SEPTEMBER - OCTOBER 2007 ROUND IEW G Volume 1 No. 5 V Price Rs. 50.00

Affliction in the A farmer’s Stories of hardship economic body INSIDE story from Puttalam Dr. G. Usvatte-aratchi PAGE 03 PAGE 13 PAGE 06 Provide water for the East By Asvida

ater is central to man’s existence. So when one community is deprived of this essential commodity, the very survival of that community is endangered. And supplying water to a deprived Wgroup can come as a blessing in a conflict-ridden zone. The prevailing ceasefire why no one in the Government or at the was threatened when administrative level spoke about develop- the LTTE closed the ing the right bank of the Maduru Oya. Mawilaru sluice gates Mr. Godamunne said the project was put depriving people in the off due to alleged opposition by the LTTE area of water. The mili- and now the Government had an excellent tary forces then launched opportunity to complete the mission of de- Mr. Lalit Godamunne a rescue operation. Sub- veloping the East by providing water to the sequently the mission was extended to province. liberating the Eastern province from the “The System B lies along either side of LTTE. the downstream Maduru Oya reservoir in The military operation to liberate the East the administrative districts of Polonnaru- from the LTTE ended with Forces captur- wa, Batticaloa and Ampara. The Maduru ing Thoppigala and the Government cel- Oya Right Bank development project was ebrating victory by spending millions of meant entirely for the Batticaloa district, rupees. After a few weeks the Government which has a larger Tamil population. My announced the launch of the Eastern devel- personal belief is that the LTTE did not opment project which focused on ensuring like this phase to take off in fear that they democracy, law and order in the Eastern would lose control of the area,” he said. province and uplifting the living standards He pointed out that if the project was com- of people. pleted, thousands of families could have As the Government blew its trumpets about found employment and the area could have liberating and developing the East in a big been better developed. way, former Secretary General of the Ma- “If everything fell into place, the govern- haweli Authority of Sri Lanka, Lalit Goda- ment could have won the INNOCENCE munne expressed his bewilderment as to AND Wijesinhe molds his pots with care. If only our nation could Contd. on page 8 DIGNITY be molded with equal care and diligence. (See story on page 10) Today’s environment only expenditure No new industries or businesses By A.Yapa rade Union Wing bearable rate during the last 18 the reason to come up with failure. Leader of the Janatha months, Mr. Lal Kantha point- such an idea was the dearth of “The environment today is T Vimukthi Peramuna ed out that successive govern- essential goods as well as the only for expenditure. No move K.D. Lal Kantha M.P. express- ments since 1948 have failed high prices. Coincidentally, has been taken to develop new ing his views on the escalating to control inflation. the cause for Sirimavo Banda- industries or businesses. They Cost of Living charged that no “Even the infamous hartal in ranaike’s government to return have no new way of earning government could combat in- 1953 occurred due to the un- to the Opposition in 1977-78 money-only of wasting and flation under the current eco- bearable cost of living. Then also was inflation,” he said. consuming what is earned by nomic system and highlighted there was talk of bringing rice He pointed out that consider- housemaids and apparel sec- the need for a production based from the moon - of course it ing past experience, it is ob- tor employees through hard economy. was fabricated by the Sirimavo vious that neither the UNP labour,” he charged. While noting that the prices of Bandaranaike faction to defeat nor the SLFP alone or in an Explaining the reasons behind all consumer goods and ser- the then Dudley Senanayake alliance could reduce CoL, as the sky rocketing cost of living vices have increased at an un- Government. Nevertheless, the economic system itself is a Mr. Lal Kantha said: 2 September - October 2007 GROUNDV IEW Avoid disaster GROUND V IEW he main theme of this issue of Ground- making it possible for them to live in har- four decades ago explain why we as a nation View is the state of the economy and mony and set their countries firmly on the have now arrived at this critical point. Since the prolonged increase in prices which path to prosperity, we proceeded on a path to Lee Kuan Yew seems to be an acceptable role NO 30/81 1/1, Longdon Place, T is the external manifestation of a problem restore past glory which was in the opposite model for most of our leaders let us consider Colombo 07, SriLanka that affects a vast majority of our people. direction. As Professor Gunnar Myrdal in his two of his observations made in his memoirs. Tel: (94-11)2506855, 2598415: How did we embark on this stampede to- three volume work- “Asian Drama - an in- First is how important it is to adhere to laws Web: www.humanitarian-srilanka.org E- mail: [email protected] wards disaster? The stampede of course is of quiry into the poverty of nations” published that the government itself imposes. He states recent origin. Yet the march towards destina- in 1968 noted in his comments on Ceylon, with great pride how critics compared Hong- tion “disaster” was consistent since Indepen- “The goals of political stability and national kong and Singapore as financial centres. “In dence. We did have leaders with unimpeach- unity, which involve regularizing relations Hongkong ,what is not expressly forbidden For contributions, information and able integrity. They had a genuine desire to between the majority and minority commu- is permitted; in Singapore what is not ex- advertisements please contact: develop the country and improve the living nities within a system of representative gov- pressly permitted is forbidden.” The other 0112598413 or 0112506855 standards of our people. Free education, free ernment seemed as far away as ever.” That is observation he makes is even more relevant. Views expressed in Groundview are the contributors’ own and do not necessarily medical care, food subsidies and develop- not all. “An inability or unwillingness to plan “It is easy to start with high moral standards, represent the opinions or policies of ing land settlement schemes for the land less on a national level was the price paid for, or strong convictions and determination to beat the CHA were their priorities. Creating wealth for the a reflection of, the particularisation form of down corruption. But it is difficult to live up Nation was not a priority. While many other nationalism that has imbued Ceylon’s poli- to these good intentions unless the leaders are Asian countries molded nations out of soci- tics and absorbed the interest of its politi- strong and determined enough to deal with eties that had a history of multiculturalism, cians.” These remarks made in 1968 nearly all transgressors , and without exceptions.”

o write even a brief essay on peace is simultaneously both a walk in T the park as well as a walk through a minefield. It is a walk in the park because at face value one could assume that everybody knows what peace is all about, and it is sim- alisms along with other interest groups that clearly, the LTTE’s definition of peace con- entrenched civil society networks hardly ply inconceivable that someone who has not doThinking not take ‘nationalism’ as their point of tains within it the entrenchmentabout of its own represent a people’sPeace movement in the sense taken leave of his senses might not appreci- departure agree on what peace is at a very hegemony and the clear marginalization of of mass movement for peace that has clear ate peace. On the other hand, it is a walk basic level. This includes the LTTE, the other voices within and beyond the Tamil popular support across the country. In fact through a minefield because in specific lo- State, JVP and so on. It is at this point community. Interestingly, it is clear that even though Sri Lankan people may want cal situations what different individuals and that specific cultural and politico-national- both the Government’s and LTTE’s defini- peace, what it lacks is a dynamic all encom- groups refer to as peace might mean very ist definitions of peace have emerged. Cur- tions of peace are based upon foundations passing peace movement that can attract different things. It is precisely because of rently, among many such specific meanings of violence and hegemony articulated pri- a large public following. At the moment, this state of affairs that peace has become Sasanka Perera marily on military terms. I simply cannot see such a reality. While such an elusive commodity in the contem- University of Colombo some of the awareness works of civil so- porary world replete with multiple forms of The more dominant civil society defini- ciety groups surely help contextualize the conflict. What I hope to do in this brief es- tion of peace consists of a simple technical consequences of war and the need for peace, say is to articulate some of the ideas that meaning of peace. However, the dynamics they hardly expand beyond an amalgamation come to my mind when I think about peace of that definition are not devoid of poli- of professionally organized projects, vigils, in our specific context. tics, and by that same token this particular seminars, leaflets, marches etc. discourse on peace is also not a domain of The technical definitions of peace which innocence. For instance, while the better So why is peace so elusive in Sri Lanka are somewhat precise but varied are taken known civil society groups unequally repre- when the need for it is so clear? It seems for granted in popular, religious and politi- sent peace as their ultimate goal, its collec- to me that the absence of a mass-based cal discourses in many parts of the world. tive criticism of the non-peaceful activities peace movement based on grassroots orga- This is the same in Sri Lanka. As a point of of the state are far more articulate and con- nizations and individuals that can cut across departure, let me offer the six meanings for sistent than its criticism of similar activities ethno-cultural and regional boundaries has peace presented in the Webster’s New Uni- of the LTTE. What I want to stress then is been a major drawback. This is particularly versal Unabridged Dictionary (1979): that all these three definitions or discourses so when one considers the fact that the three on peace meet at certain points while they major peace discourses have not shown any 1. Freedom from war or civil strife. diverge quite pronouncedly at other signifi- significant visionary attributes. As a group 2. A treaty or agreement to endwar. cant points, and all of them are embedded of people, we hardly seem to ask the ques- 3. Freedom from public disturbance or in their own politics. It is precisely due to tion why peace was lost in the first place. disorder; public security; law and order. this state of affairs that peace in real terms For me at least, the answer to that question 4. Freedom from disagreement or quarrels; of peace in the context of violent politics has been so elusive in Sri Lanka. What is the following: for a very long time the harmony; concord in Sri Lanka, there are at least three domi- is muted in the cacophony of these domi- collective of individuals who have lived in 5. an undisturbed state of mind; absence of nant definitions, one from the Government, nant peace discourses are the expectations this country have become strangers among mental conflict; serenity one from the LTTE and the third from civil and yearnings for peace of average people themselves. They do not know or under- 6. Calm; quiet; tranquility (1979: 1317). society. whose definitions of peace are much closer stand each others histories, cultures, ritu- to the first three simple meanings of peace als or religions. They do not speak each It is to such a cluster of generally accept- The Government’s definition of peace has quoted above. others’ languages. They do not take part in ed meanings that I referred to as a walk in notions of gaining an upper hand in military each others’ ceremonies or read each oth- the park. Even in the present violent politi- terms at ground level, implementation of a For me, the fundamental problem in this ers’ literature or poetry. Surely, under such cal context of Sri Lanka, most normal peo- package of devolution that has not reached scenario is the relative non democratic na- circumstances the only thing that could ple would agree that peace refers to the first any kind of consensus yet even with the dif- ture of this discourse. That is, if we take have happened over time has happened: the three definitions given above. At a more ferent support bases of the Government and the three dominant discourses on peace I loss of peace. The appropriation of the lost general level, they would also agree that the an interest in maintaining the framework of have briefly attempted to outline above, it peace in real terms cannot come through the remaining four meanings would make sense the unitary state as ruptured as it is now. It is difficult to argue that the collective ex- discourses of the State, the LTTE or civil to both individuals and collectives in the is this definition of peace that has been gen- pectations and wishes of large sections of society with their own structures of interests pursuit of personal happiness. But once that erally labeled by government rhetoricians Sri Lankan people battered by war and other and politics. Peace can only come about if walk in the park ends, the treacherous walk as ‘dignified peace’ or ‘gaurawanwitha sa- forms of multiple conflicts are contained space is created by any or all of these enti- through the minefield will begin. maya’ (in Sinhala). there. Clearly, the discourses of peace that ties for the people to rediscover themselves the State and the LTTE represent have very and learn about their collective fears, pains, As far as I can see, the more audible The LTTE’s definition of peace has mean- clear politico military agendas and frame- animosities, strengths and dreams. peace debate in Sri Lanka is more like a ings of entrenching its control in the areas works of hegemony attached to them. These walk through a minefield where the general it currently holds sway, further expanding discourses of peace are not without strings Dr. Sasanka Perera holds a PhD agreement of what peace means in techni- that control into areas it claims as part of as opposed to the yearnings of peace that in social anthropology from the cal and simple epistemological terms have elam and ensuring that ‘peace’ in real terms often manifest in the not so audible private University of California. He is been reviewed by all parties concerned, and means its hegemony in political, cultural words of people that we may hear in dif- currently a Senior Lecturer in summarily agreed upon. That is, all shades and social terrain in any future resolution ferent parts of the country. Similarly, the the Department of Sociology, of Sinhala and Tamil ethno-cultural nation- of the current ethno-military crisis. More very audible peace discourse of the better University of Colombo. GROUNDV IEW September - October 2007 3 They are not ashamed to speak to me. Most people who come to the shop ask for milk powder in sachets. Most of the brands of milk powder are now avail- able in small sachets. We hardly sell the 400 gram packs. The sachets are in demand.” Andarawewa’s Story A farmer relates his struggle to make ends meet By Manula Wickrema

Andarawewa of sus of the farmers, the amount that saster.” The sachets are in demand.” Paragaswewa, was harvested and the amount that “Now I don’t bother to bring nor- P.B. in Anuradhapu- was sold, and the amount that was Mr.Anderawewa continued, “they mal milk powder packs. Why stock ra once served in the Department of stored. We sold to the co-opera- blame the open economy , but things that do not move. If it is dry Railways. Giving up a secure gov- tive with no middlemen involved. we know what happens. They fish the normal request is for 50 ernment job he took to cultivation Today it is different. Selling paddy waste money on utterly unneces- grams. We do not stock expensive and was soon a successful farmer is like being in a dog fight and we sary things. They sell paddy and items like jam, sauce and salmon. I in the Mahakandarawa settlement. all end up selling our produce for a buy milk powder, shampoo, hand cannot close down the shop as I too His hard work and will to assist his pittance and go home grinding our phones, perfume and such rubbish. need whatever money I can make fellow farmers made him a popular teeth. There is neither money nor What we produce in this country if only to settle the debts and meet figure in the area and within a short enough food. So we are compelled and what we spend on are all non my daily expenses.” time he became the President of the to do some manual labour to earn essential things described as fash- ‘Mahakandarawa United Farmers more money.” ionable. The problem is that the I took an inventory of his stock- Association’. “Do you realize the amount of country has no discipline to deter- One kilo of tomatoes money we need to spend to culti- mine what is needed and what is One rupee shampoo packets A man with firm opinions and an vate one acre of paddy. The tractor not.” Dry fish 500 grams, independent thinker, he describes charge for one acre is Rs.5000. The The rise in prices is really manipu- Cakes of soap-190, in two brands the present state of affairs with con- cost of pesticides, fertilizer and lated. This can be clearly seen if Ten packets of condiments tempt and disgust. Asked to com- other expenses leave us with so you study the evolving relationship Sugar ment on the cost of living he began little money. That is why I said that between the trader and the consum- Dhal by reminiscing about the past. today farmers do not eat. They lick er. The pressures on the people in Coconut oil “A coconut was 10 cents. A bun the plate of what is left. There was the rural areas continue to oppress One customer who came while I was 6 cents. Buttered bread was a time when farmers were regarded them further. The small townships was there, bought 250grams of sug- 40 cents. A pound of sugar was 34 as kings. Today they roam around with a few shops and a bakery that ar, 100 grams of dhal and a quarter cents. For one cent I could eat three like stray dogs.” catered to a few surrounding vil- bottle of coconut oil. bananas. A bushel of rice was Rs. “What I cannot understand is that lages are quietly vanishing. 6. When I took a bushel of rice to while the financial rewards for our If you travel from Nochchiyagama Bopage Lal who sells ice cream town, I could buy all the provisions hard work continues to diminish to Anuradhapura on the road to Put- on normal days and vegetables on for the house required for more than day by day our expenses rise at a talam you will see that more than market days told me, “this is not a week and was able to eat well in pace that we can hardly compre- fifty shops which once flourished what I would call life. It is hell. I town and was still left with a few hend. are now closed. When asked why packed off my wife to the Middle cents to spare. Today we don’t eat It is so unjust and is carried out in they were closed the shopkeepers East. Now I am determined to es- we lick the plate,” he said. such an insidious manner, it is hard say trading has declined or people tablish myself as a trader. I get up to imagine that it is not done de- defaulted on credit sales.” very early and collect coconuts, “A hired hand who earned 50 cents, liberately. The rise in costs com- W. Piyadasa who is a retired em- Indian corn and breadfruit by trav- would have his meal for virtually menced gradually in the ‘70s. To- ployee of the Department of Ar- elling far and wide on my bicycle nothing. Today even if you earn day it is totally out of control and chaeology now runs the shop set up and reach the market early. I have a Rs. 500 per day you can save noth- nothing is there to prevent this di- by his son who gave up the business motor cycle which I cannot use as ing. At dawn, the next day the due to his failure to recover debts. I cannot afford to pay for the fuel prices would have gone up. We are Mr. Piyadasa is generous enough and keep a decent margin at the no longer in control of our lives. to concede “these people are not prices people are willing to pay. I We cannot plan as there is no or- cheats. Hunger makes them ask had a small shop which I gave up der in anything. We farmers have for credit. They fail to pay because as the rent added to my cost. Now to buy many things and the process they do not have the money. They I have a small make shift counter is complex and confusing. What are not ashamed to speak to me. by the side of the road. I manage we are to be given is not described Most people who come to the shop to sell some vegetables. My Indian precisely. ask for milk powder in sachets. corn sells better as it is an afford- In the earlier days I spoke of there Most of the brands of milk powder able food item.” was a system in place to sell our are now available in small sachets. Bopage Lal at his make shift stall paddy. There was an accurate cen- We hardly sell the 400 gram packs. 4 September - October 2007 GROUNDV IEW

