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Are the recent changes in fertiliser import policies signs of fresh thinking on economic policies? The decision to import chemical fertilisers for tea, chemicals for fertilisers and an unlimited amount of rice imports is perhaps a tacit admission of the faulty policies adopted by the Government and an indication of a change in policies.

Fresh look

As suggested in last Sunday’s column, it is opportune to have a fresh look at economic policies and adopt practical economic policies. It is the time to ensure a productive agriculture that would enhance food self-sufficiency and increase the country’s agricultural export surpluses. It is not the time to suddenly switch to organic agriculture and face a precipitous drop on food production and agricultural export incomes and endanger the livelihoods of the large rural community.

Change economic policies

It is also time to abandon the undefined and imprudent alternate economic policies and the inflationary New Monetary Theory (NMT). As we advocated last week in this space, it is the time to take a fresh look at policies and make changes.

Political acumen

The political wisdom to make a drastic reversal of its failed and disastrous agricultural policies at this stage is political acumen rather than political courage as a large proportion of the rural population had turned bitterly against the Government’s denial of fertiliser.

Reversal

Despite scientific advice and the warnings of experienced planters the Government persisted in its policy of sudden conversion to organic cultivation. For whatever reason, there has been a drastic reversal of this disastrous policy.

New fertiliser policy

The communiqué changing the policy said it was based on scientific advice. Ironically, the advice of a large body of scientists had been ignored in the sudden adoption of organic agriculture and the banning of chemical fertiliser.

Gazette

Last week the Agriculture Ministry Secretary Prof.Udith Jayasinghe announced that the gazette notification banning the import of chemical fertiliser was a decision taken on unscientific advice. The implication of this statement is that chemical fertiliser imports will now be permitted. Earlier there was an announcement that chemical fertiliser would be permitted for tea.

Setback to agriculture

In spite of this reversal in fertiliser policy, there would be a setback to smallholder tea production and the export of tea.  Reductions in agricultural production would impact severely on the trade deficit and the foreign reserves of the country. On the one hand, import expenditure on food would increase, and on the other hand, export incomes may decrease.

Paddy and food crops

In spite of the belated correction of the fertiliser policy, the output of paddy and other food crops this year and in the Maha 2021/22 seasons is likely to be diminished. The policy of unlimited rice imports is due to this.

Better late than never

Despite these drawbacks, the reversal in fertiliser policy though late was better than its continuation. Hopefully it is a step in the direction of scientific agricultural policy formulation in the future.

Macroeconomic policy

Similarly, there is a need to take a fresh look at macroeconomic policies and make essential mid-course corrections. The alternate economic policies of the Government have led the country into a severe economic crisis.

The mounting economic difficulties are clear evidence that the alternate economic policies and the NMT pursued by the Government have led to unprecedented inflation, a huge fiscal deficit and depreciation of the currency.

Clearly, the time is opportune to take a fresh look at these policies and undertake reforms that would resolve the pressing problems of the economy.

The severity of the economic problems, especially the depletion of foreign currency reserves is such that foreign assistance from whatever quarter coupled with economic reforms is urgent and imperative.

Conclusion

The reversal of the policy to suddenly switch to organic agriculture has been shelved “on scientific advice.” In fact, the dire economic consequences of the policy and mass protests by farmers are the more likely reasons for the reversal of the policy. While this is a step forward, it is inadequate.

The Government must rethink its economic policies that have brought it to the brink of an economic catastrophe. The need of the hour is recognition that the policies pursued have been inappropriate and faulty. The reversal of faulty policies and adoption of comprehensive economic reforms are the only means of stabilising the economy and placing it on a path of economic recovery. Does the Government require a new set of economic advisors?