At what cost, the subsidy-cuts?

By N Sathiya Moorthy

Even as Parliament discussed women empowerment recently, local newspapers reported how many girl students were taking periodic leave from school because families could not afford to buy them sanitary napkins. Afterwards, the State minister for women and child welfare, Geetha Kumarasinghe told Parliament that on her request, President Ranil Wickremesinghe has agreed to reduce the cess, the Port and Development Levy (PAL) and customs duty on sanitary pads.

Better still, a local manufacturer, the minister said, had agreed to provide sanitary pads at LKR 150 for school children. That is saying a lot about how mindless has the system worked post-economic crisis and how human intervention (alone) can help.

Maybe, the minister should consider approaching bigger manufacturers and suppliers to give away free napkins to poor students in rural and urban areas for a time, as part of their CSR and/or awareness programme. In the south Indian state of Tamil Nadu, the local government had introduced the scheme, as a part of women education/empowerment programme.

Million emigrate

Yet, such is the economic plight at the grassroots-level that over a million Sri Lankans have left the country in the past 20 months through official routes, as per official records That includes over 500 medical doctors, whose profession through the past seven decades had contributed to make Sri Lankan healthcare system among the best in the Third World, particularly in South Asia.

This apart, according to Opposition SJB, the government?s decision to lower the retirement age of government employees from 62 (as hiked and hyped by the predecessor Gotabaya Rajapaksas government) to the original 60 years of age would lead the mass retirement of many super-specialist doctors from service, at the stroke of the midnight hour on New Year Eve. Rather, that is the deadline fixed for seeing off all those who would have crossed 60 years as on that date.

To think that some political parties had protested when the Sirisena-Ranil government had included ?Services? in the proposed Economy and Technology Cooperation Agreement (ETCA), as it could lead to medical doctors from across the Palk Strait glutting the Sri Lankan market, and denying opportunities for local specialists. Today, they may be the ones who may want Indian doctors to come and work there ? as they would rather have their own doctor-son or daughter to go West, grow green.

Leaving aside the emerging doctor-crunch, government hospitals also lack the basic means to fight malnutrition in children, which is becoming increasingly rampant, some reports have clamed. It is understandable, as the authorities do not have the funds to clear the pending bills of private contractors, who hence have discontinued clearing the medical waste that are piling up in government hospitals for weeks and months now. Both are sure causes for the spread of multiple diseases, viruses and epidemcs, both old and possibly new.

Refugee issue

The million-plus migrants do not include illegal immigrants, whose numbers may still be a trickle in comparative terms. Now, however, members of the Sinhala majority are joining minority Tamils, to use the illegal ?human-trafficking? route to ?escape? what they fear is stark poverty nearer home, if it is not already. If they do not succeed as much, it?s because Australia, the destination of Sri Lankans who want to take the ?boat?, has been working closely with Sri Lankan authorities to check against it all.

There is a lesson for the authorities and others who want to bring back Tamil refugees who are having a relatively safe, secure and hunger-free life in the camps run by the local government in the south Indian state of Tamil Nadu, across the Palk Strait. But going by certain indicative trends from Europe, will some of those nations tie their economic aid to Sri Lanka taking back refugees who have not yet been granted local citizenship?

Acute food scarcity

In the midst of all this, or as an extension thereof, the world Food Programme (WFP), the food assistance branch of the UN, has said that over a third of the nation?s population, or 37 per cent to be precise, was facing acute food scarcity. ?population (37 percent) are presently facing acute food insecurity, a latest report released by the World Food Programme said. In its report on ?Sri Lanka: Remote Household Food Security Surveys?, the WFP said that that (a very high)?79 per cent of the population is now resorting to coping strategies such as relying on less preferred food (78 per cent), limiting portion sizes (49 per cent) and reducing the number of meals (39 per cent).

In comparison, as recently as 2019, food insecurity was just 9.1 per cent, going up to 28 percent in June this year, and 37 per cent at present. ?According to WFP, nearly four in ten households are facing insufficient food consumption with many consuming far less diverse diets due to price increases. While vulnerable households are nearing the brunt of the crisis, women-headed households are faring worse than those headed by men.

Among these sections, 51 per cent of the households in estate areas are food insecure. As was to be expected, Central Province and Uva Province are the worst-affected. Unlike often assumed, apart from the estate labour, urban areas are the worse affected than their rural counterparts. Though the WFP report did not mention it, even in the early stages of the Aragalaya struggle, foreign journalists touring the country brought out this reality in their despatches ? pointing to the higher prices and shortages with empty store shelves in capital Colombo and other urban centres than rural villages deep South.