YEAR 2006

GDP at current market price (Rs. Billion) 2,802 GNP at current market price (Rs. Billion) 2,790 C Foreign Debt Ratio 40.4% Domestic Debt Ratio 52.6% R Total Government Debt Ratio 93.0% Source Central bank of sri lanka Report 2006

2007* Month Ago year Ago I Government Debt End May Total domestic debt Rs bn 1,560.8 1529.6 1372.5 of which T Treasury bills 252.7 240.4 240.6 Treasury bonds 932.1 931.1 822.4 Rupee loans 117.2 117.2 140.6 Total forreing debt Rs bn 1,210.9 1212.0 1012.3 I Total outstanding govt. debt Rs bn 2,771.7 2741.6 2384.7 Source Central bank of sri lanka economic indicators 17 August 2007 C

A SRI LANKA CONSUMERS PRICE INDEX BASE : 1995 TO 1997 = 100 L

C H O I C E S

SOURCE : DEPARTMENT OF CENSUS & STATISTICS % INCREASE JUNE 2006 - JUNE 2007 - 16.59 Ground Veiw GROUNDV IEW September - October 2007 5

Province GDP ( Rs. Million ) % GDP

Western 1,401,000 50.00 North Western 252,180 9.00 Southern 252,180 9.00 Sabaragamuwa 168,120 6.00 Central 252,180 9.00 Uva 140,100 5.00 Eastern 140,100 5.00 ? North Central 112,080 4.00 GDP growth Inflation Northern 84,060 3.00 Budget Deficit Broad Money supply Total 2,802,000 100.00 Projections % 2006 2007 2008 2009 2010 %0f GDP CONTIBUTION BY PROVINCE ( source : CB Statistic department) GDP growth 7.4 7.5 8 8.3 8.5 Budget Deficit -8.4 -7.6 -6.3 -5.3 -5.0 Inflation 10.3 8.5 7.0 6.0 5.5 Broad Money supply 17.8 14.8 15.0 14.5 14.4 Macroeconomic Developments, O Stability and Policy Responses in 2006 ri Lanka continued on an economic ex- Spansion path in 2006 demonstrating its AVERAGE INCOME PER PERSON BY PROVINCE 2006 sustained resilience recording a 7.4 per cent growth rate, the highest since 1978 and an un- Province GDP ( Rs. Million ) Population Per Capita ( Rs. ) employment rate of 6.5 per cent, the lowest Western 1,401,000 5,381,197 260,351.00 ever. Despite these favourable developments, North Western 252,180 2,169,892 116,217.77 emerging inflationary threats posed a seri- Southern 252,180 2,278,271 110,689.20 OR Sabaragamuwa 168,120 1,801,331 93,330.99 ous challenge for policy makers. Therefore, Central 252,180 2,423,966 104,036.11 the monetary policy thrust was persistently Uva 140,100 1,177,358 118,995.24 directed towards curbing the rising inflation Eastern 140,100 1,419,602 98,689.63 pressure and inflation expectations. North Central 112,080 1,104,677 101,459.52 Sorce Central Bank Report 2006 Northern 84,060 1,040,963 80,752.15

Total GDP 2,802,000 18,797,257 149,064.30 Exchange rates for Seven Months in NATIONAL PER CAPITA 149,064.00 the Year 2007 Disparity of National GDP per Capita among the Provinces Month USD INR Euro Province Disparity January 108.6970 2.4693 140.7844 Western 111286.69 February 108.7474 2.4687 143.7369 North Western -32,846.54 March 109.4056 2.5244 145.8541 Southern -38,375.10 April 110.2017 2.7023 150.3537 Sabaragamuwa -55,733.32 May 110.8144 2.7545 149.1174 Central -45,028.19 June 111.4150 2.7442 149.6471 & Uva -30,069.06 July 111.7588 2.7752 153.2828 Eastern -50,374.67 August 113.0565 2.7595 154.5200 North Central -47,604.78 As of September Northern -68,312.15 19th 2007 114.0700 2.8272 159.8700

Source: International Finance Statistics Central Bank of Sri Lanka 6 September - October 2007 GROUNDV IEW Affliction in the economic body WHAT YOU SPEND MUST RESULT IN GROWTH

