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Farmers, workers deride handouts that worsen national financial burden
The concessions that were announced by Finance Minister Basil Rajapaksa earlier this week have received mixed reactions with warnings that they fail to address double-digit inflation, and have ignored certain sectors.
Many found fault with the Rs. 5,000 allowance that was promised to public sector workers especially since daily wage earners like plantation workers were only promised 15 kilos of wheat flour at Rs. 80 per kg.
Prof. Rohan Samarajiva
“The relief provided doesn’t even add up to Rs. 1,000,” noted S.T. Ganeshalingam, the convener of the Union for Plantation People’s Land Rights. Despite finally getting their daily wage amped up to Rs. 1,000 per day after a five-year struggle, workers are the losers because their work days have been reduced and daily living expenses continue to rise.
The concession also only applies to workers and not non-working residents of plantations who will not get aid.
Mr. Ganeshalingam also noted that 15 kg of flour would allow a family of five to six to just barely get by.
“These people struggle every day for the most basic necessities with little to no assistance from the government to even build better lives because there are no alternative livelihoods that are open to them when they come back from a day of work in the plantations.”
He held that a concession as a result of the high cost of living should serve all members of the society more equitably.
“At least a sound pack of dry rations would help because these people earn less than most public sector workers,” he noted, adding that people had little to no faith in the distribution of the wheat flour as promised.
“The scheme is very misguided and fails to address the core economic issue we’re facing, which is inflation and mostly food inflation,” noted Prof. Rohan Samarajiva, founding Chair of LIRNEasia. He added that inflation was a direct result of the excessive printing of money over the last few months. While the expenses are visible, he also added that there were no revenue schemes being presented to show how the government will fund it.
“The scheme seems to be more about optics,” Prof. Samarajiva noted referring to the removal of tariffs from pharmaceutical goods. “What are these tariffs that they’re talking about?” he questioned.
He also noted that Minister Basil Rajapaksa had promised the country a disciplined budget with the assurance that supplementary schemes would not be encouraged. “Less than a month after the budget debate we’re introducing a massive scheme.”
The Sri Lankan working population can be segmented into public sector workers, private-sector workers, farmers, and informal sector workers.
Prof. Samarajiva noted that informal sector workers were most likely the worst off during the lockdowns since income sources would be cut off. Private sector employees also suffered significant pay cuts and layoffs, while farmers struggled without fertiliser.
“The public sector workers were the more secure during this time and the least impacted,” he noted.
The Rs. 229 billion worth concessions package allocated Rs. 25 per kg, in addition to Rs. 50 that is currently paid for paddy.
“Farmers are laughing at this policy,” said the national organiser of the All Ceylon Farmers’ Federation, Namal Karunaratne.
He challenged the government to find 10,000 kg of rice for Rs. 75 in a market where the price of rice is Rs. 100 per kg.
He questioned the method used to calculate the “loss” that the farmers have suffered over the last few growing seasons. “What was the formula used to decide that Rs. 75 per kg was the solution?” he questioned.
Mr Karunaratne added that even if farmers wanted to, there was no rice to sell.
The lack of fertiliser had been extremely damaging to the agricultural sector and with the ‘yala’ season starting after next month, farmers do not expect to get fertiliser.
Most farmers are opting to keep whatever harvest they manage to get, for their own use.
“Farmers have been paying exorbitant prices for fertiliser because of the bans, and everything else required for their farming is also more expensive now, so how would a Rs. 25 increase be enough?”
Mr Karunaratne added that farmers will not be proportionately compensated at all for severe drops in the volumes of the paddy harvest.
Apart from these, the scheme also provides Samurdhi beneficiaries with an additional allowance of Rs. 1,000 from this month, while other Samurdhi beneficiaries will also receive this additional allowance proportionately. The Labour minister is also due to request salary increments on behalf of the private sector employees from their employers.
Research Director at Verite Research, Deshal de Mel, noted that while the additional income cushion for Samurdhi recipients and pensioners will provide some relief to these vulnerable groups, the bulk of the identified spending measures is to provide income support to the public sector amounting to 1.5 million people.
“The burden of funding this additional expenditure will inequitably fall on the rest of the labour force that would eventually pay for the higher borrowing costs of the state,” he said.
He too held that it would have been more prudent for the government to address the root cause of rising prices. While global supply chain issues have resulted in price increases around the world, shortages and price escalation in Sri Lanka is compounded by the sharp decline in foreign currency reserves. The limited forex availability has led to delays in opening Letters of Credit and shortages of key imported products.
As at the end of November, usable gross official reserves were US$1.58b, of which only US$b is convertible foreign currency reserves. Liabilities maturing in January and February alone amount to US$ 1.8b. Liabilities maturing during the full year in 2022 amount to US$ 6.9b.
“It is necessary to identify a solution to this mismatch between reserves and maturing liabilities, beyond short-term swaps which are not sufficient to address the problem at hand.”
According to Mr. de Mel, a sustainable solution is for the country to improve its credit ratings by at least 3 notches, regain access to global capital markets, and enable a buildup of foreign reserves to finance the needs of the economy through a normal flow of imports.
“But this can not be done overnight, and the immediate requirement is for Sri Lanka to engage in negotiations with its creditors to restructure its maturing liabilities, so as to free up reserves to pay for essential commodities and imported inputs for the economy to function as normal.”
The Sunday Times contacted the Ministry of Finance for details of sourcing and distribution but did not receive a response at the time of going to press.
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