by the year 2010. President Kumaratunga said that the People's Alliance Government had taken every possible step to keep Cost of Living (COL) as low as possible. The annual rate of increase in the COL had been hovering at a mere five percent over the past five years in spite of the war. Noting that the annual rate of increase of the COL was 14 percent when the PA Government took over, the President felt that the decrease of nine percent was a good achievement. Even in the advanced countries the prices of goods increase annually, she noted. The government had been able to give two salary increases to state employees whereas the last regime has not given any for ten years, the President observed. The income of exporters has also grown unlike its performance in the past. The government is also trying to bring down the price of potatoes, rice and other agricultural products. The President said the high unit price of most of these items was due to, not using good seed material during cultivation. India has been able to produce a kilo of potatoes for Rs.3 when it was Rs.28 here. When it was asked why the prices of gas, petrol and diesel were so high, President Kumaratunga said such increases had been prompted by the rise of prices in the world market. Last year, the price of crude oil in the world market stood at US $ 12-14 per barrel. But now it is US $ 29-31, the President pointed out. The government was unable to reduce the price of gas as its supply was run by a private company. The full amount of the increase had to be passed on to the consumer, she explained. However, a major portion of the price of petrol and diesel has been absorbed by the government. This rise in fuel prices had prompted the hiking of bus fares and the prices of many other items including vegetables, she pointed out. Asked whether it was possible to reduce the Goods and Services Tax (GST) at least on the essential items, the President argued that having more than one tax rate tended to create problems. She also said that the Government has imposed a lower GST rate (12.5 percent) when the real amount should have been 18 percent.
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