By Dilrukshi Fernando he current sustained increase in the feeds on itself. Buy now, pay less later! Finally, the Government provides all sorts of sub- price of goods and services has re- In a period of rising prices, how do you make sidies to people to reduce hardships of everyday sulted in a steep increase in the cost money easily? Stockpile items and sell later and life, an essential means of remaining popular. Now of living, adversely affecting the lives you will make good money. For instance, if I had to do all this it must raise resources. Tof low income and middle income segments of 20 bars of soap in my shop and prices were ex- The Government raises resources by taxing peo- society. pected to rise, I would hold back the stock until ple. About 95 percent of all resources the Govern- Will it turn out to be a vicious spiral that will prices began rising. Buyers know that the longer ment maintains without obligations is through tax- Dr. Geedreck Usvatte-aratchi further worsen living conditions of the peasant- they wait, the higher the price. The seller knows es. About 5 percent, the Government earns interest ry, the wage earner, the artisans whose earnings that the longer he holds, the higher the profit for on loans from employees and profits from various are indeterminate and a host of other categories him. So inflation creates artificial scarcities and enterprises. of citizens whose only privilege is to live within worsens the process. It is now foolishly cutting in to it substantially “The pre-occupation their limited means? In this context it could indicate to investors that the by giving massive unproductive employment at with the once Analysts who try to predict the future economic right way to make money is to stock goods. And to the Central Bank and at the two State banks. The trends range from the skeptics to the sanguine. enterprising individuals that money could be made Government also gets resources without creating greatness of Rajarata GroundView spoke to an expert economist by diverting their attention to activities involving obligations when foreigners make gifts. When the Dr.Geedreck Usvatte-aratchi in search of some speculation. That is destructive. Government borrows, whether here or overseas, is a real obstacle to answers. it creates obligations and somebody has to pay. When the domestic banking system creates money this change. Let us Q: But why inflation? How does it rise? to lend to the Government, they are printing mon- write somewhere in Q: Every one worries about inflation. Should Fundamentally, it is the outcome of society to buy ey, in effect. When the Government pays out of its they? It so, why? more than they produce. The oft repeated Mil- past receipts, it adds to spending. gold lettering that Answer: Yes, they should. But why? Inflation is ton Friedman mantra that inflation is a monetary This same logic applies to enterprises and house- an affliction in the economic body and all of us phenomena has suppressed the very useful funda- holds. When they spend their past savings, when Rajarata was once are members. Inflation is a general rise in the price mental that, inflation is the result of trying to buy they borrow from banks to spend and when they a great civilization level. If prices of one or two things, for example, things for which one cannot pay. buy on promises to pay, they create more money fish and mangoes rise, even by 100 percent, we How does society try to buy more than it produc- to chase after than the limited stock of goods and but moved on to give would be not be agitated. If we stop eating fish and es? To answer that, let us divide society into three the price of those goods increases. When an enter- mangoes for a while the prices will come down. groups for convenience: government, enterprises prise gets money by selling shares in the market, those young men and If the price of all items increase at the same rate and households. The government tries to buy more they do so at the expense of other people’s power we would not worry either. Imagine that prices by drawing on its previous cash balances (like the of expenditure and there is no addition to total net women who live there of everything I buy and my wages all rose at the money you store in a box for later use), borrowing expenditure. now a same rate over the same time. Except for the in- from banks or by printing money. Enterprises try The sum of all this is that whenever the activities convenience of carrying mole cash in my pocket, to buy more by using its cash balances or by bor- of the Government, enterprises and households chance in life.” I would not be worse or better off than earlier. The rowing from banks. add to the purchasing power, there will be infla- problem is that some prices rise and some don’t. Households try to buy more by buying on credit, tion. The culprit is not the creation of money but Prices of food rise and I spend 60 percent of wages and credit cards are a great convenience to that the attempt to do things for which you do not have Dr. Geedreck Usvatte-aratchi on food. My wages do not increase. Wages are no- end. Now all three groups may try to buy more, the purchasing power. graduated from the University of toriously rigid and that is the essential means by but there is only the same stock of goods. Creat- This is not to say that you must not create new Ceylon in the 50’S and holds which people are cheated and have to bear the bur- ing money whether by printing money or by way purchasing power. Then your economy will not a Ph.D. from the University of den of inflation. of promises to pay does not create a single prod- grow. The point is that what you spend must result Cambridge. He served the Central Take the case of people who have some savings uct. Prices of goods must rise. Your economy is no in growth. In that sense, all growing economies Bank of Sri Lanka and later joined accumulated over a long period of time. In 2005, I more than that-pile of goods and the struggle by are inflationary. That is fine. But if the extra pur- the United Nations as an econo- had Rs.400,000 in my saving account. In 2006 and each group to acquire more goods will raise the chasing, not only raises the price of goods but also mist and retired as a Director in 2007, inflation was cumulatively 30 percent. Then price or cause inflation. It is as simple as that. destroys the markets for those goods, we would the Department of at the end of 2007, I would have about Rs. 270, The Government is trying to do a lot of things. become desperate. Imagine prices begin to fall or International, Economic and 000 in real terms because I can buy goods worth Quite rightly, it wants to fight terrorism in the even become stagnant. Then that economy will not Social Affairs. He has also served no more than that, as prices rose in 2006 and 2007. country. These terrorists are a menace to freedom grow. as an economic advisor to the If this rate of price increases goes on for six years, and civilized life. Therefore, the Government must Q: It is evident from your comments that the Sri Lanka Government. He was a I would be left with close to nothing. So people make an honest effort to eliminate terrorism and government plays a critical role in the matters member of the UN Committee for who possess any savings in money are robbed of use peaceful means in explaining their motives concerning inflation. In that context, how much Development Policy (CDP) - a their value. to the public, in order to make it possible for the impact does a stable and structured government committee advising the Secretary Anybody who lends money loses, and borrowers thousands of civilians in the North and the East to have on overcoming inflation? General of the United Nations on gain at their expense. Imagine I lent Rs.500,000 to live a normal life. I don’t understand pussy footing questions of economic, social and Dhanavardhana in January 2006 and Dhanavardh- them by whomever, whether here or overseas. At It is not so much a stable government as a stable environmental policy. He was the na had increased it to two million in two years and the same time the Government is trying to build and coherent economic policy of a government, executive Vice- returned the Rs.500,000 in January 2008. In the infrastructure: roads, harbours, airports, power sta- that could contribute to low inflation and rapid Chairman of Marga Institute, meanwhile prices increased by 100 percent. tions, telecommunications, schools, hospitals and growth. It is a great pity that groups of people who Colombo. He was a founder Vice The value of the Rs.500,000 that was returned the lot. Who would find fault with them for that? are competent to arrive at such sense are either si- chairman of People’s Action for in 2008, in terms of the prices in 2006 would be The Government is also providing employment on lent or have tuned into apologists for government Free and Fair Rs.250,000. So, borrow as much as you can. You a large scale, especially to the educated youth- a folly. Elections (PAFFREL) will pay less to the lender. That is why inflation very laudable objective. The university community who know all this keep GROUNDV IEW September - October 2007 7 In 2002, we exchanged some 22 kilograms of tea for a barrel of crude oil. In 2006, we exchanged 67 kilograms of tea for the same barrel of crude oil. absolutely quiet while the country is taken to ruin. The Central sequel. Globalization can be considered on two fronts, although they Bank which has a core of excellent economists dole out sense- The military exercise is a perennial source of inflation. Its are connected. First, what you have in mind is, perhaps, that less calming balm when the need is to raise alarm about the need speedy end would help greatly to reduce inflationary pressures economies of the world get interlinked more and more. Second, for caution. in the country. is what happens culturally. The government must be honest and open. It is this struggle that Much of globalization has been driven by advances in tech- creates inflation,that generates struggles for higher wages and Q: A term which regularly comes up in discussion of inflation niques: ships, airplanes, telephones, satellites, computers and all many more stresses in the economy. The people should be told is that the balance of payment is under stresses. How is it con- the rest. The net effect has been to reduce prices and increase about the loss of huge resources because of the rise in the price mobility. The price of corn in England fell drastically in the of petroleum. 1870’s when railways and large ships could carry the grain from In 2002, we exchanged some 22 kilograms of tea for a barrel the west of US to England. Similarly, tropical fruits and flowers of crude oil. In 2006, we exchanged 67 kilograms of tea for the are now quite cheap in temperate climes. Millions of our people same barrel of crude oil. The economy must absorb and suffer go to work in West Asia and elsewhere. It is not all a bless- that loss of resources to petroleum exporting countries. Large investments must be ing. Multinational corporations have become hugely powerful The people should be told what the government cannot afford. made with regard to economic entities, more powerful than many states. Production The people should be asked what they could cut in terms of ex- processes are now spread widely over the world. One part may penditure, being faced with current resource constraints. The telecommunications and be made in Japan, another in Ireland, a third in Brazil ...... a bogus claims by the opposition that they could do better should infrastructure. fifteenth in Sri Lanka and all assembled in France. Enormous be exposed, that they are capable of cuting more clothes out of amounts of money are flying all over the place through those the same cloth. Of course, there are blatant inefficiencies in this Money used for same fibre optics and satellites that bring you much goodies and Government. Cutting them out would be a great step forward. defence purposes, they may move lightening fast creating unmanageable problems There is much noise about the size of the Cabinet. Government for many countries, not only poor small countries. Globalization ministers have wisely come out to explain that the need to sew should in fact be has made the world economy more integrated but that more in- up a coalition has made this eventuality imperative. However, utilized for building of roads, tegrated world is left without any practical governance, leaving there is enormous waste on the part of every one in Government. powerful countries more powerful than earlier. An open econo- The President travels with huge retinues. Other ministers take bridges and houses. my may find it suddenly invaded by cheap imports of a good it their spouses and children at official expense. There is much Switching to fiber optic had been producing earlier at higher cost and producers may be merry making at Government expense. A cabinet of 100 people left without their livelihoods. or more is a joke. Whilst recognising the need to bribe MPs with cables instead of the All this requires all countries, not excluding poor ones, to react ministerial positions to keep a government intact, it is essential copper wires used here, equally fast. Their entrepreneurs need to be ever vigilant for op- to find a few people with whom decisions could be taken after portunities for investment or markets that suddenly open. Their substantive debate. The present practice of rushing 100 cabinet for the transfer of data from governments need to have smart economists who are open to papers in a sitting of 50 or 60 ministers is a farce. satellites ideas and information from the rest of the world. A stable and coherent economic policy of that nature requires the Government to look at both short and long term. In the short term in order to expand In general economies that are open have gained from the process it should try to keep inflation down and the value of the rupee telecommunication of globalization. These include China and India among others. fairly stable, while in the long term make sure that the economy That openness requires more effective internal management can grow. The short term also includes political considerations services not less, on the part of both enterprises and governments. The such as avoiding disastrous mistakes which may antagonise one world needs to think of how best to mange this integrated world or another part of the population into open violence. like in Bangalore and economy. To begin with they had better look at the international We need to get out of low productivity and poverty perpetuating Hyderabad financial institutions and secondly the problem of the pollution agriculture including plantations, as soon as we can. Agriculture of the environment. contains a huge part of our labour force and moving out of the is an urgent necessity. agricultural sector will not be easy but the longer we stay there, Q: How has Sri Lanka met the challenges posed by globaliza- the longer we remain in poverty. tion? The pre-occupation with the once greatness of Rajarata is a real obstacle to this change. Let us write somewhere in gold lettering A: Our situation is not that promising! ‘Capitalism’ is still a that Rajarata was once a great civilization but moved on to give dirty word here. We yet do not have an entrepreneurial class that those young men and women who live there now a chance in life. nected? can move the economy massively. Government itself does not Plantations which imprison some 600,000 people in poverty are actively promote the development of large enterprises which can another trap we must escape. These are not easy things to do but A: The balance of payments statement, like any other balance go to the rest of the world. Taking labour to the rest of the world to realise that they need to be done is a means to success. sheet, is an account of the external economic accounts of the is a poor substitute for the growth of enterprises in the domestic country. It tells you how the whole economy balances its ac- economy. That is a real problem. Some in the travel trade are counts with the rest of the world. In any given period, it is not beginning to hit out big. A small number of IT companies are Q; There has been much controversy over last year’s budget necessary that all your payments are paid for out of your own beginning to grow fast. One or two manufacturing firms sell a allocation for defence expenditure. The recent surge of vio- resources or you use all your resources to pay others. bit overseas. All these enterprises and others must grow big and lence in the NE is yet another concern for the citizens. In your If you do not collect enough to pay for what you buy, you bor- spread wherever they can. As developing country markets ex- view how does a ‘war-like’ situation contribute to a country’s row money to do that, this time from abroad. However, you can- pand fast there is room for our enterprises to grow. Our Govern- inflation? not go on borrowing year after year without consequences. You ment and our economists must help them in this process. There must pay interest and the capital. If that burden seems large to is little more that they can do to eliminate poverty. A: War is not a one party activity. The Government would not lenders they will charge you higher interest and lend you for fight a war unless there were militaryactivity threatening it or shorter periods. When at some point lenders conclude that you its citizens. The rise in government expenditure to fight a war are too risky a borrower at any reasonable interest rate, you have Q: Lastly, do you see our country climbing out of this ‘bottom- was inevitable with terrorist activity all over the country. About a balance of payments crisis. less pit’ of inflation and what do you propose as a remedy? the scale and nature of that activity, I am not competent to com- In a period of inflation, if the exchange rate of your currency ment. in respect of other currencies does not fall in the market, your A: For a short time we will be in a ‘pit’ for as long as we fight Wars almost always produce inflation. The Napoleonic wars in exports become more expensive to foreigners than exports from this civil war, prices will go on rising. Even if the war is stopped, the early 19th century, the 1914-18 war between UK and Ger- countries where this has not happened. Imports to your coun- a substantial amount will go into maintaining our armed forces, many, the war in 1939-45, on the part of Britain, the Korean try become cheaper than domestic products, the prices of which which prior to the ‘70s was merely a show and tell outfit at in- War in the early fifties and the war in Vietnam in the late sixties have risen because of inflation. Governments come under pres- dependence parades! on the part of the US, all generated inflation. sure not to devalue because each devaluation makes imported But large investments must be made with regard to telecom- This is because in wartime there is a struggle to divert resources good more expensive than earlier and feeds inflation further. In munications and infrastructure. Money used for defence pur- for the war by government and financing it with newly printed so many ways, inflation makes managing the balance of pay- poses, should in fact be utilized for building of roads, bridges money is part of the strategy of governments to fight for resourc- ments problematic. In these sorts of situations countries go to and houses. Switching to fiber optic cables instead of the copper es. The experience of Sri Lanka would be no different. the International Monetary Fund for help and that can be costly. wires used here, for the transfer of data from satellites in order Besides, a lot of capital, roads, buildings and equipment is de- It is best you keep that bridge far away. to expand telecommunication services like in Bangalore and stroyed in war and soldiers are paid to destroy not build or pro- Hyderabad is an urgent necessity. India is building a new city in duce any thing. If you pay people on a large enough scale to Nagpur, which used to be the back of beyond, a few years ear- produce nothing it would result in inflation. There are a lot of Q: How does globalization affect a third world country like lier. We should learn from them. The government must also lay people uprooted from their homes and living in camps. They Sri Lanka? the necessary conditions for enterprises and construction com- produce little but governments have to feed, clothe and find panies to venture overseas. The Lankan hoteliers who manage places for them to live in. Again you have a population which A: Third world country is a horrible phrase. I never use it. Poor up to 12% of hotel rooms in the Maldives, and Damro Limited, consumes but does not produce. You must have inflation as a country will do fine. which has an international sales network are the way to go. 8 September - October 2007 GROUNDV IEW Continued from page 1 Provide water Today’s for ...... environment ...... hearts of Tamils and they would not have master plan. Its construction was delayed “the Government issued new He also said that an ordinary had a say as 90% of the land comes under due to various reasons during the last 35 money to the market when it was Advanced Level student who the Maduru Oya,” he added. years. in a drastic state which subse- had lessons in economics would The feasibility study of this project was This multi-purpose project was expected to quently ended up in increased know that there are various ways carried out by ACRES International Ltd in provide domestic and industrial water sup- debts and a devalued rupee.” of issuing money into the market August 1980. In 1982 ACRES carried out ply to Anuradhapura, Trincomalee, Polon- rather than printing new notes by an update of technical and costing data with naruwa and Matale districts. The water to He also said that when the Gov- the Central Bank. “Central Bank funds obtained from the Canadian Interna- cultivate 26,500 Ha of uncultivated lands ernment realised it was a mistake Governor Ajith Nivard Kabraal tional Development Agency (CIDA). De- annually in the Amban Ganga system and it caused the increase of interest should re-read his own annual re- tailed designs of the right bank (RB) main around 55Gw of hydro power could be rates on savings in order to re- port in 2006,” Lal Kantha said. and branch canals were carried out in late generated annually at Moragahakanda. absorb money. 1981 and in 1982 with USAID financing. The project components include construc- As remedies for the high cost of At full development, it proposed to settle tion of a dam across the Amban Ganga, “The interest rates for savings living he could suggest as a trade 19,654 and 14, 000 families on the left and about 2km upstream of the Elehara anicut went up to 18%-19%. When the union leader that there are short- the right banks respectively, bringing it to incorporating a powerhouse with an in- interest rates on savings go up, term as well as long-term solu- a total of 33,654 settled families. stalled capacity of 20Mw. This would en- interest rates on debts too in- tions that a government could The Maduru Oya basin has a drainage area sure the supply of irrigated water to 81,422 crease. Now the interest rates take. of 1541 sqkms and the Oya originates from Ha of land in the dry zone to meet the for loans vary from 20% to 25%. Mahiyangana in the Badulla district. Ac- drinking water requirements in the Anurad- Even the money lender in our “For instance, an immediate step cording to the Mahaweli Authority, this hapura and Trincomalee areas and an addi- villages in the past used to lend this government could and should river remained under-developed until the tional water supply to the industrial zone in money at a rate of 20% and we take is to reduce its jumbo Cabi- restoration of the Vakaneri tank, Pimburat- Trincomalee and generation of electricity. used to call it ‘gini poli’ (exor- net. Various people charge that thawa tank and the Maduru Oya reservoir According to the Authority, the cost of the bitant interest). Now investors it wastes public funds unneces- during the recent past. construction work on the Moragahakanda and entrepreneurs have to pay a sarily but I see it in another way. The Punani anicut across the Maduru Oya, and Kalu Ganga projects will be Rs. 7 bil- huge amount of interest for their More than wasting public funds irrigates lands on the left bank of Maduru lion. In February 2000 the Mahaweli Au- loans,” he said while noting that it leads to a complete collapse of Oya and the development of lands under thority, under the Ministry of Mahaweli according to economic indica- public administration. Imagine a the Maduru Oya reservoir constructed dur- Development, and Lahmeyer International, tors, the tendency to obtain loans family where father, mother and ing the Mahaweli accelerated programme in association with the Central Engineering has decreased this year. children are all trying to become was also limited to the left bank mainly due Consultancy Bureau (CECB), Sri Lanka, Head of the house. It will create to the conflicting situation. United Consulting Group (UCG), Kuwait, Mr. Lal Kantha elaborating on only chaos and in the same way The Maduru Oya was designed for the de- and Chuo Kaihatsu Corporation (CKC), consequences of increased loan when a country has two to three velopment of both banks. There is a large Japan, signed an agreement to undertake interest rates said that it resulted ministers to look after one port- extent of flat fertile lands under rain - fed the feasibility study of the Moragahakanda in discouraging the launch of folio it creates problems. Nobody cultivation extending from Welikanda to development project. new ventures too. knows who is responsible. So the Valachchena on the right bank of the Mad- first step in order to bring down uru Oya in the Batticaloa district. The wa- If the Government accelerated the Maduru “According to the indicators, it inflation would be reducing the ter presently available at the Maduru Oya Oya Right Bank development project it is clear that employment in the number of ministers,” he said. reservoir is quite sufficient to provide wa- will not only provide water to the sun-burnt private sector too has declined ter to the right bank. dry zone in Batticaloa district but will also this year. All social sectors are in He however noted that the Gov- “The Government could easily begin con- provide employment for a large number of unrest as nobody’s economic sta- ernment is not capable of doing struction on the Right Bank development people. tus is satisfactory. People are in- so as the moment it starts reduc- project because the planning was already “When we absorb one area into develop- creasingly coming to the streets ing the Cabinet it will also start done and the only problem is to find do- ment under a Mahaweli Project we basi- and are demonstrating against reducing its so-called stability. nors. Even the donors will be happy that cally develop all the areas. That includes the Government and demanding the Government is doing something for the developing infrastructure such as roads, solutions. But we are aware that “On the other hand, the Govern- Tamils,” Mr. Godamunne noted. bridges and transport which would provide this government too could not ment could also start collecting He also said that it was not clear as to employment for the people in the area. Ag- find solutions under the present taxes from people. Even though why the Government shifted its attention riculture will also be developed. Not only economic system,” he added. the Executive President is the Fi- to build the Moragahakanda development will the main agricultural crops but eco- nance Minister, the Government project instead of the Maduru Oya Right nomical crops be highly encouraged so that Asked to comment on the Cen- has failed to collect due revenue Bank as the feasibility report done under people will have a decent income,” said an tral Bank Governor’s statement from tax payers.” the Mahaweli accelerated programme had official of the Mahaweli Authority. that he would resign from the put off the construction of Moragahakan- post if any one could provide a He also charged that even though da. Various activists have staged protests new note bearing his signature, the names of culprits were re- “Moragahakanda project was proposed to against the project in the area alleging that Mr. Lal Kantha’s response was: vealed with all the details about supply water to the northern areas through the Moragahakanda development project “The annual Central Bank report corruption and malpractices, au- the NCP canal. One problem was that geo- was only a charade to milk money for vest- issued in 2006 admitted that the thorities have failed to take any graphically, the Moragahakanda reservoir ed interests like gem mining. country has failed to achieve action against them. is lower than the canal so that an irrigation development in the manufactur- lift has to be done. According to estimates It is up to the Government to decide ing sector despite expectations. Emphasising on the need for a made even at that time, the cost was not whether it should waste money and They too accepted that the rea- manufacture based economy in economical,” he said. time on a project worth less or whether son for inflation is attributable order to combat inflation he said: He pointed out the other problem was the it should grab a golden opportunity to to the release of new currency “It is up to the working com- distance of the canal being too long that rectify historical mistakes by developing notes. It was normally accepted munity to decide whether they the water evaporation was high, occurring the East through Maduru Oya RB proj- that money should be issued in should continue going from bad at 50% more water loss. ect and show that minority communities accordance with development to worse or whether they should The Moragahakanda reservoir was the are no longer given step-motherly treat- but the Central Bank themselves end the vicious cycle.” fifth reservoir planned under the Mahaweli ment. accepted their mistake.” GROUNDV IEW September - October 2007 9

