A deteriorated economy by giving subsidies

(Sara Kandegoda)

Ten years ago Sri Lanka was classified as a middle income country. Now there is a new challenge. The international community is not ready to admit Sri Lanka, which is in an economic crisis, into the rich society. It has happened to accept Sri Lanka as a lower income earning country.  There is no other course of action when the society is restless in the face of economic problems, where the debt cannot be paid.

Economists are of the opinion that the middle income level is a threshold that creates some kind of problems. It is a common doctrine not only for countries but also for individuals. A poor family receives assistance but does not receive relief when their standard of living rises. It has to continue with its own efforts without the previous concessions. Even though Sri Lanka started its journey from a middle-income level with a new lease of life, the Easter Sunday attack and the accompanying covid-19 pandemic dashed those hopes.

The criticism that corruption, fraud or theft destroyed the economy is reasonable. It is a true fact that not taking due decisions and measures in the face of an economic crisis is a negative impact.

Cutting down some expenditure in a situation where the revenue goes down is not unusual for us. Politicians ignored the constant warnings of experts about the economic situation. Necessary reforms were avoided. Obtaining local and foreign loans was not controlled and getting loans not fore revenue generation but for consumptions created a great risk. We are facing the consequence now. People have fallen to misery. The country has fallen into poverty. Sri Lanka has been classified as a country that has deliberately come to destruction.

Something about poverty and malnutrition

The international organizations that monitor the facts of the worst economic pressure in the history of eight decades, the shortage of foreign exchange resulting in the increase in the price of food and medicine point out as a result of the above factors, the population has become poor and the children have become victims of malnutrition. Even though the income is low, compared to other countries in the world, it is somehow a country that relieves hunger. According to a research report by America's Oxfarm organization, between 7,750 and 15,345 people die of hunger every day. Sri Lanka has issues with food prices. The usual diet has to be changed. But the country does not have a huge problem. The health authorities should look into the matter and answer.

According to United Nations reports, the world's poor population is considered to be around 675 million. Between 75 and 95 million of this segment has been impoverished by the war between Russia and Ukraine. The region with conflicts, which has a special place among the countries that produce fuel, fertilizers and grains, has become a serious reason for the current economic storm in the world. The increase in the price of crude oil, gas, milk powder and wheat is a result of the Ukraine conflict and the Covid pandemic. Western countries are providing Ukraine with huge wealth against Russia. The powerful nations who do not spend that wealth as an answer to poverty and food shortages are trying to highlight the nature of the countries weakened by this economic situation and imply that these events are internal problems of those countries.

Sri Lanka is a country with good health and sanitation facilities. Even with thirty years of war, the health sector managed to keep child and maternal deaths to a minimum. It is no secret that the medical facilities provided free by the government helped it even in the midst of many shortcomings. What is the basis for the United Nations declaration that 1.7 million children are at risk of dying of malnutrition after a few months of economic crisis? The country has a social pattern of providing the best for the children while the adults are starving.

A country ruined the economy by subsidies

Mismanagement has brought destruction to the country. There is a large amount of black money in the country which is not visible on the surface. Has the wealth been hidden in unauthorized places such as Daduwam, Sakwithi, Golden Key and the recent famous lady’s case..?

This wealth generated by social disparities has widened the existing gap between wealthy and poor. Instead of fair methods, illegal and unjust situations have been allowed. It is the fault in the political system.

Every political party has a group of billionaires gathered around them. The power of parties is not voters. It should be mentioned that they are an organized group who earn money through fraudulent methods and spend it on elections. The country does not need to change the executive presidential system. Why a new constitution? The proportional system should be abolished and the election of people's representatives should be done at the electoral level.  A crisis-free country can be created by removing wealth power and subsidy systems.

As mentioned earlier, Sri Lanka's tax revenue as a percentage of GDP was 11.1 percent in 2013 when it became a middle income country. It was less than 8 percent by 2021. It is not the poor who do not pay taxes. Indirect taxes are being collected from the poor. Even maintaining the system of taxation in this country is not an effective task.

It has been proven that people at various levels, from politicians, follow fraudulent methods. The government even subsidizes a huge section that hides such wealth. It is not wrong for the poor to receive Samurdhi benefits. Care services should be provided to patients. Free provision of health and education is an investment. Why subsidize the undeserving..?

A few people who maintain the system and benefit from it have made a range of people, from the farmer to the working people, victims of a serious myth. The people should be given relief and it is the responsibility of the government to maintain the people. It has been converted into vote-gaining promises. A middle income country does not exist in a system that gives a pittance into the hands of the people instead of the policies that build the economy. A country that was going towards natural destruction was thrown into a sudden crisis due to the Covid pandemic. Even though young strugglers forced to change these short-sighted ways, opportunists were also able to brutally destroy their voices. 

 There is no way but to generate and export

Exchange deficit has been a problem since history. Foreign resources are needed to bring what the country needs. It should be noted that the background to signing contracts for wheat from America or rubber rice from China is exchange issues. The imperialists created a plantation crop economy including tea and rubber, after which the only export sector for the country was the garment industry. Tourism or migrant labor is not a generator.  More recently, computer-related exports have been marginally impressive. Governments that come to power should take steps to produce on a large scale and competitive standard and export. That is what is planned but not done.

There is no salvation for the country until exports exceed fifty percent of the gross domestic product. In Sri Lanka, the rate is now 16.4 percent. Look at countries with high export earnings as a percentage of gross domestic product. In Singapore it is 173 percent. In Vietnam it is 101 percent. 72 percent in Maldives and 71 percent in Malaysia. Another list can be given of many countries that were below Sri Lanka at the time of independence. It is no secret that export income is the reason why these countries have reached the middle and high income levels today. There is no other way out of poverty except to produce something and export it to any country. Is it a sign of development to send young labour to another country and use the exchange amount to import fuel..?

Countries of the world have found new export sectors. Water, electricity, liquid hydrogen are leading among them. The country has no wealth for investment in these fields. A false wall of a national economy on which no-entry sign is hung and the rapidly deteriorating internal economy is the cause of today's risk. Political parties must go to a new reality. It is important that investment opportunities should be opened up and society should be allowed to take advantage of the resulting opportunities. When the economy improves, the standard of living of the people increases.

 Today's decisions are an advantage for a government that comes to power tomorrow

Politics can only be done if the economy is positive. There is no question of holding an election when the people are feeling miserable and uncertain about the future. The highest number of votes can be obtained by auctioning people's sorrows. That is what happened in history. There are people who use their wealth as an investment to bring governments into power. But after coming to power, there are no other ways to develop the country. Rice from moonshine or oil from Pesal is misleading. Even serious words such as corruption or fraud are meaningless.

The first goal is not an election. A program that will establish a new economy for the country. A common program is an absurd idea. Strong leadership is needed. Leaders must be allowed to proceed according to a plan. History records that no leader has been allowed to implement a plan. What an opposition should do is not seize power. Creating a country that is worth seizing.  It is a serious mistake to think that taking over a poor country, which has caused many scandals in the world, is a big mistake.