The economy grew by 7.9 percent during the first quarter of 2011 compared to the 7.1 percent recorded in the same period of 2010, the Mid-Year Fiscal Position Report 2011 stated.

This level of growth in the first quarter of 2011 is remarkable as this is achieved despite a drawback in some sub sectors, such as paddy, coconut and other food crops due to flood damages in the beginning of the year, which resulted in a negative growth of 5.1 percent in the Agriculture sector, it said.

The stock market continued to grow with the positive outlook in the favourable macroeconomic environment, decline in interest rates, higher business confidence and brightened growth prospects following the end of the terrorist insurgency, the report said.

The total expenditure on welfare payments and subsidies during the first five months of 2011 increased by 37 percent to Rs. 23,648 million compared to the corresponding period of the last year, stated the report.

It also said the welfare programmes implemented for the benefit of school children by providing free school textbooks, uniforms, season tickets and free dharma school books, and bursaries etc. were continued at a cost of Rs. 2,234 million.

Under the fertilizer subsidy programme, the government incurred Rs. 11,876 million during the first five months of 2011. Accordingly, all varieties of fertilizer for paddy farmers were provided at Rs. 350 per 50 kg bag while small holder tea producers received urea at a subsidized price of Rs. 1,000 per 50 kg bag, the report added.

The report said expenditure on "Maga Neguma", the island-wide rural infrastructure development programme, amounted to Rs. 939 million during Jan-May 2011. During this period, around 156 km of rural roads have been rehabilitated using modern techniques aiming at eradication of development bottlenecks for boosting local economic activities. Further, a total of 340 bridges, flyovers, culverts and causeways have also been constructed benefiting 26,314 families, it said.

The investment on road sector was around Rs.19,479 million during the period of January – May 2011. This includes Rs.4,279 million on expressway development and Rs. 8,914 million on development highways islandwide. Meanwhile, Rs.4,861 million on widening and improvement of Provincial roads, Rs. 524 million on construction of bridges and flyovers and Rs. 898 million on Tsunami affected road rehabilitation had been incurred during the period. Also, under the Maga Neguma and Gama Neguma programmes, Rs.939 million and Rs. 1,153 million were spent respectively for the development of rural roads etc.

In the area of education, Rs. 11,218 million has been spent under the allocation made to the general education sector during the first five months of 2011. Further, Rs. 7,778 million has also been spent for the higher education sector.

Worker remittance flows posted a 27.8 percent increase to US$ 1,273.7 million in the first quarter of 2011 compared to the same period of 2010 complemented by expansion of banking facilities, particularly the opening up of bank branches in the Northern and Eastern provinces.

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