On the other hand, as inflation is eroding the real income of workers, it is reasonable for the workers to demand higher wages. In a Rising Average Prices and market economy, price controls are a bad policy option. If one chooses this option in Sri Lanka now, the consequences would be very serious. Wage and price controls are also undesirable and unimplementable in Sri the Unraveling Economy Lanka at the moment. The third alternative is to control input prices As a result, the budget deficit has increased mainly by controlling oil prices. The Govern- substantially. Political instability and the in- Another reason for ment is not able to reduce oil prices as they tensified war have also curtailed the financial are determined in the world market. Depre- sources of the budget deficit. Sri Lanka has inflation is the ciation of exchange rates have also raised the been depending on various foreign sources cost-push concept, domestic prices of oil. Sri Lanka also does for its budget deficit, including foreign loans not have foreign exchange capacity and re- and aid. But, since the Government has been which is termed as sources at the moment to create buffer stocks pursuing a policy that is not consistent with and use buffer stocks as an instrument of sta- the main aid donors in resolving the ethnic supply shocks, caused bilizing domestic oil prices. This option is conflict, the donor funds have been squeezed. also unimplementable as a result of this. This has compelled the Government to seek by drops in aggregate domestic inflationary sources for financing Another mathod is to reduce aggregate de- the budget deficit. Government has turned to supply due to mand in the economy. As we argued before, inflationary sources for financing the budget the inflation in Sri Lanka has mainly been deficit resulting in printing of too much mon- increased prices of driven by increased government spending as ey. It is reasonable to argue that increased in- inputs. High rate of a result of deliberate increase of various so- flation in Sri Lanka has been mainly driven cial welfare spending and war spending. This By Dr. Dayaratne-Banda by the intensified civil war as well as deliber- inflation led to printing of too much money. On the ate increases in other social welfare spend- other hand, foreign sources of financing the ings. experienced at budget deficit have depleted as the interna- tional community uses peace talks as against Another reason for inflation is the cost-push present is partly war as a condition of concessional aid to Sri ri Lanka has been experiencing Lanka. As war has intensified and there is no an unprecedented rise of average concept, which is termed as supply shocks, caused by drops in aggregate supply due to caused by the rising mood to stop war and go for negotiations, prices in recent years. The annual there is little interest in the international com- rate of average prices has reached increased prices of inputs. High rate of infla- oil prices. Sri Lanka’s tion experienced at present is partly caused munity to help the Government to finance the more than 15 percent, while the budget deficit arising due to war. This dis- monthly official rate of inflation has been by the rising oil prices. Sri Lanka’s economy economy is heavily S is heavily dependent on oil as a major source cussion makes it clear that there is only one about 18 percent for the past few months. of energy. dependent on oil as a feasible option for the Government to curtail On the other hand, there is a debate ongoing inflation in Sri Laka. That is to curtail gov- on the accuracy of the official rate. Some ar- Almost all the sectors of economic activities use oil as a primary source of energy. In re- major source of ernment spending and stop creating inflation- gue that the rate of increase of average prices ary pressure in the economy by printing the in Sri Lanka is underestimated. Some even cent times, due to the rising world oil prices, the cost of production has increased. This in- energy. too much money. But, in order to achieve provide guess estimates of the inflation say- this, war has to be stopped and negotiations ing it is more than 25 percent at present. On crease in input prices should normally reflect in the final product prices. Moreover, domes- for a political solution should emerge. In ad- the other hand, official bodies of the- Gov dition, the Government may need to think ernment countering these arguments points tic price of oil is also driven by depreciating foreign exchange rates which are caused by pressure to raise the rate of average prices. of curtailing other sources of government to the conspiracy theories and in fact argue spending by rationalizing various govern- that the rate of increase of average prices in various factors including political instability Higher average prices in the economy also and intensified civil war. Sri Lanka also does divert the economy’s resources from produc- ment programmes. One thing is clear. If the Sri Lanka is an over-estimation, and goes on Government wants to curtail inflation, it has to say a new price index to measure infla- not have a mechanism of buffer stocks to sta- tive sources to unproductive sources. Higher bilize the oil prices. It is reasonable to argue average prices in turn are likely to retard the to cut down spending which can be done tion should be created. This debate actually only by curtailing war spending. To do this misses the main point. that rising oil prices is a significant source of rate of economic growth in the medium to increased average prices in Sri Lanka. long run. the war has to be stopped. But, the sad real- The fact is that the official rate of increase of ity in Sri Lanka at the moment is that there average prices in Sri Lanka is closely an ac- is no mood in the Sinhalese polity to stop curate measure of inflation, and that even the Inflation may also be induced by expecta- What can actually be done to curtail inflation tions. In times of inflation, workers are trying in Sri Lanka? In this connection, we need to war and go for negotiations. There is also no official monthly inflation rate in Sri Lanka, way of getting foreign aid to finance the war which is now about 18 percent per month, to keep their wages up with a view to main- take into consideration the fact that many tain the current level of real income. Then the economic problems may have many different as the international opinion is not in favour is an unbearable rate of inflation for an of war at the moment. There also seems to economy like ours. The issue here being not employers pass higher costs of labour on to solutions. But, there is only one optimum so- consumers. The increased averaged prices lution. To curtail the rising average prices in be a well-received political slogan in the Sri whether the rate of inflation in Sri Lanka is an Lankan polity at the moment that war should under estimation, but whether the economy in the economy lead to even more increased Sri Lanka, one has to address issues in both prices as part of a vicious cycle. This is nor- demand and supply sides of the economy. be fought at any cost. There is an increasing can progress under the current official rate of demand from the people to be ready to sacri- 18 percent. I would argue that an 18 percent mally termed built-in inflation which reflects There are at least four policy options for events in the past, and so might be termed consideration, but many of them can not be fice anything for the war. Should the country monthly inflation rate is highly disturbing. sacrifice everything for an unending war?. The economy would pay the price dearly if as hangover inflation. In recent times, salary implemented. hikes became a norm in Sri Lanka due to pres- The economy is in a total mess. No one measures are not taken to curtail the rate to a knows for sure where we are heading. In single-digit level. sure from the labour unions, and this might Some schools of thought suggest raising in- have translated into higher than anticipated terest rates as a method of controlling high fact, Sri Lanka appears to be progressively moving backwards. Many think that the There is also an ongoing debate on the causes rate of average price changes in the economy. rate of rising average prices. But this can Increased inflation has also compelled work- have negative effects on the economy. Rais- economy is moving forward as there is a of inflation in Sri Lanka. According to theory cycle of illusive thirst for nominal increase at least there are three major sources of infla- ers to seek higher nominal wages. ing of interest rates would lead to reduction in overall investment spending in the econo- of income due to inflation. The people do tion. One is that inflation is demand-pulled not seem to understand that the economy meaning that inflation is caused by an- in Inflation creates many problems in an econo- my as cost of borrowing increase. There are my. People with fixed incomes, such as gov- clear evidence in Sri Lanka to suggest that is in fact progressively moving backward crease in aggregate demand due to increased as result of bad policy choices. private and government spending. Inflation ernment servants and other monthly salary the economy suffers due to increased inter- originates from the supply of money. receivers, will be worse off in real terms due est rates. Because of these reasons, it is not Inflation may be caused by an increase in the to higher average prices and equal income as possible for a responsible government to Dr. Dayaratne Banda is a Senior Lec- quantity of money in circulation in relation to before. This results in reduction in purchas- raise interest rates as a method of curtailing turer in Economics at the University the ability of the economy to supply. There is ing power of their income. Rising inflation inflation as it tends to sacrifice country’s long of Peradeniya. He holds a PhD from also results in trade unions demanding higher term welfare for fighting current problems. clear evidence in Sri Lanka in support of this the National University of Singapore. view. In recent times, war spending has been wages, as wages have to be adjusted to keep raised remarkably due to intensified conflict. up with rising average prices in the economy. Another method for controlling higher aver- His current research is on a “sub re- In addition, other sources of Government Demands for higher wages would result in age prices is to control wages and prices. This gional approach to a global single spending have also risen as the Government higher nominal wages and this would in turn is impossible in a country like Sri Lanka. La- currency” and “on inflation – growth has implemented various social welfare pro- translate into higher rates of average prices. bour unions are highy politicized and they connection in Sri Lanka.” grammes in keeping with election promises. In times of inflation, there would always be have a strong influence over the Government. 10 September - October 2007 GROUNDV IEW He decides the speed of his pottery wheel WHO DECIDES THE VALUE OF THE RUPEE By Manula Wickrama

he processed clay had Wijesinghe is 51-years old. When the the potter’s wheel. He needs one day to of the roof over their kitchen has virtu- spend Rs. 8 per night. been left by the side Rajangana settlement began in 1969, process the clay and another day at his ally come down with gaping holes on I am still fortunate to find my clay on of the potter’s wheel, Wijesinghe’s father bought a piece of primitive kiln. In addition he and his the wall due to water seepage. my own land. If I had to bring clay from while Wijesinghe spent fertile land in the Kala Oya basin and wife must find the wood to fire the kiln. Their eldest child was born mentally outside I would have fallen from the most of his time trying settled down to begin a new life for him- He also makes about fifty pots that could retarded. His two sons Amal Harshana frying pan into the fire.” to sell his wares. self and his family. When they moved hold a measure of rice. These are sold and Damith Harshana are preparing to from their native Giriulla, Wijesinghe in the market for Rs.45 per pot but the sit for the year five scholarship exami- The day I visited Wijesinghe’s home, I TOn returning he sits beside the wheel had two other siblings, a brother and traders offer him Rs.23 per pot in lots nation. did not see any sign of the fireplace be- Wijesinghe determined to finish his days work even a sister who were three, and two years of fifty. Roughly five to ten pots crack As an experienced artisan producing ing lit in the kitchen. All kitchen uten- if he has to work late into the night. old. in the process of drying as he has no quality pottery, there is a demand for sils were washed and arranged upside While carefully placing the clay on On this plot of land the older Wijesing- proper shed to dry them under an even his products. His dream is to build a down. the mould, a slight gust of wind comes he commenced his new life by turning temperature. A few more get cracked in proper work shed and increase his pro- Though oppressed to the limits of endur- Their eldest child through his broken hurricane lamp and out clay pots and other traditional clay the kiln. duction by hiring additional labour. His ance by the burden of living and feeding kills the flame. He relights the lamp kitchen utensils using the golden hued only problem is that he cannot afford to his family of four, Wijesinghe is aware was born and bends over to protect the clay from supple clay that was found on his new When asked if he made a reasonable set aside any of his earnings. He has to of his obligations to his other siblings. getting soggy, due to a constant drizzle homestead. profit he replied, “What profit,” with no meet the needs of his two school going He provides his sister who has no regu- mentally that torments him through a leaky roof Wijesinghe inherited the land and con- attempt to mask his irritation. “Do you children. lar income a part of his processed clay above his head. tinued his father’s vocation. Today his think the price of pots go up the way the “What I earn for a day is spent the same and fire wood. retarded. His main vocation is to produce clay pots price of rice, flour, and sugar go up? I day. Sometimes I run short and then I Wijesinghe’s sister - Piyaseeli who is In the kitchen, his wife Ariyawathie was for curd which he supplies to a trader. have to pay Rs.1,500 for a tractor load of have to borrow. That is not a problem. a widow living with her son, needs to engaged in a battle of her own to light a “I sell a pot for Rs.4, only if he buys my firewood. That is Rs.3000 for a month. The trader who buys my pots knows that make at least Rs. 3000 to settle her ac- two sons Amal fire with a few pieces of fire wood that entire production,” he says gesturing I use the kiln twice a month producing he can recover it on my next delivery. counts with the shopkeeper who gives were already soaked, since water seeped to the trader, with an apologetic smile. three hundred pieces per firing. Unable to sustain himself and his fam- her credit. Harshana and down the wall of their wattle and daub How much do you sell a pot of curd for? According to that count you should be ily, I asked him why he continues in the “I need to make at least twenty cooking hut, which they called both home and I asked the trader, “the best price I get making about Rs. 400-500 a day, I said, same profession. pots so that I can sell each at Rs. 20 per Damith Harshana workshop. is Rs.20 per pot and paying Rs.4 for the to which Wijesinghe replied, “If that “This is the profession I inherited from piece and look at my hands, they are full Oblivious to the struggles of their par- pot is the best I can do. I cannot increase was possible don’t you think I would my father. It was not always this diffi- of calluses and I get dizzy under the hot are preparing to ents to keep their home and hearth my price as people can do without curd have built a shed and also re-thatched cult. I made enough to keep my family sun. My son told me that he can no lon- warm, their three children, begin amus- and selling it at Rs.20 per pot is also my roof ?” well fed. If I look back on the last four ger suffer in this hell and went today for sit for the year ing each other by throwing small pieces hard.” years I may have increased the price of an interview to join the army.” She said of clay. And so another night begins for Wijesinghe’s greatest worry is in not a pot by about Rs. 2. But the price of with a bitterness that made me wilt. the Wijesinghe family. Wijesinghe is capable of making a 100 having a shed to dry his made up pots a can of kerosene has gone up by how five scholarship to a 150 pots per day when he operates before they are put in the kiln. The part many times? When I work in the night I examination. GROUNDV IEW September - October 2007 11 He decides the speed of his pottery wheel WHO DECIDES THE VALUE OF THE RUPEE he processed clay had Wijesinghe is 51-years old. When the the potter’s wheel. He needs one day to of the roof over their kitchen has virtu- spend Rs. 8 per night. been left by the side Rajangana settlement began in 1969, process the clay and another day at his ally come down with gaping holes on I am still fortunate to find my clay on of the potter’s wheel, Wijesinghe’s father bought a piece of primitive kiln. In addition he and his the wall due to water seepage. my own land. If I had to bring clay from while Wijesinghe spent fertile land in the Kala Oya basin and wife must find the wood to fire the kiln. Their eldest child was born mentally outside I would have fallen from the most of his time trying settled down to begin a new life for him- He also makes about fifty pots that could retarded. His two sons Amal Harshana frying pan into the fire.” to sell his wares. self and his family. When they moved hold a measure of rice. These are sold and Damith Harshana are preparing to from their native Giriulla, Wijesinghe in the market for Rs.45 per pot but the sit for the year five scholarship exami- The day I visited Wijesinghe’s home, I TOn returning he sits beside the wheel had two other siblings, a brother and traders offer him Rs.23 per pot in lots nation. did not see any sign of the fireplace be- determined to finish his days work even a sister who were three, and two years of fifty. Roughly five to ten pots crack As an experienced artisan producing ing lit in the kitchen. All kitchen uten- if he has to work late into the night. old. in the process of drying as he has no quality pottery, there is a demand for sils were washed and arranged upside While carefully placing the clay on On this plot of land the older Wijesing- proper shed to dry them under an even his products. His dream is to build a down. the mould, a slight gust of wind comes he commenced his new life by turning temperature. A few more get cracked in proper work shed and increase his pro- Though oppressed to the limits of endur- through his broken hurricane lamp and out clay pots and other traditional clay the kiln. duction by hiring additional labour. His ance by the burden of living and feeding kills the flame. He relights the lamp kitchen utensils using the golden hued only problem is that he cannot afford to his family of four, Wijesinghe is aware and bends over to protect the clay from supple clay that was found on his new When asked if he made a reasonable set aside any of his earnings. He has to of his obligations to his other siblings. getting soggy, due to a constant drizzle homestead. profit he replied, “What profit,” with no meet the needs of his two school going He provides his sister who has no regu- that torments him through a leaky roof Wijesinghe inherited the land and con- attempt to mask his irritation. “Do you children. lar income a part of his processed clay above his head. tinued his father’s vocation. Today his think the price of pots go up the way the “What I earn for a day is spent the same and fire wood. main vocation is to produce clay pots price of rice, flour, and sugar go up? I day. Sometimes I run short and then I Wijesinghe’s sister - Piyaseeli who is In the kitchen, his wife Ariyawathie was for curd which he supplies to a trader. have to pay Rs.1,500 for a tractor load of have to borrow. That is not a problem. a widow living with her son, needs to engaged in a battle of her own to light a “I sell a pot for Rs.4, only if he buys my firewood. That is Rs.3000 for a month. The trader who buys my pots knows that make at least Rs. 3000 to settle her ac- fire with a few pieces of fire wood that entire production,” he says gesturing I use the kiln twice a month producing he can recover it on my next delivery. counts with the shopkeeper who gives were already soaked, since water seeped to the trader, with an apologetic smile. three hundred pieces per firing. Unable to sustain himself and his fam- her credit. down the wall of their wattle and daub How much do you sell a pot of curd for? According to that count you should be ily, I asked him why he continues in the “I need to make at least twenty cooking hut, which they called both home and I asked the trader, “the best price I get making about Rs. 400-500 a day, I said, same profession. pots so that I can sell each at Rs. 20 per workshop. is Rs.20 per pot and paying Rs.4 for the to which Wijesinghe replied, “If that “This is the profession I inherited from piece and look at my hands, they are full Oblivious to the struggles of their par- pot is the best I can do. I cannot increase was possible don’t you think I would my father. It was not always this diffi- of calluses and I get dizzy under the hot ents to keep their home and hearth my price as people can do without curd have built a shed and also re-thatched cult. I made enough to keep my family sun. My son told me that he can no lon- warm, their three children, begin amus- and selling it at Rs.20 per pot is also my roof ?” well fed. If I look back on the last four ger suffer in this hell and went today for ing each other by throwing small pieces hard.” years I may have increased the price of an interview to join the army.” She said of clay. And so another night begins for Wijesinghe’s greatest worry is in not a pot by about Rs. 2. But the price of with a bitterness that made me wilt. the Wijesinghe family. Wijesinghe is capable of making a 100 having a shed to dry his made up pots a can of kerosene has gone up by how to a 150 pots per day when he operates before they are put in the kiln. The part many times? When I work in the night I 12 September - October 2007 GROUNDV IEW

