IMF-IBRD INTERVENTION IN SRI LANKA 5 other service activities had the effect of increasing the proportion of the population engaged in non-tood production. Non-export agriculture, neglected during the colonial period and contiouing to suffer from various problems causing low productivity, was unable to produce a surplus of food to feed the increasing non-food-producing population. Sri llanka's imports thus came to be heavily concentrated on foodstuffs. What is more, the bulk of these food imports, 91 per cent in 1948-50, was made up of essential items : rice, wheat flour, pulses, currystuffs, fish products, milk products and sugar. These, together with other consumer items, formed 73 per cent of the country's imports in 1948-50; intermediate goods were 17 per cent and investment goods, 10 per cent. Although some form of "capitalist" organisation took root in certain sectors of the economy like plantations and selected service sector activities, the colonial economy did not produce the necessary conditions for an organic development of capitalism on a wide front. The capitalist sectors came to be dominated by foreign private capital, either directly through equity holdings in companies engaged in domestic productive activity (e.g. Sterling Companies in the plantations sector) or indirectly through management control via foreign-owned companies like Agency Houses. As in the case of other colonial economies, the surpluses generated in Sri Lanka too were largely sent abroad, leaving very little for further accumulation domestically. The bulk of the economy which remained pre-capitalist and of low productivity^ on the other hand, >was not in a position to generate any significant investible surplus. It may be noted here that this large pre-capitalist sector included not only peasant sectors in paddy, and other non-export crops, handicrafts and cottage industries,'but also a fair proportion of the export crops sector which was in small holdings. In terms of acreage ownership, small holdings dominated the coconut sector, and were equally important as estates within the rubber sector. With the passage of time, there was, no doubt, some development and accumulation of domestically—owned capital. But it retained a dependent and merchant character and was invested in bulk within plantations, trade and other service activities. As in the case of colonial economies in similar conditions, in Sri Lanka too, the free trade policy effectively prevented any significant industrial accumulation. Thus when, during the Second World War for example, imports of industrial goods had to be drastically cut for war-related reasons, private capital failed to invest in industry, making the state fill in the so created gap (Amarasinghe, 1979). State capitalism in industry during the war period, however, was a temporary .phenomenon. The termination of hostilities and the gradual return to normalcy in external trade flows prevented further expansion in state or private capitalism in industry. As will be seen in the following section, the intervention of the World Bank in the early 1950's led to a gradual process of the state's disengagement from industrial activity. On a request made by the government of Sri Lanka in mid-1951, the WB organised "an over-all mission....to survey the development potentialities of