Regulations allow govt. to provide essential foods at a ‘concessionary rate’
On August 30, 2021, Sri Lankan President Gotabaya Rajapaksa, using powers vested in the country’s Public Security Ordinance, declared Emergency regulations pertaining to the distribution of essential food items. The regulations sought to empower authorities to provide essential food items at a “concessionary rate” to the public by purchasing stocks of essential food items, including paddy, rice and sugar, at government-guaranteed prices, and prevent market irregularities and hoarding.
President Rajapaksa has appointed Major General N.D.S.P. Niwunhella as the Commissioner General of Essential Services to coordinate and ensure that people have access to essential supplies, a statement from the Presidential Media Division said. On Monday, the Proclamation on the Emergency Regulations for the Supply of Essential Foods enacted by President Rajapaksa was passed in Parliament. In the week since the regulations were promulgated, several questions have risen on their legal ambit, and their likely impact on the country’s larger economic crisis persisting for two years now.
Is there a precedent?
According to Austin Fernando, a retired civil servant who served as Commissioner General of Essential Services in the 1980s, the post came into prominence after the 1983 ‘Black July’ riots to ensure that affected families — Tamils who were targeted and attacked — had food supplies and other essentials; to facilitate their movement and return to their homes. “I held the post from 1986 to 1988 and was also tasked to look after the requirements of thousands of displaced in the North and East affected by the conflict,” he told The Hindu.
Speaking on the recently promulgated Emergency regulations, Mr. Fernando said: “There is criticism. That is because our country has experienced Emergency regulations for more than 40 years. We know that the laws were used by successive governments for alleged disappearances, killings of journalists; and to violate freedom of expression, movement, etc. There is a lot of baggage in there, and criticisms are made based on the past experiences, even though the contents of these regulations appear different.”
What is the criticism?
Criticism of the Emergency regulations has largely been over the government’s legal choices, and their political implications.
In a commentary on the regulations published in Sri Lankan media, senior constitutional lawyer, and former parliamentarian Jayampathy Wickramaratne argued that the government — with a comfortable parliamentary majority — “had all the time in the world” to bring in any legislation needed to deal with the crisis but opted not to do so.
In April this year, Tamil National Alliance legislator M.A. Sumanthiran presented a Private Member’s Bill for legislation needed to declare a public health emergency, deeming current legal regimes “inadequate”.
Instead of bringing in an urgent Bill to help its pandemic response, the government has brought the country under a “fully-fledged State of Emergency”, Mr. Wickramaratne argued, although the current regulations “look innocuous”. “The danger is that given the present government’s propensity to stifle dissent, emergency regulations would be used to curb protests and other democratic action”, he wrote in The Island newspaper.
Is there a food shortage?
There is fear of one. The possibility has grabbed international headlines, with the government’s drastic measures against hoarding, triggering speculation over food security in Sri Lanka that is home to 21 million people. Fuelling the speculation are different factors, including the country’s known reliance on imports for essentials — such as petroleum, sugar, dairy products, wheat, medical supplies — its fast-dwindling foreign reserves, from $7.5 billion in November 2019 to $2.8 billion in July 2021, and the daunting foreign debt repayment schedule in the coming years.
The pandemic’s lethal blow since early 2020, to all major sources of foreign exchange earnings — exports, worker remittances and tourism — has further compounded the economic stress.
Sri Lanka’s economy contracted by 3.6 % last year. According to the Central Bank of Sri Lanka, the Sri Lankan rupee depreciated by 10.1% against the dollar this year. It hovered around 200 against a dollar last week.
The fear of a possible food shortage also stems from the Rajapaksa administration’s decision in April to ban import of chemical fertilizers and adopting an “organic only” approach. Farmers who resisted the move have warned that the dramatic, overnight shift to organic fertilizers could impact production severely. Producers of tea have warned of a 50 % drop in production.
Meanwhile, many, especially daily-wage earners, and low-income families, are complaining about being unable to afford, and in many cases access, essentials such as milk, sugar, and rice during the current lockdown, imposed on August 20 following a rapid surge in daily Covid-19 cases and fatalities, and extended twice since.
Prices of essential commodities — including rice, dhal, bread, sugar, vegetables, fish — have risen several times during the pandemic, and more rapidly in recent weeks. Local varieties of rice — a staple item — currently cost about LKR 120 (₹44) a kg, while common vegetables such as onion and potato are priced over LKR 200 (₹73) per kg. A kilo of fish costs nearly LKR 700 (₹255).
What’s govt.’s response?
The government has denied reports of a food shortage. In a statement responding to international media reports, the Department of Government Information accused traders of creating an “artificial shortage”. With the recent Emergency regulations, the government has “dealt with the situation,” it said.
On the country’s foreign reserves, the statement attributed the drop to a settlement of $ 2 billion worth sovereign bonds during the last year. Reserves have since increased to $ 3.8 billion, it said. If Sri Lanka accessed a $1.5 billion swap extended by the People’s Bank of China, reserves would increase to $ 5.3 billion, it added, while remaining silent on the foreign debt repayment deadlines coming up in the next few years.
Will the government’s strategy help Sri Lanka cope with the persisting crisis?
Few outside the government think so. “These Emergency regulations are not sustainable,” said K. Amirthalingam, Professor of Economics at the University of Colombo. “Sri Lanka does not have a universal public distribution system or ration cards that can ensure essential goods reach all consumers. The current regulations do not address our fundamental economic problem, and instead pose the risk of creating black markets,” he told The Hindu.
In his view, the recent measures, coupled with the government’s move last year to restrict import of non-essential goods, are taking Sri Lanka back in time. “After four decades since our economy was liberalised, we are going back to 1970s,” he said, referring to the time when then Prime Minister Sirimavo Bandaranaike promoted import substitution, a policy that her critics associate with food shortage and long queues of people waiting outside shops to buy essentials.
Commenting on the government’s “ill-timed” decision to switch from chemical to organic fertilizer, Prof. Amirthalingam said: “That transition ought to have been staggered, not dramatic like this. Tea producers and paddy farmers say there could be a sharp fall in production because of the chemical fertilizer ban. And that could lead to a food crisis.”
At the heart of the current crisis is the strain on foreign exchange available for imports, that is disrupting the market, particularly for imported food items, according to Ahilan Kadirgamar, a senior lecturer at the University of Jaffna.
He contrasted the current economic situation with the foreign exchange crisis of the 1970s, pointing to some differences in the government’s responses then and now. “In the 1970s, the government initiated or empowered expansive institutions such as the Paddy Marketing Board, Multi-Purpose Co-operative Societies, the Cooperative Wholesale Enterprise and the Food Commissioners Department. However, those institutions were undermined and disempowered with liberalisation after 1977.”
On the government’s apparent policy ambivalence, the political economist said: “The government must either allow the market mechanism to work or, take charge of distribution of essential foods. It needs to either find the foreign exchange for importers to continue sourcing adequate supplies so that shortages or hoarding do not take place or, rapidly empower public institutions and take charge of importing food items and their distribution.”
As the availability of imported foods fluctuates or falls, public distribution mechanisms are necessary to avoid price disruptions and unequal access to food, Dr. Kadirgamar observed. “What will not work is the current sham of claiming that the market mechanism can work amidst unstable and dwindling supplies, and drastic interventions by the state such as price controls and raids on hoarded foods.”
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