[lg policy] Sri Lanka: Politics Of Two Measures Of Rice And Free Economic System

Harold Schiffman hfsclpp at GMAIL.COM
Wed Sep 23 17:28:08 UTC 2009

Politics Of Two Measures Of Rice And Free Economic System

Wed, 2009-09-23 01:02 — editor
FeaturesBy Edward Theophilus Wanigasekera

There is no argument that when Sri Lanka gained independence in 1948
from British rule, it has inherited a dependent economy based on a
dependent currency system, which was called currency board system that
linked the monetary unit of Sri Lanka to Sterling pound in Britain.
Despite the subsistence farming system that had been in the country
since the establishment of Sri Lanka state, the economy of Sri Lanka
under the foreign rule gradually transformed into an import – export
economic system or international trade, which successfully generated
comparative advantages to the country.

According to historical evidence, Britain wanted to establish
alternative tea suppliers to the world market with a view to defeating
the monopoly power of China, as a tea supplier to the world because it
was a tit a tact strategy for criminalizing opium trade, which was
dominantly handled by British businessmen in China. The conflict
between Chinese rule and British traders assisted Sri Lanka to embark
international trade through the production of plantation commodities.

There are plenty of evidence that Sri Lanka had been engaged in
international trade during the eras of King Parakramabahu the Great,
King Dhatusena, King Kashapa, Mugalan,and King Senarath. However, the
international trade that existed in Sinhalese Kingdom in the history
had not a dominated characteristic in the economic system because
citizens of Sri Lanka were not dependent on the revenue of export
commodities or commodities that came to the country through the
overseas trade.

The engagement in international trade during the European
administration was a great economic achievement despite the criticism
against imperialism, which aimed at exploiting weak states. However,
the policy failure or negligence during the European rule resulted in
the neglecting of domestic subsistence economy and heavily depending
on the import of essential consumerable items such as rice and other
groceries. According to Donomore reforms and its structural changes in
Sri Lanka’s political administration, it is assumable that British
administrators in the political system were encouraged to neglect the
subsistence economy in exchange for international trade as Sri Lankan
administrators in the political system either had no power to make
decisions on economic policies or few Sri Lankan administrators in the
political decision making process were reluctant to influence the
colonial administration to invest in subsistence economic system.

The role played by DS Senanayake and other Sri Lankan leaders in the
state council clearly demonstrated that if Sri Lankan representatives
of the colonial administration were keenly interested in investing the
traditional economic system, it would had been plenty of opportunities
to do it. If it had happened, the shape of the economy when Sri Lanka
gained independence would have been much different from what we have
obtained in 1948. However, it is not right ethic that blaming past
leaders for unseen experiences, but, we must accept that the education
system in Sri Lanka at that time did not encourage critical economic
policy development skills to our political leaders to think different
ways or lateral thinking.

The economic system based on international trade had been running
smoothly until the rice issue emerged in 1952. Since then, two measure
of rice had been a political foot ball until the budget policies of
1978, which initiated effective and structural changes in Sri Lanka’s
economy by former Minister of Finance, Ronnie de Mel. The planning
secretariat under the Sir John Kotalawala regime wanted to promote
liberal economic system and attempted to give a new definition to the
management of economy through six years development program despite
the politics of two measures of rice. However, the loss of election by
Sir John in 1956 and the replacement of Ten year plan for six years
development program reversed the pattern of economy despite the famous
statement of SWRD Bandaranike that a river will not be drained back.

How two measures of rice became a political football is a wonderful
story in Sri Lanka’s history. When compared to Asian leaders like Lee
Kwan Yu and Dr Mahatier Mohamed, who studied in UK and became national
heroes by formulating effective economic policies to their countries,
many of our political leaders such as Dr N.M. Perera, Dr Colvin R.de
Silva, Dudley Senanayake and SWRD Bandaranaike, who also studied in UK
and learnt to become political opportunitists to gain political rather
than becoming national leaders with a clear vision and philosophy to
gain economic independence. Our politicians wrongly believed that
gaining political power using whatever issue as a political foot ball
was the way to development and solving economic problem in the
country. Therefore, they used two measures of rice, language policy,
and nationalization of private business, racial and religious issues
to gain political power without a clear vision and policies to address
the issues and also without considering possible repercussion of their
actions that current generation pay the price for it.

When Felix Dias Bandaranaike as Minister of Finance proposed to change
the rice subsidy in Sirimao Bandaranaike’s government in early 1960s,
leftists and rightists both opposed to the proposal without any
reasonable ground and when Dudley Senanayake became Prime Minister in
1965, he reduced two measures of rice to one measure at free of charge
and opposition used such reduction as a political foot ball and
SLFPers said that our mum will be coming soon with two measures of
rice. Before 1970 election they promised that if there is no rice in
this world, we will bring rice from the moon, which was a sub planet
with ash and no water or air. The Finance Minister of the collision
government, Dr NM Perera reduced the rice and many other subsidies in
the wake of international financial crisis and the sudden death of
Dudley Senanayake was happen in 1973 motivated people to cry saying
father, who had given rice to be attained enlighten.

