Balancing Desperate Remedies


There can be nothing worse than getting the feeling that time was wasted allowing the loss of opportunities.  Destructive taxation policies and remedial stop-gap-measures affected the general trend in our efforts towards economic development. When the numbers grew, needs for financial requirements also grew. The experts may say no nation can completely eradicate inflation, but is that actually so? If currencies become stronger the buying power remains stable or might even increase, and it is only over investment that can affect rates of interests. In affluent nations the poverty line is negligible; the surpluses generated can always absorb the burden. In Sri Lanka it’s not the case. Let us close our eyes, and try to bring back at least one example of price reductions, we will realise without fail that, prices always increased.

A recent report by the Resident Coordinator of the United Nations, can be taken as a fair and a neutral picture, it says “Sri Lanka is facing its worst economic crisis since independence. Concurrent challenges in public finance and sovereign debt, as well as the availability and affordability of food, fuel, fertilisers, and medicines, have disrupted livelihoods across the country. As a result, around 5.7 million women, men, girls and boys are now in urgent need of humanitarian assistance”. The cost of products and services has spiralled.

While successive Governments kept on increasing prices it has now reached disastrous levels: faster now due to national urgencies that cannot be postponed. It has become a scary reality that has acquired the features of a peptic ulcer, a medically common phenomenon that attacks the human digestive system. A peptic ulcer develops because a bacterial infection eats away the protective lining of the digestive system making all remedial treatment highly uncontrollable.

Not very long ago, a top crust loaf of bread cost less than Rs 60.  Within a short period of time it kept on increasing and now costs more than Rs 150. Rice that used to be less than Rs 75 per kilo has now gone beyond Rs 200. The spiralling effect of the major price increases has affected the system making it difficult for large families to survive. The burden gets larger when essentials go up in prices and are not available: like the power supply, transportation, kerosene and Liquefied Petroleum. It is the common citizen who is affected most. Decision-makers generally belong to the privileged class and since they are hardly affected and spared long hours of standing in queues.

Pathetic indifference 

The increases are not illogical, what’s illogical is the people carry the burden now for the unforgivable sins caused by other. The UN Resident Coordinator mentioned that food prices have reportedly increased by 73 per cent in the last two years, but in reality, it was actually more than 100 per cent in the cases of rice and bread. Our country was reduced to total dependency on imported milk powder and a wide variety of formula-based products, which have to be imported from other countries, with the unavoidable necessity to pay more Rupees in the first place and then the taxes and levies added on.

Main solution to kick-start

Have those decision makers thought about the seriousness of the situation ? One may raise the question whether there is an alternative. Unfortunately, yes. They have not bothered to worry about those unnecessary angles. About a buffer reserve to absorb shocks. The increases in prices and levies are now raked from the consumers, who were not in any way responsible for this ugly calamity. But, in reality, they are compelled to bear the burden. One may raise a very legitimate sounding question about the way it should be realised. Now the Government is negotiating with a variety of Funding Agencies as well as Companies to secure assistance and relief in a large number of sectors. We can assess the requirements for a fixed period. The quantum of the totals can give us an idea of the requirement. This will facilitate the opportunity as the alternative to the Government to avoid slamming levies so that the prices do not have to change. In other words, the mechanism shall serve as a subsidy, this arrangement may be planned for a period of two financial years and a cash flow can be prepared to show how all those facilities provided can be recovered by the Government.

The responsibility can be shared by all the commercial banks so the Banks would guarantee to the Government the Duty /Levy Components and the Port Charges. As a result, any essential food items that have been imported can be released to the Importer. Also, this can be used as an opportunity to recover large sums due from the major tycoons who are supposed to be doing well and have the capacity to pay back. The pay back can be based on the national austerity plan for recovery, with the inclusion of the commitments given to the  I.M.F. and any other facilitators with whom we are required to work.

Other solutions

This crisis is a blessing in disguise to help us understand what is really good for us. All what surfaced because of the crisis has been caused by negligence of our own political system that did not care for statesmanship and governance.

About 70 per cent of the households are compelled to reduce food consumption and even miss meals. They are affected by the loss of livelihood due to adverse conditions that ravaged the country recently, the absence of opportunities for small enterprises have affected mainly women and daily-paid workers and the absence of opportunities even for irregular employment  have affected citizens very much. No one should face a multidimensional food security crisis. As a society that is being misled by a small section, our values have changed and the blind effort of those who think development is a combination of credit card culture and the free economic practices have influenced the thinking of the new generation.

Of the younger generation, only 3 per cent can obtain higher education and even if we add another 7 per cent it will be only a percentage like 10 per cent who can be identified as fortunate. Even if we add another 10 per cent to the fortunate lot, it shall be only 20 per cent and we must not forget that there are enough and more young people who shall be in the balance 80 per cent of the Human Resources. There are no Government Agencies or Private Sector enterprises capable of becoming responsible for that 80 per cent which can be transformed into a highly productive section in our society. How many former paddy lands have been allowed go fallow. The youth organising themselves into labour cooperatives can easily convert all those lands into very productive agricultural lands within six months, if desired.

Paddy can be harvested within six months and a crop like manioc or tapioca also in a period like that. Other food crops also can show results in similar short periods like that. Other important crops that can generate cash can be the solution for the aspect mentioned regarding revenues. On the other hand, the free medical attention that was available to people also had vanished in an environment where medicines are not available including the surgical attention. The economic crisis has affected law and order having effect on Protection Concerns, gender-based violence while the facilities that were there to protect children are neglected.

By Ananda Ariyarathne