Nationalisation in Sri Lanka

Nationalisation in Sri Lanka refers to a series of state-led initiatives from the 1950s to the 1970s in which key sectors of the economy—transport, education, plantations, banking, and industry—were brought under state control. These actions were driven by socialist ideology, anti-colonial sentiment, and the goal of reducing elite and foreign influence over national resources. Nationalisation played a central role in shaping Sri Lanka’s post-colonial economic model and state structure.

History

Mahajana Eksath Peramuna Government (1956–1959)

The initial wave of nationalisation began under Prime Minister S. W. R. D. Bandaranaike's Mahajana Eksath Peramuna government, which came to power in 1956 on a platform of Sinhala nationalism and economic reform. His government nationalised the private bus industry in 1958, leading to the creation of the Ceylon Transport Board (CTB), which aimed to rationalise rural transport and eliminate private monopolies.^[1]

In education, Bandaranaike's administration took steps toward bringing denominational schools under state control, setting the stage for a more comprehensive takeover under his successor.

Sri Lanka Freedom Party Government (1960–1965)

Takeover of schools

The nationalisation of schools was formalised under the Assisted Schools and Training Colleges (Special Provisions) Act No. 5 of 1960, passed by Sirimavo Bandaranaike’s Sri Lanka Freedom Party government. This act allowed the government to take over all assisted private schools receiving state funding. The primary targets were elite Catholic and Protestant mission schools, many of which had operated autonomously since the colonial period.^[2] These schools were converted into state-run institutions. Religious instruction was curtailed, and control was transferred to the Ministry of Education. The Catholic Church in particular resisted the move, viewing it as a threat to religious and minority rights. Nevertheless, the government argued that the policy ensured equitable access and reduced educational privilege tied to colonial legacies.^[3]

Nationalisation of industry and banking

The government nationalized the Bank of Ceylon and formed the People’s Bank, redirecting credit toward national development goals.^[4] It nationalised the petroleum sector by establishing the Ceylon Petroleum Corporation in 1961 and expropriated the properties belonging to Shell, Esso and Caltex.^[5] Colombo Harbour was nationalized in 1958, followed by the Galle Harbour in 1964 and the Trincomalee Harbour in 1967.

United Front Government (1970–1977)

Economic nationalisation

The most extensive nationalisation efforts were carried out during the United Front government led by Sirimavo Bandaranaike. This administration, supported by the Lanka Sama Samaja Party and the Communist Party of Sri Lanka, implemented a socialist-oriented agenda focused on the nationalisation of plantations, banks, and major industries. These moves were intended to achieve economic self-sufficiency and reduce dependence on foreign investment and imports. However, many state-owned enterprises became inefficient, overstaffed, and politicised.^[6]

Land and plantation reform

The Land Reform Law of 1972 imposed a 50-acre ceiling on private land ownership. Over one million acres of land—including foreign-owned tea, rubber, and coconut plantations—were expropriated and redistributed through the Land Reform Commission.^[7]

Nationalisation of the press

In 1973, the government nationalised the country’s largest newspaper group, Associated Newspapers of Ceylon Limited (ANCL), commonly known as the "Lake House". This was done under the Associated Newspapers of Ceylon Limited (Special Provisions) Law No. 28 of 1973. The justification for this move was to prevent media monopolies and ensure that information served the national interest.^[8] Following nationalisation, ANCL newspapers—including the Daily News, Silumina, and Dinamina—came under state control. Critics argued that the nationalisation led to the erosion of editorial independence and turned major publications into government propaganda tools. Journalistic dissent was curtailed, and media became a platform for advancing the United Front’s political messaging.^[9] The press nationalisation marked a turning point in Sri Lankan media history, with long-lasting effects on freedom of expression and the role of the media in public accountability. In 1964, the SLFP-led coalition under Bandaranaike had introduced a bill to take over Lake House. However, the move was highly controversial and triggered strong opposition from both the United National Party and elements within the ruling coalition. On 3 December 1964, 13 members of the SLFP, led by C. P. de Silva, crossed over and voted with the opposition against the press takeover bill. As a result, the government was defeated in Parliament by one vote, forcing Bandaranaike to dissolve Parliament and call early elections.^[10] The incident marked the fall of the first Bandaranaike administration and was one of the earliest examples of press nationalisation becoming a flashpoint for political instability in post-independence Sri Lanka.^[8]

United National Party Government (1977–1989): liberalisation and reversal

After the 1977 election, the United National Party led by J. R. Jayewardene shifted economic policy towards liberalisation. The new government reduced state control, encouraged foreign direct investment, and introduced market reforms. Some previously nationalised enterprises were privatised, while others were restructured.

Reforms included:

Creation of Free Trade Zones
Deregulation of imports and exports
Reduction in government subsidies and price controls

Despite the reforms, large segments of the public sector remained under state ownership, particularly in education, transport, and health. The structural legacy of nationalisation continues to influence Sri Lanka’s political economy.^[11]

Legacy

Nationalisation in Sri Lanka had mixed consequences. On one hand, it expanded public access to essential services and diminished colonial-era inequalities in education and landholding. On the other, it created a large and often inefficient state sector, burdened with political patronage and limited innovation. The transition to liberalisation in the late 20th century did not fully dismantle this legacy, which continues to shape debates on economic policy and state reform.