Plight of paddy farmers

It is in this background that the worsening plight of mainstay agriculture sector? too needs to be viewed with greater concern than already. The Agriculture Ministry?s decision to speed-up the distribution of urea required for the Maha season for paddy cultivation in Ampara, Batticaloa, Mullaitivu, Jaffna, Anuradhapura and Moneragala districts, as it commences in the first fortnight of October is welcome. So is the government decision to arrange for the supply of MOP (Murate of Potash) fertilizers for paddy cultivation, officials have claimed.

The government, at the instance of Agriculture Minister Mahinda Amaraweera, will provide urea for the Maha season at a price of LKR. 10,000 per 50 kg bag, as in the Yala season. For tea and maize, which are commercial crops, the price is fixed at LKR 15,000 per 50-kg bag.

Officials said that paddy cultivation for the Maha season in those districts is scheduled to start in the first two weeks of next October. Therefore, the aim of the Ministry of Agriculture is to give the farmers the opportunity to easily buy urea fertilizers by providing them to the Agrarian Services Centres countrywide.

Yet, there is the undecided issue of the purchase pirce of paddy, which has agitated farmers, worsening their plight even more. At a meeting chaired by Prime Minister Dinesh Gunawardena, Minister Amaraweera reportedly reiterated his charge that state-run banks were not financing paddy-procurement.

Banks reportedly have expressed their inability, as the Paddy Marketing Board (PMB) already owed them huge sums in unpaid credit for earlier operations of the kind. Already, there is an? argument that the government could not afford to compete with the private operators.

High inflation

Given multiple factors already at work, the consumer price index for August has shot up sharply to 70.2 per cent on a year-on-year basis. According to the National Consumer Price Index (NCPI). It was a high enough 66.7 per cent in July.? Yet, monthly prices decelerated to 2.5 per cent, from 5.6 percent in July, in what is considered a potential sign of peak inflation.

Among these, food prices rose by 84.6 per cent from 82.5 per cent in July but decelerated to 1.7 per cent from nearly thrice as much in the previous month, ie, 4.6 per cent. ?Likewise, the non-food inflation surged by 57.1 per cent in August, accelerating from 52.4 per cent in July amid a sharp upward hike in electricity tariffs.

The monthly price increase however eased to 3.2 per cent, from 6.7 per cent in July.? The so-called core prices measured barring the often-volatile items such as food, energy and transport accelerated in August to 60.5 per cent, from 57.3 per cent in July.

The unprecedented increase in power-tariff, a 15 per cent Value Added Tax (VAT) and 2.5 per cent Social Security Contribution Levy all could push up prices by at least 22 per cent, according to some calculations. Rather, the cascading effect of it all is to be blamed for the anticipated rise, according to experts.

In the interim, the Central Bank had expressed had hoped that prices could peak in September before starting to ease thereafter, yet linked it to some sort of stability in global commodities prices. As is known, global oil prices have retreated in recent weeks, from their highs at the commencement of the Ukraine War. Mounting concerns of a global economic slowdown in response to the synchronised monetary tightening by the global central banks is said to be among the causes.

Signals either way

In this background alone, the political consensus on ending subsidies on various public services and utilities, starting with electricity, needs to be viewed. While there is said to be cross-aisle acceptance about the economic need for the same, in socio-economic terms, it could prove to be problematic, as people overcome the economic shocks of the previous months, to come face-to-face with realities.

President Ranil Wickremesinghe?s revised budget, which he presented as Finance Minister last month, has a lot in store as social sector initiatives for the poor. But that won?t be enough for a population that has got used to a certain level of social mobility and economic stability. The current economic crisis at a more personal level can only push them over the precipice next.

In similar circumstances in the seventies and the eighties, you have had the JVP insurgencies and LTTE terrorism, on either side of the ethnic divide. Today, a more literate Sinhala youth compared to 50 years back may not be in a mood to fight it out on the streets, from jungle hideouts. But they are even likely to give up on the benefits that state support had entailed them to. It has become a sort of entitlement, which when denied overnight can cause socio-economic consequences.

If the resultant fallout takes only a politico-electoral form, then it is one thing. But the success of the massive Aragalaya protests sends out signals either way ? and that will not be good news!

(The writer is a policy analyst & commentator, based in Chennai, India. Email: sathiyam54@nsathiyamoorthy.com)