What are our priorities right now?

Are they far less important than all what this Parliament is howling about? 

Is debating and quarrelling in Parliament over the SC decision on the responsibility of the three Rajapaksas and top officials on the economic crisis, the dissenting order almost forgotten, the most vital issue this moment? Or Sri Lanka Cricket and its mega corruption? Is personal security of MPs who wouldn’t know the Parliament elected by the People is an august assembly, anything important to be given public priority? Or is the temporary suspension of Sri Lanka by the ICC an urgent issue for Parliament to discuss? Is the two-week suspension of a confirmed rowdy in Parliament worth headlines and front page news coverage?

Here we live in a country that was a year and a half ago declared as bankrupt with no dollars to pay back even the interests of loans borrowed over past many years. We live in a country where the urban middleclass life ruffled with power outage, fuel shortages and LP gas hiccups lent to urban resentment of Rajapaksa rule, jelled with the Galle Face protest that was subtly exploited for a leadership change of the Rajapaksa regime a year and a half ago. 

For trade unions the priorities are different. For TUs, cost of living has become a far more important and urgent issue than it was when the previous Budget proposals were adopted in 2022 December. Divided on the pro JVP union demand of a Rs. 20,000 monthly wage increase, a section of the private sector trade unions without directly demanding a wage increase have now proposed to President he should include in his 2024 Budget a new proposal that would compensate the fast increasing cost of living.

They want the Government to provide a basket of most essential consumer items worth Rs. 20,000 every month for all households with an income less than Rs. 75,000. In a public campaign note the FTZ and General Services Employees’ Union demand two fortnightly baskets worth Rs. 10,000 each, free for those households with an income or wage less than Rs. 40,000 and for those above Rs. 40,000 on a 50% subsidy. This they say is an urgent necessity in a crisis led context with prices increasing rapidly. Finance Minister Wickremesinghe’s Budget proposals they allege would create far greater economic difficulties with a Social Security tax of 5% and VAT increased to 18% on an enlarged list yet unknown and effective from January 2024. VAT gets added to all goods at every distribution point directly effecting the consumer with instant price hikes. 

The FTZ union also claims around 2,000 small and medium factories have shut down and nearly half a million employees have lost employment by now. Many factories have basically laid off their employees with just half the basic wage, not giving them work. These employees are in serious difficulty as they are neither dismissed nor employed and therefore cannot find alternate work to make ends meet even with minimum needs. Even major apparel export manufacturers have been complaining they cannot secure new orders since August 2022 and February 2023 electricity tariff hikes raising production costs. Brands and buyers do not offer higher prices. Plainly we are heading into a major economic crisis. This time it would affect the lower segments of society before reaching the urban middleclass.

What should be priorities now? Are closing down factories no serious tragedy? Loss of thousands of employment not anything of concern? Isn’t more and more going hungry getting dragged into poverty nothing important? Are they far less important than all what this Parliament is howling about? 

Huge disparity in income

Factories closing down, workers getting thrown out into streets, households going semi-starved are no sectoral issues as they seem to be. In year 2019 when the Census and Statistics Dept. (C&SD) concluded their national Household and Expenditure survey the latest to date, the average monthly household expenditure in Colombo district was Rs. 108,893. This does not mean all 2.0 million adults in Colombo earn that income. That is the average between those who earn below poverty line incomes and the highest income earners in the fifth quintile in Colombo district. Within district disparities remain in all districts. In the two poorest districts Mullaitivu and Kilinochchi compared to Colombo the average expenditure was Rs. 34,181 and 37,237 respectively. That shows the huge disparity in income between the urban middleclass and the rural poor. In Colombo only 25.6% of the expenditure is on food at an average, while in Mullaitivu a household had to spend 57.5% on food and in Kilinochchi it was 51.4%.  