List of State Corporations created to manage state and nationalised assets

Name of Corporation	Sector	Year Established	Purpose / Function	Legal Basis / Notes
Land Reform Commission (LRC)	Land & Plantations	1972	Took over excess private lands and redistributed to state or cooperative farms	Land Reform Law No. 1 of 1972
Janatha Estates Development Board (JEDB)	Plantations	1976	Managed nationalised tea and rubber estates	Post-land reform implementation
Sri Lanka State Plantations Corporation (SLSPC)	Plantations	1958	Took over large British-owned estates	Early state-run plantation management
Ceylon Petroleum Corporation (CPC)	Energy	1961	Took over petroleum imports, refining, and distribution	CPC Act No. 28 of 1961
Ceylon Electricity Board (CEB)	Electricity	1969	Took over national electricity generation and distribution	CEB Act No. 17 of 1969
People's Bank	Banking & Finance	1961	State bank offering rural and development credit	Created by Act of Parliament
National Savings Bank (NSB)	Banking & Savings	1971	Centralised state savings institutions	NSB Act No. 30 of 1971
State Mortgage Bank	Housing Finance	1970s	Provided housing loans under government policy	Predecessor to Housing Development Finance Corp.
State Pharmaceuticals Corporation (SPC)	Pharmaceuticals	1971	Centralised import and distribution of medicines	SPC Act No. 49 of 1971
State Pharmaceutical Manufacturing Corporation (SPMC)	Pharmaceuticals	1987	Local manufacturing of essential drugs	Built on SPC infrastructure
Ceylon Transport Board (CTB)	Transport	1958	Nationalised private bus companies for public transit	Transport Board Act No. 48 of 1957
State Engineering Corporation (SEC)	Construction & Industry	1962	Handled state infrastructure and construction projects	Soviet-assisted establishment
Ceylon Steel Corporation	Industry / Manufacturing	1962	Produced steel and construction materials	Soviet-assisted state enterprise
Ceylon Tyre Corporation	Industry / Manufacturing	1967	Local tyre production to replace imports	Industrial diversification
State Timber Corporation	Forestry	1960s	Managed state forest resources and timber production	Forestry-related policy
Ceylon Ceramics Corporation	Manufacturing	1960s	Produced tiles, ceramics for local use	Nationalised or state-established
State Hardware Corporation	Manufacturing	1960s	Manufactured and distributed hardware and tools	State-led industrial policy
Ceylon Glass Company (majority state-owned)	Manufacturing	1970s	Produced bottles and packaging	Acquired through partial state ownership
Ceylon Shipping Corporation	Shipping	1971	National cargo and maritime transport	Created under state monopoly policy
Air Ceylon (state-owned by 1960s)	Aviation	1960s	National airline of Ceylon	Later replaced by SriLankan Airlines
Co-operative Wholesale Establishment (CWE)	Retail & Distribution	1950s	Handled food imports, consumer goods distribution	Part of food security and price control
Marketing Department	Commodities	1950s	Stabilised prices and managed food supplies	Oversaw rice, flour, sugar, etc.
Associated Newspapers of Ceylon Limited (ANCL)	Media & Publishing	1973	Nationalised publishing house for newspapers like Daily News, Silumina	Associated Newspapers Act No. 28 of 1973

References

^ de Silva, K. M. (1997). A History of Sri Lanka. Penguin Books. pp. 540–542.
^ Jayaweera, Swarna (2004). Education in Sri Lanka: Policy, Practice and Prospects. Institute of Policy Studies.
^ Perera, L. A. (1982). "Religious Education and the Takeover of Schools in Ceylon". Ceylon Journal of Historical and Social Studies.
^ Snodgrass, Donald (1966). Ceylon: An Export Economy in Transition. Richard D. Irwin.
^ Petroleum Corporation (1994). Oil Refinery: 25th Anniversary (in English, Sinhala, and Tamil). Central Bank of Sri Lanka.
^ Richardson, John M. (1979). "Socialist Experiment in Sri Lanka". Asian Survey. 19 (6): 547–564.
^ Moore, Mick (1985). "The State and Peasant Politics in Sri Lanka". Cambridge South Asian Studies. 28.
^ ^a ^b Wickramasinghe, Nira (2006). Sri Lanka in the Modern Age: A History of Contested Identities. University of Hawai‘i Press. pp. 245–248.
^ Fernando, Ralph (1982). "The State and the Media in Sri Lanka". Media Asia. 9 (4).
^ de Silva, K. M. (1997). A History of Sri Lanka. Penguin Books. pp. 545–547.
^ Kelegama, Saman (2006). Development Under Stress: Sri Lankan Economy in Transition. SAGE Publications.

[1] Silva, K. M. (1997). A History of Sri Lanka. Penguin Books. pp. 540–542.

[2] Jayaweera, Swarna (2004). Education in Sri Lanka: Policy, Practice and Prospects. Institute of Policy Studies.

[3] Perera, L. A. (1982). "Religious Education and the Takeover of Schools in Ceylon". Ceylon Journal of Historical and Social Studies.

[4] Snodgrass, Donald (1966). Ceylon: An Export Economy in Transition. Richard D. Irwin.

[5] Petroleum Corporation (1994). Oil Refinery: 25th Anniversary (in English, Sinhala, and Tamil). Central Bank of Sri Lanka.

[6] Richardson, John M. (1979). "Socialist Experiment in Sri Lanka". Asian Survey. 19 (6): 547–564.

[7] Moore, Mick (1985). "The State and Peasant Politics in Sri Lanka". Cambridge South Asian Studies. 28.

[Wickramasinghe-8] Wickramasinghe, Nira (2006). Sri Lanka in the Modern Age: A History of Contested Identities. University of Hawai‘i Press. pp. 245–248.

[9] Fernando, Ralph (1982). "The State and the Media in Sri Lanka". Media Asia. 9 (4).

[10] Silva, K. M. (1997). A History of Sri Lanka. Penguin Books. pp. 545–547.

[11] Kelegama, Saman (2006). Development Under Stress: Sri Lankan Economy in Transition. SAGE Publications.

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