n the Ratnapura district, like most other areas of the country, the quality of life for the communities that Dreaming of a Idwell there is rapidly deteriorat- ing. This deterioration is so rapid that they are left with hardly any time to catch their breath, let alone have a peaceful night’s sleep be- peaceful nights rest fore the next day’s trials begin. By Manori Gamarala

The people of Embilitpitiya, the largest town in Ratnapura con- luxuries such as new furniture. rental of six hundred rupees – but ‘My wife is also a teacher and sisting of 40 Grama Sevaka divi- The plight of those Unfortunately, this adversely af- now we have to pay three thou- our joint salaries amount to about sions, succinctly exemplify this in Ratnapura has fects the large section of the pop- sand rupees. Even though they thirty thousand rupees. Of this desperation, with the Samurdhi ulation employed in trades which have increased the rental they do we spend about four thousand ru- Office reporting that one fourth of turned to desperation, produce just such luxury items, not even employ a guard for the pees a week on traveling and food the over seven thousand popula- such as A. Samantha, a father of complex like there was before. expenses. Those days we used to tion are presently suffering from due to the rising cost two and a carpenter by trade. Recently four shops were broken travel a lot discharging our social malnourishment, while nearly of living they spend into and money, phone cards, gro- obligations. But now with the forty percent are dependent on ‘I need at the very least Rs. 8000 ceries and other items were stolen. high cost of fuel and transport, we Samurdhi aid. many sleepless a month for my water, electric- This kind of thing results in huge cannot afford to do this. Now we ity, and other bills because my losses and we are unable to meet travel much less and meet only Life in the wattle and daub hut nights worrying trade is such that I use electrical the steep rental’, he complained. the very essential of our social of 31-year-old Nihal Vasantha, a about how equipment. I can charge about obligations. fisherman from Wewasirigama, Rs. 1,600 for a set of windows With poor food to eat and in- has not been easy, but lately to get by. and about Rs. 4000 for a drawing creased stress and strain, medi- ‘Because of the price of things we things have become desperate. room suite of six units if the cus- cines are one kind of item which have curtailed our expenses great- Nihal says he and other fishermen tomer provides the timber. Mak- is in high demand, says C.L. ly and now even grow some veg- like him are now hard pressed to land available. The farmers sell ing roofing timber also used to Lakmini, a mother of three who etables at home. Fish and meat is earn their daily keep, let alone their produce at the Embilipitya provide me with a decent income. owns a pharmacy, with the de- out of the question. We buy milk keeping their children fed and Economic Centre, which was ear- But today nobody is interested in mand for drugs being mostly by food for our children with a lot of clothed. He confesses that lately lier a bustling vegetable and fruit drawing room suites, let alone a patients suffering from diabetes, difficulty. his thoughts have often turned to exchange situated on over four bed to sleep on or a chair. What cholesterol and blood pressure. stealing or other vile deeds just to acres of land, but is now hardly use is a bed if you cannot have ‘More people are now resorting Fifty seven year old Embilipitiya find some money, and has been frequented. a peaceful night’s sleep because to state run pharmacies for low resident Danasiri is a cultivator deterred only by the thought of you are worrying about how to cost medicines and we suffer as a and a small scale industrialist who his four children. W. Jamis is a 65-year old farmer make ends meet,” is how Saman- result. Even the customers who established himself in the early “We are originally inland fisher- from Moderawewa who culti- tha hits the nail on the head so to buy medicines from us often buy 1990’s but who has now gone men. About a year ago, daytime vates paddy and a few vegetables speak. only half the quantity prescribed bankrupt. A booming short-eats fishing was prohibited in order on a two acre plot of land. With because they can’t afford to buy business has now been reduced to to prevent illegal fishing in the inflation soaring sky high and While the general public is under the full prescription’, she says. next to nothing. ‘Earlier I bought daytime by non-fisher folk who the prices of essentials such as the impression that with the pre- The pharmacy has a turnover a kilo of maldive fish for ninety deplete the stocks of fish reared dry fish, dhal, sugar and tea- in vailing high retail prices of food of about ten thousand to fifteen rupees, today it costs six hundred by the fisher folk out of their own creasing steadily, even a humble items and considering the fact thousand rupees a day resulting and fifty rupees. I had to let all money. Now we lay our nets and farmer now needs a princely sum that people have to eat to survive, in a monthly profit of about- ru ten employees go and today my fish from about four o’ clock in of 10,000 rupees a month to meet traders are up on the deal, traders pees fifty thousand, but with ever wife and I do the work, but I am the afternoon till eight o’ clock in his day to day living expenses. like twenty-four-year old Nihal increasing phone and electricity totally dependant on my children the night and then go back around ‘I harvest roughly a hundred Iroshan who runs Luckymal Gro- bills and government taxes being because I have no sales at all. five in the morning to recover our bushels of paddy per season, of ceries at Navanagaraya, in close slapped on them from every pos- nets, which contain almost noth- which I sell a majority for about proximity to the Weekly Fair and sible angle, this profit seems to I even used to post goods to places ing because fish are so scarce. Rs17 a kilo and keep the rest for the Economic Centre at Embilipi- be diminishing before their eyes, like Nuwara Eliya, Galewela and The twenty two boats which were my own use. Even though I also tya are quick to dispel this com- says Lakmini. Malsiripura. Now postal costs engaged in fishing some time ago have a vegetable crop, vegetables mon belief. have gone up by five hundred per- have now been reduced to just are fetching extremely low prices With the present monetary dif- cent – and this has caused great four.” these days. With the prices of ‘The Nawanagaraya Weekly Fair ficulties the country is facing, an difficulty. Then I resorted to sell- everything being so high even a is held on three days – Tuesdays, ever increasing number of parents ing my ware in places close to my The scarcity of fish and the new visit to the doctor’s now costs Rs. Wednesdays and Sundays. Ear- are realizing that the only means home to which I traveled by bus fisheries regulations have forced 200,” says Jamis, who engages in lier our business was booming, to escape from the death clutches but the increasing bus fares put fisher folk like Nihal to give up manual labour even in the eve- as about 7500 to 10,000 people of poverty is education. Nearly an end to this as well’, lamented fishing and resort to engaging in ning of his life, just to make ends consisting of farmers and traders fifty percent of a middle income Danasiri. odd jobs as labourers and ven- meet. from Ratnapura, Moneragala and earning familie’s monthly income dors in order to make ends meet. Hambantota districts would visit is spent on their children’s educa- Life for the almost thirty four “I now sell a small variety of Another farmer, W.M. Wimalase- the fair and invariably buy things tion, even in spite of the severe thousand strong population of marine fish which I have to buy na of Aliyamalahena complained from our shops too. But these economic hardships they face, be- Embiliptiya is a constant struggle, from places like Mirissa and Tan- that the way things were, it was days there is hardly any business cause they realize that this is the declining so rapidly that people galle on the coast, and earn about doubtful that the next generation because people are so short of best investment they can make. don’t even have the opportunity seven hundred rupees a day. The would engage in farming because money. to resign themselves to their fate, additional money I need I have to the occupation has now become Over twenty seven thousand stu- as every new dawn brings upon earn by doing manual labour,” he so unprofitable. ‘Even a crop ‘Some time ago this area came dents receive their education in them new challenges. With social says. like karawila which should fetch under the Embilipitiya Pradeshi- forty eight schools in the Em- challenges like poverty malnutri- about thirty to forty rupees now ya Sabha but now it is run by the bilipitiya Educational Zone, with tion and the sheer desperation of Traditionally, just over 35 percent fetches only about Rs. 20,” says Urban Council’, says Iroshan of seven of these being situated people increasing every day, if of the population of Embilipitiya Wimalasena. the public market where he runs in the Embilipitiya Town itself. the current apathetic attitude of is engaged in agriculture. Most his business, which is proximate A.P. Kumarasiri who is a Geogra- the authorities is not abandoned farmers have turned to supple- With people hardly able to feed to the Weekly Fair and the Eco- phy Teacher at the only National and the situation is not looked menting their incomes by sow- and clothe themselves the last nomic Centre at Embilipitya. School in Embilipitiya Mahaya into proactively, the Government ing crops such as onions, corn, thing they are able to afford are ‘When it was under the Pradeshi- Maha Vidyalaya had this to say: is soon going to have a humanitar- kurakkan and chillies in any spare ya Sabha we paid a monthly ian crisis situation on their hands. GROUNDV IEW September - October 2007 13

fish is not something we can target and catch. foreign vessels fish in our waters and sell their catch to the local market at lower prices

bound to help ease the rising cost by planting Jak, Coconut, Bread- fruit etc.” Malcolm Stories of hardship “Small countries like ours should try to limit the use of oil and gas if we are to progress. We should try to use firewood for cooking pur- hile moving from Puttalam poses. I come to this saloon every around Puttalam morning from my home which is and engaging in By: PRASAD PURNIMAL about 3 kilometers from here on conversation with my motor cycle, but I am think- Wpeople in varied vocations, the ing of reverting to my bicycle or general feeling among those in to travel by bus or train in order the district and their views about to curtail the expenses.” the rising cost of living were ex- pressed. I then moved on to the Thudu- wawa village in the electorate Forty-eight- years old. Warnaku- of Nattandiya where we met 48- lasooriya Malcolm Fernando, a year-old, Loyel Pieris a father of Prawn Farmer of Pinkattiya Vil- three children, at a protest rally lage in Udappuwa Chilaw said: organized by those engaged in “I had given up prawn farming the fishing industry. totally for some time due to the These fisherfolk have been en- “White Spots” virus that affected gaged in protest rallies against oil the prawns. I have three persons hikes, prompting the Government working under me as we have to Sisira Shamika Roshan to grant some concessions. be vigilant during the day and at Mr. Dharmarathne said his pro- spend thousand rupees monthly if this situation continues all my Mr. Loyel said he has to spend night to protect the prawns from fession was now in danger as on newspapers, as they do not efforts during the past six years about Rs. 1500 for a day on oil, thieves and as such it is difficult most people preferred to travel have money. All this has caused would have been a waste.” but a catch of fish worth about to keep the workers going for a by ordinary bus or train. This he our profits to drop although on Rs. 2000 was very rare. He went long time due to the nature of the says has resulted in the daily turn- the other hand the prices of ev- “I achieved all this through my on to stress that many people of work.” over dropping by over Rs. 2000 erything has increased. The poli- own efforts as I was interested the Thoduwawa village had giv- affecting his salary too; with his ticians make all sorts of promises in this sector from the day I left en up fishing. It is not possible “With the price of every article and the conductor’s salary lower- to gain power but forget them no school, which made it possible to increase the prices of fish to going up and having to import ing by Rs. 150 daily. sooner they take control of Gov- for me to start this business. If it match the rising prices of petrol everything from the prawns on- ernance.” He concluded by say- is not possible for me to proceed and fish is not something we can wards, with a large amount hav- “When the prices of goods in- ing that the government should due to financial constraints not target and catch. “In the face of ing to be spent on the food for the crease the salaries in the public find a remedy to counteract the only me, but 20 other families these great injustices foreign ves- prawns, we find it very difficult. sector too increase whereas it rising price of fuel even by lim- will be affected. sels fish in our waters and sell Besides, the transport costs have seems to be the opposite with us. iting other relief measures and Next we heard what Shantha their catch to the local market at escalated and as we are stationed In our vocation no proper rules concessions. Douglas Fernando of Kakkapal- lower prices which have affected over a 100Km from Colombo and regulations are enforced and Also in Puttalam, I came across liya in Chilaw had to say regard- us very badly,” concluded Mr. we incur heavy costs on trans- the bus owners are only intent Shamika Fernando a young ing this situation. “I am 40 years Pieris. port; but it does not result in ob- on making money depriving the mother of two children who is old and I have three children. Our taining a favourable price. We commuters of a proper service,” 32-years olds and operates a family has been carrying on this Thirty-five- year old R. M. are facing a great setback as the he said. small garment factory. She had salon at the Kakkapalliya Junc- Roshan Jayaweera of Kakkapal- prawns fetch only Rs. 350 per this to say. “I began this job with tion for the last 45 years; my fa- liya in the Chilaw electorate who kilo whereas in the earlier har- In Puttalam itself I spoke to 52- a lot of hardships having only ther for 25 years and by me now is engaged in the business of vesting it fetched Rs. 450, result- year-old N P Shahul Hameed, one sewing machine and without for the last 20-years.” cushioning also related his story ing in a drop of Rs. 100 per kilo who had seven dependents. He any employees; but today I have “At the start the charge levied for of hardship. in comparison, though the rela- has been working as a newspa- 20 employees working under me a hair-cut was Rs. 7 but now, I “I am a bachelor having five de- tive expenses have gone up,” he per agent in Puttalam for the last and I am engaged in the business charge Rs. 50; but the Rs. 7 that pendents and six business people said, adding that it was not pos- two decades. In his own words of sewing dresses and making we got then went much further working under me and my main sible to give his workers a good “at the initial stages the sale of shoes, there is a large demand for than the Rs. 50 that we get now; business is the cushioning of ve- wage. How can it be done when I newspapers were very low but it this making it difficult for me to as the price of everything from hicle seats. It has been six years am losing heavily,” laments Mal- increased rapidly with time as it meet the demands in time for oc- electricity to water has escalat- since I began this business and colm Fernando. was the only medium which en- casions. ed.” everything has gone up in price abled people to have a connec- Besides, I supply my finished “The goods we buy spending ever since then. The bottle of gum Travelling to the Anamaduwa tion with the world. However, items to some well known out- Rs. 1,000 will not be enough to that I use to buy at Rs. 950 is now Electorate I next met a 48-year- sales have declined heavily now, lets. However, although our basic fill even two shopping bags as Rs. 1,515. However, we cannot old private bus driver - K.M Si- with the leading Sinhala national expenses, transport, wages, cloth the rupee has depreciated a great charge our customers exorbitant- sira Dharmarathne who operates newspaper the Lankadeepa sell- and the price of other affiliated extent. All the governments that ly. The situation is very acute and from Anamaduwa to Colombo. ing only 175 copies daily. items have increased in a big way, have shouldered power should has risen to a point from which He has three children. we are unable to increase our sup- take the responsibility for this; it may not be possible for us to “The people cannot afford to ply rates. I am of the opinion that and even we as citizens are duty carry on,” he said. 14 September - October 2007 GROUNDV IEW Hard earned savings and reserves are being wiped out due to the rising cost of living notes Udayar, from Jaffna. Diminishing savings

