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The severest blows dealt by COVID, globally and in Sri Lanka, is the deprivation of employment and income, which has increased poverty and starvation. Resolving or even ameliorating this human tragedy in poor countries around the world is a near impossible task.

It is a near impossible challenge in Sri Lanka too owing to the fragile economic situation of the country that limits state interventions. Public finances and external finances are in a perilous state and inappropriate policies have aggravated poverty and starvation in the country.

Global poverty and hunger

According to the World Food Programme (WFP) an increasing number of countries are facing growing levels of acute food insecurity. It is estimated that about 700 million people or nine percent of the world population are in acute hunger and are under-nourished.

Even before COVID-19 reduced income and disrupted supply chains, chronic and acute hunger were on the rise due to various factors including conflict and corruption. Diminished income and increasing food prices, among other reasons, have increased food insecurity, especially in less developed countries.

Impact of COVID

The severe impact of COVID on employment and income are well-known. Even many in secure employment have suffered salary cuts. Those employed in small enterprises whose trade is not possible due to restrictions and lockdown have lost their employment and incomes altogether. Informal workers, who comprise a large proportion of the workforce are unable to ply their trade. Farmers denied of fertiliser are facing crop failures and dire poverty.

These are not hard times: they are sad and sorrowful times. Mental depression and suicides are likely. The end of this dark tunnel is uncertain.

Tourism

Everyone is aware of the loss of employment in tourist hotels. A significant number of those providing related services such as people selling handicrafts, clothes and other items have lost their livelihoods too. Those in these backward-linked employment are in dire straits.

There were significant employment and income losses before COVID. COVID was a second blow after the April 2019 Easter Sunday bombings. There were further losses of employment and income with the COVID restrictions that increased unemployment on a larger scale.

Informal self-employment

COVID restrictions have affected a large number of those employed in small enterprises: shops, restaurants, motor repair shops and similar services. They too are in severe income difficulties.

Extent

The extent of these employment and income losses are by no means captured in the official statistics, which are difficult to collect. The extent of unemployment is much above ten percent and those in abject poverty have increased in number.

Agriculture

If COVID spared agricultural production to a good extent, Government policy of denying farmers fertiliser has impoverished them. Today, farmers are among the worst affected as their crops are heading to failure owing to the unavailability of fertiliser and agro-chemicals. Food crops and 80 percent of tea grown by smallholders are facing crop losses or failure. The decision to import 100,000 metric tonnes of rice is an admission of this.

Least affected

Agriculture was the least affected by COVID. Agricultural workers were permitted to work unhindered by COVID restrictions. The rural community that could have been spared the worst effects of the pandemic, are now in dire straits owing to their crop losses due to the unavailability of fertiliser.

They too require income support to avert famine and starvation. And they are a large proportion of our population.

Needed interventions

The enormity of unemployment, loss of incomes, poverty and starvation requires interventions on a scale that is neither within the financial capacity of the government nor its administrative capacity. Corruption compounds the problem.

Economic conditions

Sri Lanka’s pathetic public finances and fragile external finances severely limit the capacity of the government to adopt adequate measures to alleviate poverty, provide income support and prevent starvation. These fragile financial conditions are compounding the problem.

Inappropriate policies

Moreover, inappropriate economic policies and ineffective administration have depressed income, increased prices of essential consumer items, decreased food availability and accessibility. They have aggravated poverty and starvation.

Inadequate

The relief measures have been grossly inadequate to cope with the severity of the problem and several policies of the government, such as the unavailability of fertiliser, have aggravated poverty rather than ameliorated it.

Community efforts

There have been many community efforts to reach the poorest and the needy. These have even included contributions to government hospitals and patients However, these too are inadequate and community groups have found it difficult to reach the starving poor due to COVID restrictions.

Recapitulation

Undoubtedly the severest economic impact of COVID, globally and on Sri Lanka, is the deprivation of employment and incomes of a large proportion of the population. This has been much more in less developed countries owing to the larger number that has been affected and their incidence of poverty is higher, their greater dependence  on global trade, the nature and structure of employment and the lesser capacity of governments to effectively intervene with adequate relief measures. As a result there has been a considerable increase in poverty and starvation. This has been the case in Sri Lanka.

Sri Lanka’s weak public finances and perilous state of external finances severely limits the capacity of the Government to adopt adequate measures to alleviate poverty, provide income support and prevent starvation.

In addition, inappropriate policies and ineffective administration have depressed incomes and aggravated poverty and starvation. The relief measures have been grossly inadequate to cope with the severity of the problem. The fragile public finances and perilous foreign reserves limits the capacity to expend money on relief measures.

The finances allocated for poverty alleviation is inadequate, its coverage small and its administration is inefficient. Its beneficiaries are not the neediest and the poorest receive too little of the relief. Several studies have documented that Samurdhi recipients are not the neediest people and the poorest people are not Samurdhi beneficiaries.

Bleak future

The predicament of the poor is likely to worsen with time. Consumer prices will continue to escalate, food production and availability will decrease, import restrictions on essential consumer items will be tightened further as foreign reserves diminish and the capacity of the Government to assist the needy decreases owing to the weakening of the Government’s finances.

Concluding reflection

We can cope with this tightening state of affairs only with foreign assistance. Can Sri Lanka obtain such assistance speedily? And from whom?