While the country is bleeding, inflation has risen to over 25%. This is what all reputed economists say. Of course the Government says it is less than 20%. They say the indicators have to be redefined with new formulae used in the calculations.
Obviously, some people are going to believe this. In a crisis situation there is a tendency to hold on to illusions. Even fairytales and mythology become more important than sane political analysis.
I saw one political newspaper giving prominence to a famous astrologer who predicted that a national government is the need of the hour. But what the people really feel is the incredible rise in the cost of living.
Now they have to keep accounts on a weekly basis. In every village, or street in a town, small shops are pulling down shutters, unable to give any more credit. The main cause for inflation is the continuation of this unwanted and unpredictable war.
The JVP strongly opposes this view. According to them, war is not the main cause of this terrible economic uncertainty. They point a finger at corruption at higher levels. War is a necessity they say, but the Government is not committed to solving it and many high-ups are involved in misdeeds and rackets, they argue.
Obviously the JVP is unable to blame it on the “patriotic war”, which they advocate and which is the main theme of their campaign. We must expect them not to blame inflation on the war, though it has reduced itself to a dirty and bloody affair without a fruitful end.
Galloping inflation
Strangely, UNP stalwarts, led by their leader Ranil Wickramsinghe, have recently taken more or less the same stand in complaining about galloping inflation. In a recent interview, Ranil blamed the mismanagement of the economy by the Government as the main cause for inflation.
Only 20 % of the budget is allocated to war-related expenditure, he said. What about the remaining 80% of the budget? Apparently the Government should be able to manage the rest of the budget to counter the inflationary trend created by war expenditure.
Curtail demand in society
He has not explained how this can be done. But the rest of the expenditure includes salaries and allowances paid to government servants, maintenance and expansion work handled mainly by the provincial councils and local governments, social welfare for education, health, etc.
Does Ranil want to cut down all these expenses to curtail the demand in society? Kabir Hashim, a man who should know better, has supported the leader by claiming that the cause of inflation is not the war or the condition of the world, but the wastage of the Government. It is tragic to see Ranil, Kabir and other UNP leaders joining the bandwagon of the JVP, to protect the war mongering policy of the Government, while blaming mismanagement and corruption to inflation.
In 1980 too inflation reached over 25 % while the average growth was around 8%. There was a massive investment programme including the Mahaveli, greater Colombo development, FTZ, etc. The open economy had just started and there were investments by an enthusiastic private sector in tourism, garment, hotels, etc.
Today, Mahinda is involved in mega projects negotiated by Ranil under his ‘Regaining Sri Lanka’ programme. No doubt Mahinda too is following the global capitalist agenda. But there is a vast difference in scale between then and now, and the demand created due to infrastructure investments cannot account for the present inflation.
There was corruption and mismanagement even in ‘77/80. Nobody claimed that inflation was due to corruption.
Workers asked for a 300 rupees wage increase to counter the natural outcome of the Government’s economic policy. What did Ranil and the others do? They clamped down Emergency regulations, virtually banned the trade union movement and put us behind bars. The same man is playing hide and seek in the present situation.
Today, the main cause for inflation is neither the economic policy nor mismanagement and corruption; it is due to this unproductive, unnecessary and destructive war. The agricultural sector is devastated, so is tourism, there is obstruction to the market, and hindrance to all areas of production.
Above all this war is totally unnecessary and it is caused by the inability to think about the other. Barrack Obama said so. This statement is one of the most intelligent things he has said so far in his campaign.