In 2019 the poorest 20%, the first quintile that on average is 1.2 million households, earned only Rs. 17,572 per month. Ironically even the poorest 40% (1st and 2nd quintiles) earned only an average of Rs. 26,931 per month when the national average expenditure needed for basic living was Rs. 63,130.

Since 2019, all expenses kept moving up. Poverty line, the lowest minimum monthly income of an individual the C&SD calculated as necessary to survive, had to be gradually raised. In year 2019 it was calculated an individual could survive with Rs. 6,966 a month. That meant a household with two persons collectively earning Rs. 13,932 per month was still at the bottom of the poorest first quintile. The C&SD calculated that poor number in 2019 as 3,042,300 individuals. The poverty line was thereafter raised to Rs. 7,395 in December 2020 and a year later to Rs. 8,923 in January 2022. In July same year it had to be raised to Rs. 13,138 and in August 2023 it was Rs. 15,978. Meanwhile the World Bank’s latest forecast for 2023 says Sri Lanka’s poverty would increase to 27.9% at year end.

Two wholly different worlds

Obviously, there are two wholly different worlds on this land called Sri Lanka. One is that of the urban middleclass and the rich that is obsessed with all things “Rajapaksa” including cricket while living with the same corrupt political system and an equally corrupt State apparatus nurtured by the filthy rich. Their concerns brought to stage focus mainly on Rajapaksa’s influence in governance. Their selfishness is more than apparent in expecting the SLPP to vote on everything President Wickremesinghe wants adopted, but with no criticism, conditions, and with no compromising. 

On that same breath, issues they raise are hardly related to the lives of the majority who are in a different world. A world that struggles to survive with growing poverty, loss of employment and income, depleting social services and environmental devastation. Bottom line is the fate of this island nation is decided by the small but rich urban world on their perceptions of a middleclass life and comfort, using the larger numbers in the poor starving world at elections. The larger world of the poor and the deprived is therefore left with no answers to their major issues now turned into a tragedy. 

Sadly, for the urban middleclass, their life hitched to the private sector defined as the “engine of growth” has only been about a totally wrecked engine which guzzles unending tax and duty concessions that should be precious income for the people. For over 40 years, this engine of growth has not led to any growth other than in the urban consumer market. The urban middleclass outlook and approach in reading the present 2024 Budget still remain on that ram shackled “engine of growth”. 

They therefore have not been questioning how budgets could be adopted violating the “Fiscal Management (Responsibility) Act No. 3 of 2003” that very clearly stipulates the budget deficit from 2006 should not exceed 05% of GDP and Central Govt. debt should not exceed 80% as amended in 2013 with a timeframe for compliance set for 2020. Parliaments throughout have been irresponsible in breaching this Act and the timeframe for compliance is now proposed to be extended to 2030. As for the budget deficit, this 2024 Budget deficit is calculated to be 9.1% of the GDP, a clear breach of the law once again by one who wants law and order set right. 

This 9.1% deficit violating the Act, is based on the Finance Ministry expectation of collecting Rs. 4.1 trillion revenue. Deficit projection for 2023 was 7.9 and was lately revised to be 8.5%. When the year ends it could be nearly 10%. This same revenue collecting mechanism would never ever collect the expected revenue in 2024, unless numbers are tinkered. Added to this are ad hoc decisions that increase State expenditure. Agriculture minister has said, MOP fertiliser presently sold at Rs. 19,500 per bag would be reduced to Rs. 9,000 on a cabinet decision. Before 4 February independence 2,238 Grama Seva officers are to be recruited. Cabinet has also decided to import rice. What burden will all that have on Government expenditure? What percentage would the deficit be thereafter?

The third quintile of rupee earners would also end up poorer and among the second quintile before long. A developing scenario, neither the urban middleclass nor the parliamentary opposition is least worried about. Parliamentary opposition cannot claim they did right by voting against the Budget, without raising issues on deficits, expenditure, revenue collection, and with no amendments proposed as answers. The result? Widespread public protests on streets and heavy repression for sure, post 4 February independence.