Can India play a role in Lankan economy's recovery?

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Development sector professional Deivanayagam Devanand of Jaffna, Sri Lanka is the former chief of the Jaffna Media Development Centre and is currently the Jaffna district secretary of the Sri Lankan NGOs Confederation. During the civil war in the island nation, he was instrumental in rehabilitating children who were psychologically affected by the war. In a chat with inmathi.com, Deivanayagam shares his perspectives on the heavily battered Sri Lankan economy and its prospects.

How badly has the Sri Lankan economy deteriorated?
Sri Lanka is in an economic tailspin and the everyday life of people has become hellish. Increasing prices of essentials, including protein-rich staples such as milk, milk powder and fish, has put them beyond the reach of common people. As a result, people, especially children, do not get enough nutrition anymore.

Sri Lanka became a neoliberal economy in 1978 when the United National Party captured power. Then the International Monetary Fund (IMF) stepped in and supplied funds but recommended privatisation and other allied measures as a remedy to the ills plaguing the economy.

It is a general perception that had the IMF suggestions been implemented, Sri Lankans would have been better off. But statistical data shows that people’s nutrition intake has worsened after the country adopted a neoliberal economic policy.

The IMF has promised to bail out cash-strapped Sri Lanka, but with strings attached. In any case, it is said that the government has not agreed to the IMF’s conditions

What’s the state of food production and manufacturing in Sri Lanka?
Sri Lanka gave up on it a long time ago. As it was cheaper to import cereals and vegetarian commodities than to produce them, people patronised imports from foreign countries such as Pakistan and China. Thus, complacency set in, putting an end to food production and manufacturing activities.

After the economic crisis affected the country in recent years, the government has directed its employees to take Fridays off their schedule every week and engage in growing food in their house gardens instead. But such temporary measures will not help much. The need of the hour is a total revamp. Yet there seems to be no change.

As the government has been recruiting jobless youth, its administrative expenditure has also risen considerably. The government needs to sort out its priorities. It has allocated 35 per cent of this year’s budget to Defence. Even developed countries only set apart between 7 and 9 per cent for the sector.

Also Read: Sri Lanka food crisis: Famine, starvation looms

Why is there no change yet in Sri Lanka?
The IMF has promised to bail out cash-strapped Sri Lanka, but with strings attached. In any case, it is said that the government has not agreed to the IMF’s conditions. Moreover, the government administration is also in a mess.

The IMF has said that the solution to the Sri Lankan economic crisis presupposes finding solutions to the human rights and freedom of expression issues in the country. Experts say corruption has been a major cause of the economic downfall. So, the government is expected to be firm on these issues.

Now that the Tamil diaspora is better off having migrated to more developed countries and has become competent enough to invest heavily in Sri Lanka, they too can be roped in to help rebuild the Lankan economy. But for them to invest, stability in Sri Lanka is essential. Tamils who are scattered all over the world cannot wait to see peace in the Tamil areas of north and east Sri Lanka. But unfortunately, even now the government seems to be anti-Tamil and that will discourage the Tamil diaspora from investing in the country.

As it was cheaper to import cereals and vegetarian commodities than to produce them, people patronised imports from foreign countries such as Pakistan and China. Thus, complacency set in, putting an end to food production and manufacturing activities

What is the perception about Sri Lanka’s relations with India?
India is seen as a friendly neighbouring country that has extended humanitarian help. Although China has helped Sri Lanka through bank loans, it has declared the country a major defaulter, whereas India comes across more as magnanimous and humanitarian.

The people here expect India to be more helpful to Sri Lanka, keeping in mind the north-eastern Tamil majority region here which has ties with Tamil Nadu. But India wants Sri Lanka to resolve its internal problems before more help is forthcoming. Unfortunately, the government is being indifferent.

Also Read: Sri Lanka: Price of IMF bailout includes China’s anger

Why has the people’s uprising fizzled out?
The recent mass uprising did not attain the dimensions of a revolution. It has been pointed out that the people from the north and east have not taken part in it, but the reasons are not surprising. We, the northeastern people, thought we stood to gain nothing from the uprising, and also feared that we would be threatened if we took part in the anti-establishment rebellion, for obvious reasons that have to do with the past.

The majority of Sinhalese, when confronted with an unprecedented economic crisis, took to the streets in droves. But the revolt had no clarity of vision. Even after the palaces of the president and the prime minister were besieged by mobs, no great change was achieved.

The very purpose of the agitation – that is political and economic change – was hardly served. The people’s inability to identify their real enemies also brought about the failure of the uprising.

The rulers have deliberately kept under control the value of the Sri Lankan rupee – which has already touched 350 against the dollar – so they can pass it off as a sign of stability in the country

What then is the future of Sri Lanka?
Unless the Tamil ethnic issue in the north and east is resolved, the government cannot win over the people. Ranil Wickremesinghe has promised a permanent solution to the Tamils’ problems by the Tamil month of ‘Chithrai’. But the people don’t take the promise seriously as they are accustomed to broken promises and shattered hopes.

Though the United States has given aid purportedly for the sake of the north-east, the funds are concentrated in the hands of Colombo. Only a slice of the larger pie will be thrown to the north-east.

The same-old scenario of a minister’s car zipping past amid a heavily armed convoy and the top brass spending lavishly for their own ends still continues.

The rulers have deliberately kept under control the value of the Sri Lankan rupee – which has already touched 350 against dollar – so they can pass it off as a sign of stability in the country. Besides, the central bank is heavily politicised.