In 1974, JR Jayewardene took over the leadership of UNP and openly
promised to give eight pounds of cereal grain. When he came to power
in 1977 by a landslide victory he gave right advices to his three
strategic ministers, Ronnie de Mel, Lalith Athulathmudali and Gamini
Dissanayake, the way to handle the political foot ball of two measures
of rice. The budget proposals of 1978 initiated free economic
policies, which allowed people to have eight pounds of cereal grain or
more at the open market. After that the politics of two measures of
rice dead and free economic system emerged underpinning the economy
for an accelerated growth.

During the cold war, many Western economies adapted inward looking
economic strategies and blue revolution in 1956 in Sri Lanka
encouraged Bandaranaike government to faith on inward looking
strategies through import substitutions and hundreds of public
corporations for all services even for gunny bags established, but
inward looking policies were not successful in Sri Lanka because that
economic polities had very remote potential to generate much needed
foreign exchange and a favorable terms of trade and to eliminate
unemployment. Public corporations became white elephants creating a
huge budget gap eating public spending.

While in the government and opposition side, JR Jayewardene understood
structural issues in Sri Lanka’s economy than his predecessors and his
prescription of outward looking economic strategies successfully
motivated the economic mechanism to attract foreign supports for mega
projects in the country.

Many Western countries including Australia have been embarked free
economic system since early 1980s through deregulating various markets
such as finance, capital and labor. Sri Lanka opened the market to
outside world before all other Asian countries. A conference of US
Ambassadors held in Katmandu not only highly appreciated policy
initiatives in Sri Lanka, but also recognized as a right prescription
to eliminate poverty in third world countries. International financial
institutions offered massive aid packages to accelerated Mahavelli
project, integrated development projects in various districts and many
other projects.

Free economic system adapted by JR Jayewardene was critical to attract
foreign aid as well as to kill the politics of two measures of rice
through the increase in rice production from Mahavelli Project. Before
1978, two measures of rice consisted of white rice imported from
overseas and the free economic system allowed Sri Lankans to have
samba rice or Sinhala rice, which was treated as luxury rice during
the colonial and post colonial eras.

Economic policies in a country would differently have impact on people
and no country can introduce economic strategies that will equally be
benefited to the community. When evaluating the impact of free
economic policy in Sri Lanka, it should not forget that certain people
of the country were disadvantaged, however, generally the entire
country has been benefited by market policies. This situation is
common to all countries and many countries maintain a welfare system
to compensate disadvantaged people who were badly affected from the
economic policies. In spite of many criticisms against free economic
policies, the government was able to maintain free health and
education service to all citizens and Samurdi program for poor, which
was designed as an effective program for disadvantaged people to come
out of their difficulties.

The free economic system in Sri Lanka had given a kick start for
investment and business, which have been suffered for more than two
decades. The regulatory framework in the so called socialism in the
country was a strong barrier to investment and although there were
willing foreign investors, the government policy under the socialism
willfully prevented such investment in the name of misguided
socialism, which has done nothing to the country.

Sri Lankan leaders, who participated in left and right wing politics,
had promoted wrong attitudes among the members of the community that
the prosperity of the country could be easily achieved by aligning
into socialist politics rather than working hard to achieve economic
benefits as a return for investment. The critical thinking power of
people was uprooted by brainwashing on unseen concept of socialism. In
fact, socialist views interpret significant social values to the
society while appreciating investment, entrepreneurship that
stimulates social benefits. Our politicians misunderstood the
objective of socialism and have interpreted it wrong way to attract
votes without nationhood attitudes that will promote economic and
social benefits to the country.

In 1970, per capital income in Sri Lanka was less than US $ 100 and
the free economic system have supported to lift per capita income to
US $ 1200 or us $ 3500 in terms of purchasing power parity. The five
years plan initiated in 1972 estimated the unemployment rate 18% in
the country but it has reduced to 7.5% by economic achievements under
free market policies. The home ownership, vehicle ownership,
investment in small business have dramatically increased changing the
attitudes of the community to emphasize on economic value of politics
rather than dream psychosis of socialist state.

Despite the ethnic war, Western, Southern, North Western and Central
provinces have recorded a high growth providing employment
opportunities to increasing population as a result of the vision of
free trade system, which has been able to eliminate petty politics
from ordinary peoples’ mind. Not only major political parties but also
Marxist political parties have recognized free economic strategies are
quite effective to address the problem of people than so called
socialism, which hasn’t had any vision to uplift economic condition in
the country.

Edward Theophilus Wanigasekera, Head Of Tivet, The University Of
Goroka, Papua New Guinea


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