Dominion of Ceylon - Economy

Economy

Main article: Economy of Sri Lanka See also: Tea production in Sri Lanka and Tourism in Sri Lanka

The economy of the Dominion of Ceylon was mainly agriculture-based, with key exports consisting of tea, rubber, and coconuts. These did well in the foreign markets, accounting for 90% of the export share by value. In 1965, Ceylon became the world's leading exporter of tea, with 200,000 tonnes of tea being shipped internationally annually. The exports sold well initially, but falling tea and rubber prices decreased the earnings, with a rapidly increasing population cutting further into those profits. In the early 1970s, the Ceylon government nationalised many privately held assets as part of the newly elected government's socialist policies.

The Land Reform Law of 1972 imposed a maximum of twenty hectares of pland that can be owned privately, and sought to reallocate excess land for the benefit of the landless workers. Because land owned by public companies under that was less than ten hectares in size was exempted from the law, a considerable amount of land that would otherwise have been available for redistribution was not subject to the legislation. Between 1972 and 1974, the Land Reform Commission set up by the new laws took over nearly 228,000 hectares, one-third of which was forest and most of the rest planted with tea, rubber, or coconut. Few rice paddies were affected because nearly 95 percent of them were below the ceiling limit. Very little of the land acquired by the government was transferred to individuals. Most was turned over to various government agencies or to cooperative organizations, such as the Up-Country Co-operative Estates Development Board. The Land Reform Law of 1972 applied only to holdings of individuals. It left untouched the plantations owned by joint-stock companies, many of them British. In 1975 the Land Reform (Amendment) Law brought these estates under state control. Over 169,000 hectares comprising 395 estates were taken over under this legislation. Most of this land was planted with tea and rubber. As a result, about two-thirds of land cultivated with tea was placed in the state sector. The respective proportions for rubber and coconut were 32 and 10 percent. The government paid some compensation to the owners of land taken over under both the 1972 and 1975 laws. In early 1988, the state-owned plantations were managed by one of two types of entities, the Janatha Estates Development Board, or the Sri Lanka State Plantation Corporation. Additionally, a revamped system of education created a glut of skilled workers that could not find employment.