The economic crisis in Sri Lanka has significantly reduced incomes, reduced the availability and affordability of food and thus increased the risk of food insecurity, particularly of the most vulnerable households.
Lower income groups and war-affected families in the north and east have little or no cash reserves, and limited access to resources such as land. The problem is more acute among women-headed households, people with disabilities, former combatants, the working class, marginalised caste groups and plantation workers who, due to multiple historical injustices such as discrimination and statelessness, have been systemically denied access to resources. These groups, who have been exposed to immediate shocks amid long-term stresses, will bear the brunt of the economic crisis as food stocks deplete and production costs soar. The depreciating Sri Lankan rupee and the lack of foreign exchange have made it enormously difficult for the island to import even the most basic essentials, including food and medicines. As a consequence, the cost of staple food items such as rice, bread and daal have increased by over 50% in the last six months alone.
Indian assistance
India has emerged as the foremost partner for Sri Lanka at this time. It has provided assistance of about $3.5 billion this year to manage the shock caused by this economic catastrophe, compounded by the government’s incompetence, mismanagement and corruption. As Sri Lankans receive food aid from Tamil Nadu with gratitude, some questions about the transparency and impartiality of the government’s distribution of the same have already arisen.
Meanwhile, there is a need for more thoughtful assistance to the people, especially the poor, who will only be worse off in the coming months. Some also fear that they might be left out of the government’s recovery efforts, led by an International Monetary Fund programme that will likely prescribe austerity. In this context, the Indian government and the people of Tamil Nadu could go beyond relief and explore supporting an employment guarantee scheme, drawing from the experiences of the Mahatma Gandhi National Rural Employment Guarantee Act, for a dignified and sustainable recovery of the economy.
Social safety nets provided by the Sri Lankan state are either inadequate or ineffective. There is no functional public distribution system. The maximum monthly household cash transfer (LKR 4,000, or about ₹900) provided through Samurdhi, the government’s poverty alleviation programme, is grossly insufficient.
A work guarantee scheme assuring working people of 100 to 120 days of work annually could provide relief. Compensation for this labour could be made 70% in kind, such as rice partly procured in Sri Lanka, along with wheat, daal, and other pulses not available locally, and kerosene. The remaining 30% could be paid in cash to the worker. The food component combined with cash will ensure that families are protected from inflation. This will support their emotional, physical and nutritional well-being in a dignified way. ‘Work’ could include strengthening agricultural infrastructure by repairing embankments, channels, and drainage. It could include providing care for children, the elderly and patients. This would be especially helpful for working women and those with old and terminally ill family members looking for a carer. Internships or on-the-job traineeships could even involve and be funded by the private sector in India through Corporate Social Responsibility projects.
The United Nations estimates that 50 lakh people, or about 20% of Sri Lanka’s poorest, are at highest risk. Aid from India could target this group. By reaching 10 lakh families, or approximately 15% of Sri Lanka’s households, this aid could reduce market demand for food and help control demand-driven inflation, thus retaining food prices within reasonable limits for other sections of the population as well.
To facilitate the cash part of the aid, the Indian government could buy LKR in exchange for its value in INR thus allowing the Sri Lankan government to use the INR earned to procure more Indian medical supplies or food. Aid could be mobilised from Tamil Nadu and other States and NGOs to reduce the cost to the Central government.
Increasing food production
Resolving this crisis will also require interventions to increase domestic food production. Agriculture production fell by almost 50% due to an ill-conceived ban on chemical fertilizers in 2021. India has provided a credit facility to import fertilizer, which is timely support to incentivise farmers to resume cultivation. But more needs to be done to assist small farmers to re-engage, increase and maximise cultivation. Any increase in production will necessarily have a deflationary impact on prices, which could stabilise the prices of food and contribute to improving the broader economic climate.
Earmarking funds for specific purposes, including for provision of cheap credit to small farmers and sharing expertise in good agricultural practices, repairing, remobilising and deploying farm equipment previously gifted by the Indian government, and the management of these schemes will ensure that the benefit of assistance reaches producers directly. In addition, devising insurance schemes will give farmers an incentive to cultivate without fear of losses in the event of drought or floods. Importantly, the Indian government should ensure that the implementation of these programmes is equitable and impartial, especially in the context of the grievances of the Tamil-speaking minorities who have suffered historic exclusion.
India has been generous in helping Sri Lanka. Apart from the $3.5 billion extended so far, more was promised during the Indian Foreign Secretary’s recent visit. Tamil Nadu, which contributed rice and other essential items, is now preparing to send 4,500 MT of rice and other relief material. Food relief can only soften the hardship in what will be many difficult years to recovery unless the Sri Lankan state mends it ways.
Presently credit lines are being used for fuel, for servicing the needs of private vehicles, while fisherman have inadequate supplies of kerosene for their fishing boats and are consequently near starvation. Professor Amal Kumarage of the University of Moratuwa in Sri Lanka points out that while 76% of fuel is consumed for passenger travel, 51% is taken up by cars, pickups and SUVs. In comparison, the Sri Lanka Transport Board Buses consume only 17%.
At the end of the war, the Indian housing programme provided significant humanitarian and socio-economic benefits to devastated people in the Northeast and to hill country communities. With 50,000 houses built over five years, people had houses to live in and also livelihoods. A strategic intervention such as this, which aids recovery and includes relief with dignity, should be the basis of any future assistance. The housing programme earned goodwill for India. A programme guaranteeing employment and supporting production will be a meaningful follow-up to that. Such an intervention will also be in India’s interest.
S.C.C. Elangovan is a social worker and political activist based mostly in Jaffna, and attached to the SJV Chelvanayakam Memorial Trust
