Insufficient information flow on the escalating cost of living | Sunday Observer

Insufficient information flow on the escalating cost of living

31 October, 2021

Two crucial national issues place the Government between the devil and the deep blue sea’ currently delivering a sucker punch to the popular mandate given by the vast majority of the citizenry at the last parliamentary election. On one hand, the vehement protests of the farmer community on the scarcity of chemical fertiliser and soaring prices on the other. The other key issue of Government teachers’ trade union actions has become less forceful due to the escalating displeasure of parents towards the trade unions.

Whilst the food and other essential goods prices increase has numerous Covid 19-related reasons, the decision on banning chemical fertiliser was taken by President Rajapaksa with good faith and in keeping with his pledge to the nation although the timing of the move has become controversial.

Reasons for current crisis

The gruesome effects of the Covid-19 are diminishing after a few dreadful months. As always, most of the citizenry now seems to be conveniently overlooking the severity of the impact created for the economy of the country as a whole. The pandemic has forced the Government to spend billions of rupees on medical expenditure and vaccines. The financial loss to the country was enormous due to numerous restrictions and prolonged lock downs.

The current crisis in increasing the cost-of-living due to the ongoing price hikes has created tremendous hardships for the public. Although the day-to-day activities are slowly reverting to normal, the monthly revenue of the majority of the people are incapable of generating the same revenue they retained before the pandemic.

The heavy dependency on imports experienced by Sri Lanka during recent years is one of the principal causes for the ongoing rise in the cost of living. Almost every essential commodity except rice is currently is imported fully or partly. The importers have no option other than bringing in these essential commodities, often at high prices and by paying increased shipping costs. In addition, the sharp depreciation of the rupee against US Dollars is another justifiable reason for importers at present.

Additionally, due to the unbearably high shipping charges, the cost of imports has also risen sharply during the past few months. Also, according to the shipping industry sources, the spike in shipping rates occurs due to the extremely high demand in the global supply chain after the lull due to the pandemic.

To control the severe foreign exchange crisis, the Government has imposed stringent restrictions on non-essential imports. Some of the goods were banned completely while some others were allowed under strict control.

The move was hailed by most of the citizenry. The Government intended to save the available foreign funds to bring in essential commodities such as fuel, gas, essential food items, medicine, and other needy goods.

However, despite the rigorous restrictions, the import bill of the country has risen even more comparatively, making the Government efforts dilute. According to information available, the expenditure for merchandise imports during the first eight months of 2021 increased by over 30% to US$ 13.4 billion compared to US$ 10,.2 billion in the corresponding period in 2020, creating a gruesome deficit in the trade balance.

As usual, all the Opposition political parties are having a field day spearheading anti-Government protest campaigns Island wide. However, more severe damage is caused to the Government through evidently visible in-fighting. Responding to a single national issue, Government parliamentarians offer completely contradictory opinions, not only harming the collective responsibility but also creating doubts in the masses.

Media effects

Regrettably, the Government media machinery including the President’s media division, as this writer cited many a time, is seemingly lethargic, ignorant, and often sluggish in responding to the criticisms even when there are justifiable explanations for most of the issues. Even the so-called intellectuals who often appear in television talk shows seem to be presenting their opinions largely based on personal political ideologies, often anti-Government, rather than facts.

Most of those who represent the Government in media briefings, particularly television, are habitually unreliable and often unprepared. Even ardent party supporters do not rely on the information provided by these undependable politicos. Therefore, public trust is rapidly diminishing due to the disorganised and lukewarm media presence of the Government.

Noticeably, there are seemingly controversial and perhaps erroneous decisions and moves by the Government. The biggest issue for the popularity of the Government is that numerous worthy actions are taken for the public- benefits are currently overshadowed by these erroneous decisions.

President Rajapaksa, participating in a meeting recently with agrarian services officers, said that doing what is right is a grave challenge but that despite the magnitude of the challenge, the desired goal can be achieved by moving forward together. Also, he said that he is not focused on votes but on doing the right thing for the people and that he will not hesitate to take bold decisions for what is right. Both the statements are non-political and cannot be expected from a traditional politician. Nevertheless, such ideologies hardly reflect on typical Sri Lankan society.

Numerous positive and worthy acts of the government are not communicated to the masses adequately. Typically, in Sri Lanka, negative messages travel faster due to the uncontrollable presence of social media. Those who are involved in communicating with the masses must know this fact and respond appropriately.

In response to the recent decisions that were subjected to vehement criticism, Government sources state that all those moves were executed after many lengthy discussions with subject experts, intellectuals, Government officials, and other relevant stakeholders. The Government currently is giving priority to the controlling of food prices to reduce escalating commodity prices.

Controlling the pandemic

It is no secret that the Government is in dire straits at this point due to multiple reasons. Predominantly, the focuses of the entire state machinery were directed towards controlling the pandemic and bringing the country back on its feet after severe losses incurred due to lock downs and other health-related restrictions.

The economic hardships were common to the whole country during the past twenty months. Export earnings were severely reduced and the export volumes dropped sharply in 2020. Although the export earnings are commendably high this year, the impact of the losses last year reflects the ongoing soaring cost of living.

The consecutive Governments have taken many attempts to control the consumer prices during the past since independence. Some of the moves were successful and some others were failures. The most recent act was imposing control prices for essential commodities such as rice, sugar, gas, milk powder, and a few others. The act has become a failure and confirms that the Government involvement in price control is not successful in a liberal economic environment.

Some economists believe that if the basic cost of a product is increasing rapidly, the suppliers of such products are forced to sell in the market at higher prices. Fundamentally, no supplier will release goods to a market at a loss. Therefore, only two options are available to the Government to manage the price; either subsidise the product through Government funding or allow the supplier to increase the price.

For example, the price of Liquefied Petroleum gas(LP) has increased in the world market due to multiple reasons. Despite requests from the two LP gas suppliers in the country, one a private sector operator and the other State-owned, the Government did not allow them to increase the prices. The result was a massive shortage cropped up in the market that earned the public wrath.

Attempts to provide temporary solutions to consumers on essential commodities do not provide effective results. According to the most recent visible outcomes, not even short-term results cannot be achieved only through controls. No country keep commodity prices or cost-of-living at the same level forever. Escalation of the two factors is natural.

Therefore, a Government can only ‘manage’ the situation. Hence, the Government must come out with properly strategised, more pragmatic, and logical solutions to effectively ‘manage’ the rapidly and constantly escalating cost of living in the country.