The Parliament of Sri Lanka on 6th September 2021 approved emergency regulations enforced by President of Sri Lanka Gothabaya Rajapaksa. The emergency regulations were imposed on 30th of August 2021, for regulating prices of essential food items such as paddy, sugar and rice and for ensuring continuous food supply. A press release from the Presidential Secretariat asked the ‘authorised officers to prevent market irregularities due to concealing of stocks of essential food items and selling them at higher prices’. The emergency is declared at a time when Sri Lanka is facing the challenge of rising COVID-19 deaths, fast spread of virus across the nation and intermittent lookdowns to contain the spread.
Policy Change amid the Pandemic: A Factor in Crisis
The 2020 annual report of the Central Bank of Sri Lanka, pointed out that the government had to take several measures to mitigate adverse effects of pandemic on the domestic economy. One of the measures taken was import controls of non-essential goods as a temporary measure to help ease the burden. It led to reduction in expenditure of nearly US$ 1.3 billion from April to December 2020.
Along with import controls, policy shift in agriculture, also accentuated the crisis. The policy shift was based on the Sri Lanka Podujana Perumana (SLPP) government’s National Policy Framework titled, “Vistas of Splendour and Prosperity”. It constitutes ten key policies, including People Centric Economic Development. This policy talks about ensuring food security by introducing a “National Agricultural Policy”. Other important measures proposed are “expansion of agriculture production by providing good seed and planting materials to promote and popularise organic agriculture during next ten years”. Introduction of ‘environmental friendly farming to maximise the economy of water usage and promotion of cooperative farms at regional level are other initiatives proposed for people-centric economic development’.
In line with the proposed policy, the Government of Sri Lanka banned the complete use and import of chemical fertilisers in May this year. The President of Sri Lanka defended the decision on grounds that ‘use of chemical fertilisers is leading to number of non-communicable diseases and pollution of lakes and ground water’. Therefore, by banning the imports, annual sum of US$ 400 million, spent on fertiliser imports, could be used to increase organic fertiliser production.
Nevertheless, the impact on agriculture due to complete ban on chemical fertilisers was highlighted in a letter to the President and Prime Minister of Sri Lanka, by the Sri Lanka Agricultural Economics Association (SAEA), in May 2021. While appreciating the government’s decision to adopt a Green Socio-Economic Model for development, which will help in achieving Sustainable Development Goals (SDGs) and conserve environment and public health, the letter highlighted few issues.
One is the appropriateness of using an import restriction on agrochemicals to promote organic farming. According to the SAEA, “average yields from paddy can drop by twenty five percent if chemical fertilisers are fully replaced by organic fertilisers”. The SAEA letter also stated that “absence of chemical fertiliser would lead to thirty five percent productivity drop in tea. This can lead to less export volume of tea from 279 to 181 million kilograms, causing an income loss of LKR. 84 billion”. The loss in foreign exchange earnings can be as high as LKR. 18 billion. Second, the SAEA also asked the government to incentivise organic cultivation using safe and environmentally friendly organic fertilisers and pesticides. It also asked the government to dis-incentivise use of chemical fertilisers and pesticides as they are harmful to the environment.
These policy changes and possible implications of these changes on economy and production, have led to a price rise and inflation. Hoarding of essential food items by suppliers has accentuated the food crisis and inflation has risen steadily affecting the common man. In the month of August alone, based on Colombo Consumer Price Index (CCPA), food inflation increased to 11.5 percent in August 2021 from 11.0 percent in July 2021.
The government, according to the Presidential Secretariat has taken various measures to tackle the food emergency. Some of the measures taken are as follows:
The rising inflation and foreign exchange crisis also forced the government in August 2021, to reconsider the decision on total ban on imports of chemical fertilisers and allowed import of few fertilisers including urea for cultivation. It also appointed a Presidential Task Force for a Green Socio-Economy in August this year. The Task Force was entrusted with preparing a roadmap for the ‘complete transition from chemical farming to organic farming using organic fertiliser products instead of chemical fertilisers, pesticides and herbicides’.
The Tamil National Alliance (TNA) has criticised the President’s decision on grounds that, it was an “unwarranted act”. Initial questions raised by the opposition, regarding the legality of emergency declaration, by the President has been sidelined after the Parliament of Sri Lanka, in which the SLPP holds a comfortable majority, approved the proclamation on 6th September 2021. The Constitution of Sri Lanka provided powers to the President to declare state of emergency under section 2 of the Public Security Ordinance (PSO) and it has to be approved in the Parliament. As per the PSO, if the President is of the opinion that “it is expedient so to do in the interests of public security and the preservation of public order or for the maintenance of supplies and services essential to the life of the community, the President may, by Proclamation published in the Gazette” can declare emergency.
The main leader of opposition Samagi Jana Balawegaya (SJB), Sajit Premadasa also said declaration of emergency will lead to the burial of democracy and the real “objective of imposing emergency is to form a dictatorial administration”. He suggested that in order to handle the situation, the government should activate Consumer Security Bill instead. The argument was that Emergency Regulations “in most cases in the past have been issued in Sri Lanka under special circumstances, where the public security was threatened or in order to crackdown industrial unrest such as strikes or during communal riots”. Therefore, laws such as Consumer Affairs Authority Act and Consumer Protection Act can handle the present food crisis.
The present government’s focus has been on encouraging export earnings, while reducing imports. A Presidential Task Force on Economic Revival and Poverty Alleviation has been appointed for achieving this goal. After a gap of twenty-eight years the Export Development Council of Ministers meeting was chaired by the President of Sri Lanka in September 2020. However, Sri Lanka’s exports as well as imports were affected due to disruptions in global supply chain. For instance, Sri Lanka’s Finance Minister said in the Parliament on 7th September 2021 that, the country is facing serious foreign exchange crisis as it lost US$ 1.6 trillion in government revenue due to the pandemic. He asked the opposition parties as well as well-wishers to cooperate to solve the crisis. Sri Lanka also lost nearly US$ 4 to 5 billion from tourism sector alone after the pandemic outbreak.In July 2020, Sri Lanka was re-classified as lower middle income country, by the World Bank, just one year after the country was elevated to upper middle income country in July 2019. These developments show that, there is a need for serious review of various policy decisions of the government. Though the government announced that, it has taken measures to manufacture local organic fertiliser as well as import high quality organic fertiliser of international standards, it remains to be seen how it can manage the overall requirement for farming in the future. While the government seem to be implementing “National Policy Framework” as promised during the elections, the present conditions may not be conducive for the same, leading to concern among opposition parties and few groups.
*Dr. Samatha Mallemapti, Research Fellow, Indian Council World Affairs.
Disclaimer: Views expressed are personal.
The President of Sri Lanka, Official Website “Emergency regulations on essential food supply declared with effect from midnight today”, 30 August 2021, https://www.president.gov.lk/emergency-regulations-on-essential-food-supply-declared-with-effect-from-midnight-today/. Accessed on 30 August 2021.
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