ple have enough to eat, only then can you. For other people we may charge Jaffna University in a recent article, they feed the animals. That dog is try- upto Rs.225 or Rs.250. However we published in Valampuri last month said ing to eat the rooster because it feels can’t cope with the increasing cost of pavement business was picking up in hunger, but I am planning to sell the living. We don’t know where all this will Jaffna. This is a significant change af- rooster for two thousand to a priest.” end up,” added Ravi. ter the closure of the A9 route. Given below is an extract of that article When asked if it was fair to sell a One of the beneficiaries of the Samur- rooster valued at Rs. 800 for Rs 2000, dhi scheme, sent a letter to the Jaffna Since the closure of A9 supply route a she answered without any hesitation Uthayan newspaper dated August 20, new dimension Of business in Jaffna “yes even the price of a fowl has in- 2007 under anonymity. He sent this has emerged. creased now, and I don’t have hun- letter on behalf of the people of Pa- There has been a severe scarcity of dreds of roosters do I? Only one. I got shayoor. An extract of the letter is as food items and other essential com- Even this rooster, through sheer luck. follows: modities since August last year. How- While an eagle stole the neighbour’s “We all are from a fishing commu- ever, pavement businesses have be- chicks, this one slipped from the ea- nity. We lost our livelihood after we gun to thrive. gle’s hold and fell into my compound. I were displaced and are dependant This can be witnessed when walking carefully looked after the chicken and on Samurdhi assistance now. For a along the roadside from the entrance brought it up.” month, we are given only 4 kilos of rice, of the Jaffna College towards Hotel 3 kilos of flour, ¼ kilo of sugar and ¼ Rolex. During the last two decades the Tamil kilo of dhal. For a five member family Soap, washing powder, shampoo, milk people have undergone numerous these relief items won’t last for more foods and supplementary foods are Sakkodai Arch Bishop James Pathinathar hardships and sufferings. Due to the than three days. How can we manage sold here. A large number of pavement closure of the A9, all the prices went the rest of the 27 days? Do we have to stalls selling grapes around the Jaffna e are spending all our savings up. The cost of shipment and fuel starve? Even to get this meagre relief, bus stand, have suddenly cropped up. and reserves because of the prices have all contributed to the in- we have to set aside Rs 100/- monthly We were unable to predict whether this Wincreasing cost of living,” said creased prices. as savings.” kind of business would expand or fade 54-year-old. P.Jasintha with a great out. Apart from the grape stalls, fancy sigh. I had a casual chat with a vegetable “yes even the price of items too are taking control of the small vendor, Agustin Amalarajan, who lives boutiques. Readymade garments for Mrs. P. Jasintha began sharing her at No.384, Main Street, Jaffna. a fowl has increased children and women, travelling bags, pent up frustration as soon as she “How much is a kilo of brinjal” I asked. handbags and leather belts are sold was asked how she managed to sur- “Two-hundred-and-fifty grams is avail- now, and I don’t have along the roadside of Muneeswaran vive the continued price hikes of es- able for Rs. 20,” he said. “What 20 temple. At its front aluminum utensils, sential items. She continued for about rupees?”... I questioned with great hundreds of roost- enamel plates and mugs are the other 15 minutes pausing only to regain her astonishment. Only a kilo of brinjals items being sold. breath. was available with him. I thought he in- ers do I? Only one. I It is the young men in the area that creased the price since he was having are mostly engaged in this business “Who knows about our plight in Jaff- a small amount. “What’s the price of a got even this rooster, as they have no other profitable jobs, na? Even if we eat rice and sambol for kilo...?” I continued. “You are an edu- currently available in town. Although lunch, who cares even if we just wash cated man why are you asking me the through sheer luck. women rule business in the markets it our faces and occasionally engage in calculations, a kilo is 70 rupees. Why While an eagle stole is hard to find a businesswoman along light banter as if we had chicken curry has the price increased to this much? I the pavements. for our last meal. We used to hide our asked amazed by what I was told. the neighbour’s chicks, Fernado Sinnarasa a fisherman from personal difficulties and worries, only “The kerosene prices increased and Manadithivu now displaced in Jaffna wanting to live with dignity among our I can’t afford to water the plants or this one slipped from shared his sorrowful story with us. people. But now we have gone to the add any fertilizers. So farmers have extent of sharing publicly our poverty marked up the prices. Now is the Nal- the eagle’s hold and “I earned Rs 100 only today. How can and difficulties since we can’t find any lur Temple festival season, and there I feed my four children with this little way to end our suffering.” is a demand for more vegetables, this fell into my compound. money? If I buy a loaf of bread for has also contributed to the escalation Rs 40, it would not be enough to buy “I have five children. My eldest son of the prices. I stand the whole day in- I carefully looked af- anything else. We were able to fill our has been missing since he was ar- side this small hut. If I could sell these stomachs at least with bread and sam- rested by the army. I strived to bring vegetables before sunset, I could earn ter the chicken and bol. It’s been a shock to us to hear of up the rest of my four children. One a few rupees to buy something when I the increase in the price of bread. son met with an accident and he is dis- go back home,” he lamented. brought it up.” The main food of the poor is bread. abled. Somehow I managed to get my I walked along the Main Street and Now we can’t afford to buy that either. daughter married. Now my husband came closer to a trishaw stand. See- “Only 30% of the population in our vil- The one and only hope we have now and two sons are living with me. I am ing all the drivers in a queue, I asked lage gets this Samurdhi assistance. is God. We believe he is looking down struggling to prepare a meal a day for one of them why they were all lined Seventy percent receive relief from on everything that happens. That’s the them. Prices of all the commodities up. “We can get the hires only in the the fisheries scheme. A five member only assurance we have,” he said. are sky rocketing. We are living in the order we wait. Those army soldiers family gets 18 kilos of rice, 12 kilos of Sakkodai Arch Bishop, James Pathi- midst of many hardships. On one hand, stationed at the main road will not al- flour, three kilos sugar and two kilos of nathar reflects on the situation: “Prices clashes are going on. We are worried low us, that’s why we are waiting in dhal. “While the prices of all the com- are increasing overnight. The cost of about the safety of our children. this lane. Only one trishaw will be al- modities are mounting, the Samurdhi living is going up. Daily income earn- Our constant worry is what will we do lowed to wait on the main road. Once assistance we are getting is inade- ers are among those who are severely for our next meal and where can we the first trishaw gets a hire, the next quate. affected. Every day many gather in find it. What can we do, if prices are one in order will move on to the main Thus, we need to draw our savings. front of the church to receive food. increasing like this?Now a match box road,” said trishaw driver, A.Ravi. But we are told to wait. Even today, we The number increases daily. Salaries which we bought for 5 cents a few de- “Fuel prices are increasing, so we have to pay Rs 100 to buy food for Rs should be increased, parallel to the cades back...” is Rs.5/ have increased the fares as well. Ear- 250/-” he said. cost of living. When the cost of living Being distracted by a dog, she points lier we charged Rs 100 to go to the increases in Colombo, it increases at the animal and says “look at that main road. Now we have to charge Pavement business picks up in Jaffna several fold in our areas.” dog will you...see how it looks...if peo- Rs.200, even this amount is only for The former Vice Chancellor, of the GROUNDV IEW September - October 2007 15 Mr. Somasiri stressing further stated that it is with difficulty that he attends to the needs of the children, especially the buying of books, even though the children are provided with uniforms, how much more is there, he asked. The amount he earns, he said, is just enough to keep the family fed, but that too wauld not be there if he were to fall sick and be at home for a week.

Making ends meet Upali Perera live with the least economic stress not belong to the essential category now is living for the day and that too with our present salaries. There are and are only purchased when there is “Those days I could not cope with on half filled stomachs and hoping goods which have increased twenty some excess money in hand. As such the work I had and worked through- for a better tomorrow”. G. W. Somasiri five fold from what they were one the sales she says have dropped by out the week; as we had plenty of Mrs. Shantha Kapurubandara, a By D.P. Sumith year ago. Have the wages been in- about 75% from what it was. orders for doors, window frames and housewife on meeting us comment- creased accordingly? What is nec- other household items such as book ed in this manner. “Today living is essary is an honest plan to control Going on she says “on the other hand racks, cupboards etc. but now there like engaging in war. The price of ue to the prices of goods inflation. the cost of transport, paints, coir are only a few orders and hardly goods has gone sky high and con- and services increasing rope and other necessities connected enough work to last even 4 days of tinues to increase. The money spent day by day, the common No government according to Mr. with the production of these items the week. today is not enough to buy the same man is faced with innu- Pushpananda Perera has a targeted have increased threefold and thus quantity of goods tomorrow” Now Dmerable difficulties limiting eco- plan to reduce the price of goods and costs of production have naturally “I am a father of 3 children, but it it is not possible to give more than nomic activities. that the ascertains cannot be done at risen. Earlier, we used to purchase was not a problem to maintain them one feed of milk a day to a baby who This affects those living in Colombo once and has to be implemented over the cane and reed on a large scale at that time. But I feel the strain now, was given 4 such feeds, as the price and its suburbs more than those liv- a period of five to ten years. from those who bring them to us and as my income has dropped drastical- of milk powder has escalated and ing in rural village areas. How can pay cash, and as our purchases are ly due to people not having money to one will not be able to manage with those who reside in Colombo solely “I fall into difficulty month by month on a large scale we get these items spend on the type of items I manu- one packet for a week if that is done. for the purposes of education or oc- in order to fulfill my family needs. at discounted rates; however it is not facture”. Due to the prices of rice, vegetables cupation bear this economic brunt? Bus fares, drugs and even a cup of tea so now and we buy only our day to and such items increasing daily, we have gone up in price unbearably. A day requirements from them, as we Mr. Somasiri stressing further stated may have to manage on one meal for Upali Pushpananda Perera, a Gov- part of the salaries we get is deducted are not in a position to produce a lot that it is with difficulty that he attends a day, in comparison to the two we ernment clerk on being interviewed for the loans we have taken and the of items and stock them for long pe- to the needs of the children, especial- now enjoy. Bread is also impossible by GroundView said that they were balance we get which is very little is riods thus getting no value for our in- ly the buying of books, even though to eat”. helpless, although they receive a not sufficient for the upkeep of the vestment. This is a loss for our sup- the children are provided with uni- monthly salary and went on to relate family and thus we fall into debt”. pliers too. “I have 4 people from the forms, how much more is there, he “Although the prices of goods have his woes: “Some are of the opinion Then in order to settle that debt we village working for me and paying asked. The amount he earns, he said, increased, our salaries remain the that the wages of government servants get further into debt and ultimately them their wages is also a problem is just enough to keep the family fed, same and as such we are unable to increase frequently and they face no end up by borrowing at high rates now. We have reduced our produc- but that too would not be there if he bear these expenses. As such we are problems; but this view is totally of interest which range around 15% tion drastically and our income has were to fall sick and be at home for now compelled to sacrifice certain wrong. When we revert back twenty monthly. On top of all this when an gone down. a week. things in order to carry out our daily five years, the only factual increase occasion such as a wedding, puberty According to Mrs. Dhammika Ata- existence. These things include the the government servants got was the ceremony or a funeral, or even other pattu, the tourist hotels do not buy Another reason for the shortage of trips we go on school holidays and one given during the last few months special occasions like school func- their goods any longer as their turn- work is the use of alternatives to even the dinners out we have occa- of the government under President tions and get-togethers arise we get overs too have dropped; and even wood in the construction of houses sionally, as if we are to eke out an D.B. Wijetunga in 1994 which re- further and further into debt. private traders around the hotels are in comparison to days gone-by when existence we have to forego these sulted in every government servant “All government servants have taken faced with the same dilemma. Even wood was excessively in use for this things as our finances do not permit receiving an addition of something loans and their balance wages are if a known person comes to pur- purpose. This he indicated was due it.” between Rs. 750/= to Rs.1000/= very little which prevents them from chase their goods, credit terms are to the higher cost of wood in com- to his pay packet. However, this taking a bank loan as the banks do requested she says. How can people parison to the alternatives. “Besides my husband is the only has not always been the case when not lend to us due to our wages be- person working in the family and his the wages of government servants ing small and thus we find it almost earnings have to support 4 of us. We have been increased. Although the impossible to find ways to repay our hardly buy any new clothes for our government makes announcements debts”. children and buy fruits only once a through the media that wages have week. Even when I buy biscuits for been increased, the actual increase Mr. Pushpananda Perera concluded my children, I distribute it myself by these mathematical tabulations by saying that it’s better to stay at or they will eat it all at once and we that gets added to our pay packet is home without coming for work when cannot afford that. We have to forego minimal.” For example, when the you consider the expenses on bus such things to exist even though it is Government announces an increase fares, meals and for other needs. hurting us a lot when considering the of Rs. 1000/= (One Thousand) the Giving her views to us next was Mrs. children.” Rs. 700/= (Seven Hundred) we get Dhammika Atapattu who is engaged as cost of living is deducted straight- in a medium scale enterprise of man- She went on to say “the Government away from and the Rs. 1000/= (One ufacturing fancy items using cane. says that this is due to inflation and Thousand) added which makes the “I manufacture items using cane this of course we do not know or actual increase only Rs. 300/= from and my parents too were engaged in care, but we are unable to exist un- which 6% - 7% is deducted for the this. We produce many items such as der the present circumstances. They widows and orphans fund which was mats, bags, doormats, flower baskets must either reduce the prices or get not earlier deducted as it was an al- and dun nets using cane and bulrush, involved in controlling them, or else lowance and thus the actual increase and there was a great demand for we may also have to get on to the boils down to a meagre Rs. 260/= these items around two years ago; as roads in protest or go in protest ral- (Two Hundred & Sixty). So although they were sold to tourist hotels and I would like to have it, but at what price? lies to the houses of ministers”. the Government makes a big noise other private traders, however this buy things like these when they can- about it, we the government servants industry has fallen into a deep abyss not even afford to buy the day to day “By all this we are deprived of a She reiterated saying that they used only know what we really get.” now and we find it difficult to carry essential things now? permanent income, and thus when to go on trips to Nuwara Eliya, Galle, on”. In her own words “not only the gen- we are in need of money, we take Kandy etc., during the days gone by He went on, “no sooner the Govern- eration after us, but we too are now loans, but here too we are prevented to show the country to the children, ment announces a salary increase the The above she attributed to the gen- compelled to change course and have from obtaining bank loans, as we are but now going to Galle Face was traders increase the prices of goods eral prices of goods in the country to give up the industry”. self employed and find it difficult to also a big problem. The expenses and it glides on like a mathematical having risen to soaring heights as G.W. Somasiri a carpenter when prove our income on a piece of pa- they have to incur on a trip or outing table”. What we need is not a salary never before, and the people being questioned how he is coping with per, which is essential for a bank.” will cost a lot and if it is to be done, increase to tally with inflation, but deprived of any excess money to buy this existing economic situation had Moving away from us in a thought- she indicated that starving for a least to create a society wherein we could items such as these, as these items do this to say. ful mood he said “what we are doing a week cannot be avoided. 16 September - October 2007 GROUNDV IEW

