While emergency measures to shore up the degraded economy are the need of the hour, long-term solutions to the basic ills cannot be put off.
The UN Office for the Coordination of Humanitarian Affairs, quotes the FAO/WFP Hunger Hotspots Report for October 2022 to January 2023, to say that Sri Lanka is listed as a “hotspot of high concern”.
The economic crisis is the “worst since Sri Lanka’s independence in 1948,” the report says. A 40% reduction in agricultural outputs in the 2021/2022 Maha (September to March) season, and a 50% reduction during the 2022 Yala (May to August) season have exacerbated the situation.
“Forecasts for the 2022/2023 Maha season indicate a significantly reduced harvest as well, which, coupled with food inflation of 85.6 % in October, means that a significant part of the population is finding it difficult to meet basic needs.
“32% of households are now food insecure, and 68% households are turning to coping strategies such as eating less preferred food or reducing the number of meals and portion-sizes. Food inflation in Sri Lanka remained high in October at 85.6%. UNICEF estimates that approximately 2.3 million children are in need of humanitarian assistance, including 56,000 children suffering from Severe Acute Malnutrition (SAM),” the report says.
Tea production has decreased by 10% so far in 2022 because of a glyphosate shortage. Industrial production is still to pick up because of import restrictions on raw materials and intermediate goods. Exports cannot grow because of recession in the Western world.
President Ranil Wickremesinghe’s budget for 2023 has attempted to solve these problems with a range of immediate steps. But the budget is primarily meant to secure the US$ 2.9 billion bail-out from the IMF by meeting its onerous conditions. The high taxes imposed have cast a heavy burden on the common man. While conditions have improved in the matter of fuel, petrol, power and cooking gas supplies, there is no guarantee that this would remain so because the foreign exchange situation is still dire.
Towards Sustainable Development
Even as the government takes short-term measures to get the country out of the woods, it has to initiate long-term policies to keep the country’s economy continuously on track. A 2019 comprehensive government document entitled: Sustainable Sri Lanka 2030 Vision and Strategic Pathedited by Mohan Munasinghe gives an idea of the long –term issues to be addressed and what to do about them.
The Munasinghe report says that while Sri Lanka has been quite successful on the human development front, considerable variations in poverty rates between regions and socio-economic groups can be seen. The continuing prevalence of income inequality is also of concern. High and worsening levels of corruption continue to impede efforts to improve efficiency and productivity. These issues need urgent attention.
Rain-fed and irrigated agriculture accounts for 83% of domestic food availability (other than fish) and 25% of exports. But too many people ( 25 to 30%) continue to be heavily dependent on agriculture even as the changing weather pattern, rainfall in particular, dampens production. And with the increasing reluctance of rural youth to engage in agriculture, there could be a labor shortage.
The fragmentation of land holdings has been holding back development. A shift away from high water-dependent agriculture to low water-dependent / drought-tolerant crops and varieties along with mechanization is needed. Formation of “farmer companies linked to longer value chains,” is also recommended.
The State controls 82% of land. Due to population increase, landless peasants have encroached on State land, causing a decline of forest cover to 29%. A third of the land is also subject to soil erosion.
Fish makes up about 50% of Sri Lankans’ animal protein intake, a ratio three times the global average. The fisheries sector also supports close to one million fishers, workers, and their families. But overexploitation of marine resources in a major issue. Also, a large part of the fish stocks that Sri Lankan fishermen harvest are degraded, and catches are declining.
But when managed in an environmentally, socially, and financially sustainable manner, coastal aquaculture holds significant promise for increased export earnings and skilled jobs.
Marine pollution, mostly coming from land-based sources, is reaching alarming levels. But marine research is not considered a priority. There is a need to go beyond fisheries and develop ocean-based resources for pharmaceuticals, exploit the sea for minerals and renewable energy, the report says.
The increasing migration of labor from the island is not sustainable in the long run and could damage the economy and society. While migrant workers and their families as well as the country derive considerable benefits from overseas employment and remittances, it is also necessary to recognize its negative outcomes, in particular the loss of skilled labor and wage inflation which result in higher cost of production at home.
Economic activity is concentrated in the Western province. Diversification of the economy away from the present urban-based service sector domination will help create a more balanced and productive employment in both rural and urban areas. The promotion of rural industries based on agricultural raw materials is an important step that can be taken to narrow the present rural-urban disparity in terms of employment and income.
To reduce income inequalities there should be progressive income taxation and improvement of public educational services.
With less investment in public transport, people are captive to exploitative private transport. The current direction is economically, socially and environmentally unsustainable. “It should be reversed forthwith,” the report said.
Sri Lanka provides free education from the primary stage to the first degree level in university education. There is, however, a lack of equal provision and access to quality education across the country. At present, the curriculum does not effectively integrate and embed skills into the courses of study such that students can develop and demonstrate a broad range of skills for employment or for further studies.
In the technical education sector, the government invests a significant amount of public funds for its expansion. Programs are provided free of charge. But they lack the required quality and labor market relevance due to the weak linkages between training and market demands.
A serious issue in the tertiary and university education sector is the country’s inability to cope with the demand for higher education through public sector universities and higher education institutions due to their limited capacity for enrolment.
Additionally, there is a mismatch between higher education and market demand due to unevenness in university curricula and methods of teaching/learning, and slow growth in the labor market able to absorb graduates.
Lack of conducive environments for new knowledge generation, discovery and innovation in universities are some other issues.
Inconsistent and contradictory policies and practices are seen across the education sector due to the division of the education portfolio, and a lack of communication between the respective authorities. There are variations and inconsistencies in investment among the different sub-sectors of education.
No doubt, there have been significant achievements in preventive and curative services in the government-led health delivery system, but efforts are needed to fully eradicate a wide range of diseases and address emerging health issues such as non- communicable diseases and the health challenges of an ageing population.
Hospital services do not meet the demands for services and amenities of discerning individuals who are forced to seek care from private sector institutions. In the long run, this may destabilize the health system and undermine political support for government health services, the report warns.
Government also has to establish a supply chain with auditing, accountability and transparency in supplying medicines and equipment to State-run hospitals.
While hard-on-the-masses emergency measures are justified to kick-start the economy hit by both the pandemic and a long history of mismanagement, long-term and holistic measures are also needed.