Recorded by: INChethana BandaraRETROSPECT Wijekoon. Kanawadipullei Kandaiya spent extra money ”, he added. With the dawn of 1980 when prices started in- ixty years old, Kanawadipullei Kandaiya creasing Kandaiya too experienced the burden of the remembers fifty years of economic and so- cost of living. Labour charges for odd jobs too went cial history of Trincomalee clearly. His fa- up. S At one point in the 1980’s, daily charges were ther was a railway employee and he still has pleasant memories of spending good times with other Sinhala Rs. 25. By the 1990’s, it went up to Rs. 250. Fifteen and Tamil families in Kinniya. years ago, Kandaiya felt that he no longer could save Kandaiya had two brothers and two sisters. Small what he earned after feeding four hungry mouths. Sinhalese children living close to his small house at On the other hand limiting travelling was another Kutikarawasala village in Kinniya came to play with challenge. By the end of the 1980’s, visiting Sinha- him and they too went to other Sinhala, Tamil and la families came to a complete standstill. Although Muslim houses to play. They dined together-drank both parties wanted to share the same goodwill as together, in the same way their elders used to do. before, fear of putting the other party’s life at risk His family communicated in Sinhala with Sinha- by doing so prevented them from visiting each other. lese children and in Tamil with other Tamil children. There were times of one suspected a member of his He remembers various friends including ‘Kiri Ma- own community. hattaya’, ‘Kumara’ and ‘Sudu Malli’ but said none As a result, Kandaiya planned to start a new in- Liyanage Patrick of them was seen today. It is not a secret that various dustry or a business. On an auspicious day in 1990, he opened his new conflicts in an aggressive environment prevailing for mbalangoda Liyanage Patrick came to Trinco- more than five decades separated friends from each laundry after receiving blessing at Koneswar Kovil. However, from that day onwards he could not under- malee, from Gandara in 1947 to engage in the other. fishing industry. Kandaiya went to school up to Grade Four and thus stand whether his business was developing or col- A lapsing. He cannot even remember whether it was had to take up manual odd jobs to earn a living. His He remembers fishing as a pleasant livelihood. Fishing opinion was that it was not a big challenge to make opened for more days or closed more. Finding a living everyday, protecting his two chil- in canoes and sailing boats he learnt as a youth to fish by his young days a prosperous one in the 1960’s. sailing according to the wind, going to sea in the morning “There was no big difference whether you were dren as well as protecting the laundry shop were the challenges Kandaiya faced for sixteen years. and returning in the evening. employed in the public sector or not at that time. I Trincomalee was a beautiful city in 1950. The majority earned Rs. 6 a day by doing odd jobs. I could also He has to pay Rs. 4500 monthly for that shop in a Central Rood in Trincomalee. In order to do that were Sinhalese and most of them came to the area from save Rs 3 from that Rs 6 after spending for food and down South. Patrick said it was a nightmarish journey on all other consumer items,” he said. he has to reserve Rs. 150 from his daily income. His daily income barely goes beyond Rs. 300 now. when he came from Gandara to Trincomalee fighting with According to Kandaiya, a measure of rice was the rough seas to save his life. He recalls how he held onto only 35 cents and a pound of fish was only 15 cents. He clearly knows his income will definitely go up if fishermen came back with a good catch of fish. a wrecked sailing boat at Gandara and floated to Trinco- He also remembers eating buns for only five cents. malee. Since there was no need of setting tough goals in Due to the security situation in Trincomalee, fish- ing has been limited from morning to evening thus However fear did not keep him from going to sea. In the life in that simple society, he too entered into mar- past going to sea for fishing did not involve diesel, petrol ried life as any other youth of his generation at the limiting everybody’s income. On the other hand, people come to town only till or any other expenditure. A lantern was lit using kerosene, age of 26. He tied the knot with a Tamil girl named which only cost a few cents. Arasamma who also lived in the same area. 2p.m. imposing various restrictions in Kandaiya’s life too. One brought more than 10 kilos of fish home from sea The early stage of his married life was simple and that was priced at more than Rs 50 – Rs 60. It was a huge since Kandaiya worked wholeheartedly, most people He has to protect his 27 year old son and 26 year old daughter from being victims of youth unrest. income at that time. There was no other livelihood where offered him jobs for daily payment.These jobs varied you could earn that much money. from harvesting paddy, cultivation and working in They are looking forward to finding a small job or a way of income after completing their education. That In 1955 there were only two jewellery shops in Trinco- rice mills. There was not a single day without any malee town. A sovereign was Rs. 83 only. work but there was no major damage if one refrained hope now seems distant due to the war situation. Kandaiya says that life has become more compli- “Fishing is a profitable job even today but you have to from work for a day. use canoes and sailing boats. What can you save by using a “There was no need to work every day. Even cated but there are no job opportunities. “Today life is very difficult. Everything has a litre of petrol for Rs. 150? It is profitable only for trawlers. though I did odd jobs, I could also save some money. Those who go fishing on engine boats can earn nothing and Only those who were addicted to alcohol needed price. If one falls ill it takes at least Rs. 300 to go the town in a three-wheeler. There are four members in it is a futile act,” Patrick argued. more money to spend. According to Patrick, you get better fish by harvesting I do not drink. Therefore, when I earned Rs. 6 I our family and we need 500g of rice for one meal. Apart from that I need about Rs. 500 a day to fulfil early in the morning. “Going to sea at 4 in the morning could always save Rs. 3. We did not have a bank- and returning at 6pm is the most profitable time as fish get ing system at that time. We hid whatever money other various small. Because, a coconut is Rs. 20, a soap bar is more than Rs 20, and a kilo of chillies is attracted to the lamplight in the dark. The harvest is very we saved in a corner of the house”, he said walking low in August. Now you have to go to sea by 6 a.m and to down memory lane. more than Rs. 200. Even if I earned Rs. 600 a day by doing odd jobs it won’t be enough to meet our daily return by 4 p.m. due to security reasons. The income of Kandaiya explained that even in the 1970’s Trin- everyone has dropped,” he said. comalee was a haven for all communities. “We used needs”, Kandaiya explained. When asked how he meets his demands worth Patrick married Danawathie Hewawitharana in 1950. to go to Sinhalese weddings & they used to come for She too was from down South and they built a house close our functions. It was Sinhalese people who blessed more than Rs. 500 by earning less than Rs. 400 a day, Kandaiya was embarrassed to confess that they to the town. Premajayantha, Ravindra, Shirani, Shiromi me most when I got married.” and Samantha joined Patrick’s family from 1960 onwards. According to Kandaiya, life in that decade was a sacrifice one or two meals a day. What alternative do they have other than to sacri- “We felt no difference as Tamil or Sinhalese. We went. simple one. to sea together and dined together. It was a memorable & “Most of the time we went on foot. We used carts fice their meals to live? Since Trincomalee is now out of terrorist threats, beautiful era in my life,” Patrick said revealing his memo- for transportation only if it was a difficult journey. ries about society then. Thus, we did not have a habit of earning money to it has started becoming populating again. Kandaiya maintain vehicles, as some people do today. No one is hopeful that there will be a better income in par with the increasing expenditure. You could get one hopper for a few cents. If you had 50- spent money on styling, shampooing or oiling hair 60 cents at that time you could have hoppers enough at that time. Only when you attended a wedding you GROUNDV IEW September - October 2007 17 Three Sri Lankans reflect on how things were and the tranquility they miss

to cover one meal. We earned so much and ate ery nook and corner of the country was very effective and educated youth among them came to view society and the well. We had money in hand. We could save at least helped elevate our situation to a great degree. Even with Government with a sense of suspicion – they looked for Rs. 50 a day. It was only after the 1960’s and 1970’s the availability of this movement however, I recall that the alternatives to elevate their plight. They became inward that prices started increasing. Today it has come to more affluent folk in the neighbourhood did not purchase looking – ceasing to look at the country as a whole – and an unbearable level. You keep on spending without their requirements from the co-op store, opting instead to losing their ability to maintain a larger and more forward being able to save a rupee. You have water bills, purchase the more expensive goods in higher priced stores looking perspective. The changing policies of respective electricity bills and endless taxes. Everything from a which offered a more comfortable shopping experience. governments had left them with little to rely on. box of matches to food has been increased,” he com- plained. Then came the 1956 Revolution which turned our soci- In the 1970s local industrialists could function with some Patrick stopped fishing as some 10 years ago. His ety topsy-turvy and transformed our simple lives. Prior to self-confidence – local raw materials began to feed local children too have grown up now. 1956, there were private schools and government schools, industry and the country progressed technologically – at Today he maintains a grocery at Central Road in with the private schools offering better facilities than the the same time however we lacked the economic manage- Trincomalee with his children. Businesses, like fish- government schools. The nationalization of schools in ment skills to support this progression – a result of mixing ing are not profitable as people do not have money, 1962 changed all that. The nationalized schools progressed politics with management. and so Patrick as well as his sons believe the mainte- rapidly while those that remained in private hands lagged nance of a grocery store alone is an achievement. behind. Children attending private schools were proficient The 1980’s however saw a huge transformation in our He protected his sons from the civil insurrection in English, whereas students in government schools stud- society. The opening of the economy in 1977 was the death in 1970. They were able to survive terrorist threats ied both English and Sinhala. This resulted in a marked knell for several industries. Man’s exploitation of man saw after 1983 and the insurgency in 1989. change. Those in government schools progressed, joined new heights. Local industries could not face the competi- They were able to bear various difficulties and the public service and served their country, while those tion from their foreign counterparts, which resulted in sev- Patrick was able to protect his children as well as in private schools lagged behind, having no option other eral local industries being forced to close doors and only grandchildren. However, Patrick says it is much than to migrate, as the good jobs were all being snapped up ‘foreignness’ receiving state patronage. more difficult to face life now than in the past. by those who had been educated in government schools. “Those days it only took Rs. 9.50 to go to Matara. Those in high government positions today are those who Consumer goods coming from Jaffna to Colombo and Today it takes Rs. 460 to go to Matara and that is progressed after the 1956 revolution. They are referred to those being transported from Colombo to Jaffna faced only if you travel using one bus. But I can’t go alone as the children of ’56. fresh barriers, with the only commodities seeming to ef- my wife wants to go with me. I have to take my chil- fortlessly cross borders being multi-barrels. War is now dren and their wives as well as my grandchildren too. The decision in 1956 to make Sinhala the Official the only commodity that is traded between the North and They have to know their relatives. But it takes at least Language however saw a change in the tide of things and the South. Terrorism has engulfed the country, with the Rs. 20,000 to go on one trip and another Rs. 20,000 marked the beginning of the country’s troubles. The three once fertile farms in the North now being used as train- to buy the necessary clothes. What has happened to communities began to drift apart, with the Tamils and to a ing fields for terrorists and once productive factories being this country?” laments Patrick. large majority the Muslims being at a natural disadvantage converted to bunkers. in becoming proficient in the Sinhala language, and thereby beginning to develop a distinct suspicion of the Sinhalese. The 1972 Constitution created rather than solved prob- lems as did the 1978 Constitution. While the 1972 Consti- The 1970s also brought vast changes to the country tution created problems by creating disadvantages for the – pushing the 1956 revolution further forward. The eco- minorities, the 1978 Constitution did nothing to eliminate nomic needs of people were transformed, as new trends this problem. Nor did they provide for stable governments. replaced the old. The efforts of the ‘left’ leaders to educate That all governments after 1974 have been unstable is an people of these changes bore little fruit, mainly as their undeniable fact. Unstable governments result in unstable spiritual and intellectual development was stunted as a re- economies, with low growth rates, high unemployment, in- sult of new social and economic trends. creased imports, a weakening rupee and increasing prices. The people become poorer, more money is printed to com- Party politics took over from this point onwards. Not bat this problem which only leads to rising inflation. only were people drifting apart socially, but at the same time they were becoming victims of economic opportun- Each successive government tries to give relief by ism. One section of society used science and technology to way of subsidies. This will not work. You can’t eliminate strengthen themselves – resulting in the population gradu- hunger by giving a man a fish – he must be taught to fish ally migrating to increasingly urbanized cities. – that is the only way – and that is how advanced countries have progressed to where they are today. What we do is we The reasons for this migration were many. It was not subsidize laziness. You just can’t progress that way. only a means of economic advancement but also of secur- M.H.M.A. Rasmi ing their future. Moving to the city meant government jobs The prices of essentials like oil, and bus fares among in high positions, better educational opportunities for their others are increased four times a month. This is a result .H.M.A. Rasmi is an attorney-at-law who is children and also opened the doors to foreign migration. of the war, which in turn is a result of a lack of solid and presently serving as the Chairman of the Co- sensible economic management. But we take cover behind lombo District Chapter of the Society for the The lesser educated and lesser ambitious preferred to the war and use it as an excuse for all our ills – resulting in M stay behind in their villages – naively believing that the nothing more than a snowballing of the situation. Upliftment of Muslim Education. Here he reminisces about growing up in a trouble free Sri Lanka and the village economies were adequate to sustain them, whereas All communities, the Sinhalese, Tamils and Muslims insurmountable challenges the country faces today. the reality was that they did not have the strength to sustain have lost their intelligentsia to the war. We have lost large a quick change of circumstances. In the end it was the city numbers of youth who could have otherwise contributed I had a very pleasant childhood where a person’s that triumphed. towards the development of the country. A vast amount of race, be he Sinhalese, Tamil or Muslim, was of little property which could have been profitably used for eco- or no consequence – what really mattered was co-ex- Those who migrated to the cities categorized themselves as nomic growth has been destroyed. The agro-economy of istence. I remember the simple and trouble free lives Sinhalese, Tamils and Muslims. The new education policy the North and the East has been laid waste. This is what that the Sinhalese, Tamil and Muslim people led. I of the People’s Front of 1976 in the form of standardization I have been witness to in my lifetime. We are now faced can still recall the taste of oil cakes, cookies and milk further polarised society. The standardization policy was with the problem of salvaging what is left of the country. rice, the traditional sweetmeats of the Sinhala-Tamil viewed by many to be a means of reducing the university New Year which were so often found even in Muslim intake of Tamils and Muslims from the North and the East. The country can progress economically only if the homes during the season. This was a crime – a venture that no government should war is stopped. The aspirations of the Tamils must be con- have undertaken. This only resulted in the richer people sciously addressed. We cannot progress as a country if we I cannot deny that we had financial difficulties, but of the North sending their children abroad for education, cannot progress economically. That is an undisputed fact. the co-operative movement which had spread to ev- while the poor farmer’s son stayed back at home. The 18 September - October 2007 GROUNDV IEW Three square meals slipping from their reach

Nobody seems to be exempt from the hard times that have befallen the country. Everywhere you turn, one sees stories of hardship, sorrow and utter despair. While it is undeniable that economies invariably go through ups and downs, one cannot shy away from the fact that Sri Lanka’s economy and its people along with it are limping towards impending doom, towards total economic collapse, similar to the fates of failed nations.

By Mangalanath Liyanaratchci – Trincomalee

any Sri Lank- but basic survival – a sur- They find it difficult to pay ployee of the IOC Compa- to borrowing money. ans today vival so basic, that even the lease on the vehicle, ny in Trincomalee. ‘Pric- Due to inflation, inter- have one three square meals a day often pawning jewellery es of essential items are est rates on borrowings question on are slowly slipping out of which they then cannot increasing almost daily. A are also extremely high, Mtheir minds and it has their reach. afford to redeem. ‘Cus- packet of milk which was leading to a vicious cycle, nothing to do with the on- tomers often haggle with just Rs. 165 last month thrusting middle income going civil conflict or the Three-wheeler drivers us over the cost of the fare has gone up to Rs. 200 this earning families ever political issues. The ques- are among the hapless dai- and when we cannot low- month. I need 10 packets deeper into the clutches tion is not even the press- ly wage earners who are er our fares any more they of milk a month for my of debt. But as they point ing social issues of finding buckling under the cost of decide to walk. The roads house. Although I work out, they continue to bor- better jobs, good schools living. ‘When the price of are in a dilapidated state in Trincomalee my home row money because they for children, or even plan- fuel increases – we have to and the tyres get wasted in is in Kandy. With the ever can’t let their families ning for the future. Instead increase our fares. When no time, but with the cost increasing bus fares my starve. it is simply one of how this happens more people of tyres having risen so monthly bus fare alone is one survive. opt to walk short or even drastically, we cannot af- Rs. 3000. The common consen- longer distances, saving ford to replace them,” he sus is that traders being This situation is more the Rs. 50 or Rs. 80 they continued. ‘Earlier our salaries the middlemen in a mar- apparent in Trincomalee, a would normally pay us,” were increased with every ket economy are most city where people have for lamented Thushara Nixon, Many others like Nishan- point increase in the cost likely to profit from such years faced harsher living a three-wheel driver from tha began building their of living index. Now it is a scenario. The traders conditions than those liv- China Bay. homes when they imag- revised only once every however are quick to dis- ing in other parts of the ined that only good times four months – whereas pel any such illusions. country, their economic He pointed out that were ahead. These proj- it should be revised ev- and social hardships be- following the 2002 cease- ects, began when a bag ery week considering the Nishantha Hewamanna, ing further compounded fire, with the attending of cement cost Rs. 350 present situation. With a petty trader at the fourth by the real very threat of increase in tourist arrivals and masons charged Rs. all these price increases mile post in Trincomalee sudden and brutal injury they were able to earn as 500. However these plans my salary lasts only half pointed out that once he or death caused by the in- much as Rs. 4,000 a day, have now been abandoned the month now. Yet, how pays for transport costs cessant war raging in their enabling many of them to since a bag of cement costs can I not give my children and his workers’ wages, very backyards on the one buy a second three-wheel- Rs. 650 and masons charge milk and how can I not go he is left with hardly any hand, and natural disasters er, construct homes and Rs. 1,200 as daily wages. home?” he laments. profit. “It’s true that price of catastrophic propor- in general raise their stan- increases don’t stop people tions on the other. dards of living. Even after A common complaint Premajayantha and oth- from eating – but it defi- the initial boom following that was echoed was that ers like him complain that nitely reduces the quantity Just when things could the ceasefire, they were while earlier people could since there is no corre- of food they purchase,” he not seem to get any worse able to earn between Rs. stretch out their salaries sponding wage increase to told GroundView. for them, spiraling infla- 1,000 and Rs. 1,500 a day, to last the whole month, keep pace with the racing tion and the cost of living says Nishantha, but today, today that is no longer rate of inflation and sky- “People who bought have now focused all of they are hard put to even possible, as in the case of rocketing cost of essential half a kilo of vegetables their energies into nothing earn Rs. 100 a day. R. Premajayantha, an em- items, they have to resort earlier now buy only a

Photographs: Thushara Nixon (China Bay) – The three-wheel Driver. R.Premajayntha (LIOC). Nishantha Hewamanna (4th Mile Post) – GROUNDV IEW September - October 2007 19

quarter kilo. It’s true that ‘Public servants purchase sure of rice was 40 cents vegetable prices are sub- jewellery very rarely now and a kilo of fish was Rs ject to fluctuations – espe- – most resort to ‘cheetus’ 3. I remember a big har- cially with good harvests to purchase their needs tal when the price of rice or increased imports of in jewellery. Some time was increased in the early vegetables like big onions ago our shops were full of 1950’s, but this was an ex- and so on – but the price customers – now they are tremely rare occurrence.” increases far out run the empty. This shows that decreases,” he says. even though gold prices “ Even though there was have not risen much, peo- a scarcity of goods during Many vegetable trad- ple don’t have any money Mrs. Bandaranaike’s time, ers buy their stocks from to meet their daily needs, the prices of goods were mass wholesale locations let alone luxuries. First high, but with so many such as Dambulla. When food and clothes – only people owning large ex- fuel costs increase, trans- then jewelry they say,” tents of land they coun- porters charge by the bag Mr. Asar said. tered this rise in costs by when it comes to trans- growing certain fruits and porting the vegetables to Nobody seems to be ex- vegetables in their gar- other parts of the country. empt from the hard times dens. People also did not With the current security that have befallen the have to cope with so many situation, bags are un- country. Everywhere you extra expenses like they loaded several times on turn, one sees a story of do today. If at all, they the way to their destina- hardship, sorrow and utter would take an occasional tion so that lorries could despair. While it is unde- drink and socialize or visit be checked, and labourers niable that economies in- the cinema.” have to be paid for this task variably go through ups every time. Traders have The sugar and downs, one cannot “In 1977, President Jay- no choice but to pass on factory at shy away from the fact awardene’s open economy these accumulated costs coastal village, fishing is Kantalai has that Sri Lanka’s economy brought with it a flood of to consumers by charging the main source of liveli- and its people along with goods into the country. In- more for the vegetables. hood for the people, both closed down, it are limping towards im- dustries abounded across directly and indirectly. the rice mills pending doom, towards the country, employment “With the increased With the rising cost of liv- have total economic collapse, opportunities were plenti- costs, consumers too take ing and a number of other similar to the fates of ful and people had money extra care over their pur- contributing factors, how- folded up, failed nations. in their pockets.” chases and choose every ever, consuming fish has potatoes are Indeed, what hope can item of vegetable very become a luxury many imported from there be when a father “By the time the 1990’s carefully. This results in people choose to go with- cannot shut out the cries rolled around, however, waste as they do not buy out. India, milk of his hungry child? the situation began to de- vegetables which are even powder is cline dramatically. Bus slightly bruised, and a Due to the current secu- imported from Y.S.M.Ranatunga, a fares, electricity and water portion of vegetables al- rity considerations, fish- popular Ayurvedic phy- bills have gone up, and the ways perish during trans- ing is restricted in Trin- New Zealand, sician of the area, came war was beginning to take portation, especially due comalee, resulting in an fish is imported to Trincomalee in 1951. its toll on the economy. By to repeated loading and increase in prices. Where- even though we Here he reminisces about 2000 the prices of goods unloading due to security as earlier a kilo of fish cost life in the good old days shot up at an unbeliev- checks, and traders have to Rs. 180 now just half a kilo are an island and compares it to the able rate. Now ordinary bear that cost as well, they is Rs. 150 says Konesha- nation. hardships of today. people find their salaries complain. Unlike other mani Suresh Kumar, a fish inadequate, especially as goods you can’t return un- vendor from Janasarigama “When I came to live in wages are static but the sold vegetables. Our cus- in Trincomalee. ‘People Trincomalee at a very prices of essential items tomers have now reduced now prefer to buy a kilo young age, life here was are increased almost daily. purchasing the more ex- of chicken instead of half heavenly. Trincomalee With no control over im- a kilo of fish. Even if they pensive items such as ever points out that pres- was such a beautiful city – ports, even something as carrots, beans, leeks, and do buy fish the most they unspoiled beaches, lovely simple as a bucket is im- will buy is 500 gms of the ent sales indicate how low beetroot. Whereas earlier incomes have fallen. ‘My climate, friendly people ported, and several local people ate at least three cheapest variety. I find it – life was good. There industries have collapsed extremely difficult to dis- income has fallen by four vegetables for a meal, fold. I had to discontinue was not even a hint of any as a result.” they can now afford to eat pose of my stocks even conflict.” by noon, let alone make two of my employees as a only one.” result – what can I do with The sugar factory at a decent profit,” she told “When I became a phy- Kantalai has closed down, GroundView. employees without busi- “With all these factors, ness,” he said. sician in 1969, I opted to the rice mills have folded our incomes have hit rock go in to private practice up, potatoes are imported bottom. Our salaries, Among the other af- instead of joining the gov- from India, milk powder fected industries are the He pointed out that transport costs, losses many jewellers and pawn ernment service as we is imported from New from waste, electricity jewellery and pawn bro- could earn much more Zealand, fish is imported kering industries, another brokers made good prof- bills, shop rent have all its through the pawning outside – as much as Rs. even though we are an is- increased, reducing our indicator of the prevailing 40 to Rs. 50 a day, a very land nation. hard times. business. But now even profits. But in spite of all though people were pawn- big sum in those days, It is no longer shortfall these difficulties, what can Since fishing is a major especially when you con- items which are imported source of income in Trin- ing their jewellery instead we do other than to con- of buying any, they pre- sider the cost of living into the country but even tinue buying vegetables, comalee, when fishermen those days. It cost just products which we can make money during the ferred to pawn it to the even after raising loans,” banks, cutting off even Rs. 3.75 to travel from easily produce in our own says Nishantha. peak season they tend to Kandy to Trincomalee. A country he said. invest it in gold jewellery. that source of income to local traders. cake of soap was 10 cents, Trincomalee being a Y.M. Asar of Usuf Jewel- sugar was 20 cents, a mea- lery at Beach Road how-

Vegetable Vendor. Koneshamani Suresh Kumar (Janasarigama) – Fish Vendor. Y.M.Asar (Trincomalee) – Jeweler. Y.S.Ranatunga (Danyagama) – Ayurveda Physician. 20 September - October 2007 GROUNDV IEW Small is affordable: The sachet syndrome

Manufacturers have responded to the jith Priyantha who is the Assis- steps into a shop unless it is absolutely neces- demand of the average consumer. Milk tant Secretary of the Polonnaruwa sary.” powder and other products are now available Chamber of Commerce, holds “But I cannot split a packet of lunch in half, in sachets. a degree in management. After nor can I partition the rooms since they are Agraduating from the Rajarata University he invariably occupied. The rent is high and we did not seek a government job. have to pay various kinds of taxes that are Instead he launched out on his own, setting up mind boggling. The cost of electricity and wa- a small guesthouse cum restaurant, called the ter has increased. The disparity between the Midland Rest. income generated and the ever escalating cost of living has really put us in a quandary. The He described the sorry plight of the traders people who come to stay in my guesthouse are and the consumers: “The people do not have mostly sales representatives and agents. They money to spend as their main concern is to come with prior bookings and they can afford feed their families. Those who have a regular to pay. They do not stay for long as they did income spend very sparingly.” in the past. They no longer request additional “I run a guest house and a restaurant. I can- services like special dishes or room service. not cater to the needs of the consumer the way If people do not have the money or the incli- the other traders do. The consumer has got nation to spend how can I manage my busi- into the sachet syndrome. Every thing has to ness?” he said. come in small quantities like in a sachet. For “Perhaps I missed that lesson at the Rajarata instance the milk powder is repacked in small University on how to manage a business in a sachets. A cool drink is either what is called a failed economy,” he said shrugging his shoul- buddy or is sold by the glass. Consumer items ders in a pensive mood and staring blankly are generally sold in 100 gram packs. Nobody ahead. By Manula Financial Performance of Selected Public Enterprises

The Ceylon Electricity Board factors. These include the inflex- ment is servicing CBS’s foreign on supplier’s credit. Further- (CEB) and Ceylon Petroleum ible pricing policy, increased debt. more, it also entered in to hedg- Corporation (CPC) continued fuel cost, delays in implemen- Several factors were attribut- ing part of its oil purchases for to be the to public enterprises tation of planned reforms in the ed to the less favorable financial the first time in early 2007 with which are still posing a signifi- electricity sector, delays in im- position of CPC in 2006.These the view of maintaining stable cant burden on government fis- plementing of planned low cost include the delays in price ad- retail prices and fuel cards were cal operations. In 2006, the fi- large scale power projects and justments during July and Au- introduced to assure the market nancial position did not show a the delay in addressing the high gust and net loss of oil refinery share. Though the credit facility noteworthy improvement. system losses. The continuation during the latter part of the year. obtained under the Indian line of operating losses of CEB will However, CPC continued to im- of credit in 2005 shifted part of Despite the increase in low lead to increase its liabilities to prove its financial management the CPC’s short term liabilities cost hydro power generation the banking system leading to and internal controls while im- to medium to long term liabili- and tariff adjustments in 2006, adverse monetary implications. porting refined products on a ties, high short term liabilities the financial position of the CEB It has also led to adverse fis- more competitive basis and ne- continued to be a concern. deteriorated due to a number of cal implications as the govern- gotiating more favorable terms

Source: Report 2006 Central Bank