OPINION | Sri Lanka crisis: Doomsday predictions about Indian economy are baseless
Sri Lanka Crisis: The anger of common Sri Lankans was evident when they spoke on camera. Children were not getting milk to drink, but cakes were being eaten inside the Palace.
Sri Lanka Crisis: For the last four days, a state of anarchy prevails in Sri Lanka, with President Gotabaya Rajapakse sending his resignation letter from a secret hiding place, and huge crowds taking over the Presidential Palace in Colombo.
According to Sri Lankan media, an acting President will be sworn in on Wednesday, and an all-party government will be formed. Speaker Mahinda Abeywardena, party leaders have decided to elect a new President on July 20, through a vote in Parliament. Opposition leader Sajith Premadasa is the top contender for this post. A petition has been filed in Supreme Court to prevent the former President, former PM and other top former ministers from leaving Sri Lanka.
The entire world is watching the developments in Sri Lanka. As of now, there is practically no government functioning, the Prime Minister’s house was set on fire by protesters, and the Presidential Palace has become a picnic spot for protesters, who are taking baths in the swimming pool and cooking food on the campus. The protesters have said they would vacate the Presidential Palace, once a new government takes over.
But the 64-million dollar question remains. Can Sri Lanka limp back to normalcy once a new government takes over? Will people start getting cheaper food, petrol, diesel, LPG and other fuel? Will the economic conditions improve and will the prices of essential commodities come down?
Rumours floated when the Speaker announced that President Gotabaya Rajapaksa is in a neighbouring country, but this was soon denied by the armed forces. The President is staying in a Sri Lankan navy ship, guarded by security forces. Other top leaders of the Rajapaksa government have all gone underground. Army and policemen, who were guarding the Presidential Palace have vanished. Videos posted on social media by protesters have angered the general public, who now find that the President and other leaders were living a life of luxury at a time when people were struggling for food and fuel. The protests that have erupted have been named ‘Aragalaya’ meaning ‘struggle’ in Sinhalese. Millions of Sri Lankan rupee currency notes have been handed over by protesters to the police.
How did this situation come about? After two months of continued protests, the climax came on July 9 when the calls came on social media for citizens to assemble at Galle Face. The main organizer was the Inter-University Students Federation. Police first fired tear gas to disperse them, but failed. Soon, thousands of people from nearby regions joined the protests, carrying the National Lions Flag, and policemen started vanishing. Within a few hours, thousands of protesters forced their way into the Presidential Palace and occupied it.
The anger of common Sri Lankans was evident when they spoke on camera. Children were not getting milk to drink, but cakes were being eaten inside the Palace. Common people stood in long queues for five days to get five litres of petrol, but the President, PM and other ministers faced no fuel or food shortage. The common people were facing nearly 20-hour long power cuts, but there was a round-the-clock power supply in the Palace, along with power backup.
In my prime-time show ‘Aaj Ki Baat’ on Monday night, we showed common people saying they have entered the Palace for the first time and did not find any shortage of fuel, gas, electricity and food. “This situation must change”, one man said. “We walked for three kilometres, and then took a bus to come here (Palace). We do not want this government. We need a new government”, a woman said. “Our struggle is non-violent, we want peace. The youths and common people want to give the message that they want a peaceful change. Yet, we should be prepared for sacrifice”, said another man.
Sri Lanka’s economic condition did not deteriorate suddenly. It was because of the wrong policies of the Rajapaksa government that the treasury became empty. Gotabaya Rajapaksa gave huge cuts in tax and banned the use of chemical fertilizers in the name of promoting organic farming. This brought about a huge drop in agricultural production. Imports increased, while exports dwindled, more so, because of the Covid situation.
Sri Lanka started losing foreign exchange, and by March this year, the government had no money to repay even interest on loans taken. There were acute shortages of medicines and food. The government imposed rationing, and the supply of petrol and diesel was reduced to a trickle. There was rationing of LPG cylinders and rice and pulses. There was widespread demand for President Gotabaya Rajapaksa and Prime Minister Mahindra Rajapksa to quit.
Former Sri Lankan cricketer Sanath Jayasuriya said, “July 9 was People’s Day. I am surprised on seeing what the people achieved on that day. Nobody wanted violence. We wanted a non-violent struggle. We ensured that the President quit. This is second freedom for us.”
Sri Lanka’s population is almost 2.25 crore. The previous governments took huge loans from China for building infrastructure projects. Chinese interference in the Sri Lankan economy was huge, but as the economic conditions declined, people became agreed. In order to control mounting public anger, the government reduced taxes, and the treasury became empty. The ban on the use of fertilizers brought agricultural production crashing.
Sri Lanka’s rate of inflation was more than 54 per cent, while India’s inflation rate is six to seven per cent. Milk was being sold at Rs 200 per litre, petrol was being sold for essential services at Rs 350 per litre. A litre of petrol in the black market was being sold at Rs 2000.
China had invested billions of dollars as loans in Sri Lanka’s infrastructure projects, but when the Sri Lanka economy collapsed, it stopped giving any further assistance. Chinese companies exploited Sri Lankan resources to the optimum. In this hour of crisis, it is India which has stepped in by providing assistance in the form of rice, sugar, medicines, fuel, Covid vaccines and chemical fertilizers to give agriculture a boost. India also helped Sri Lanka to pay off its loans. Till now, India has given 3 billion dollars worth of assistance to Sri Lanka. The common Sri Lankans are praising India in gratitude. Former cricketer Sanath Jayasuriya said, “India and some other countries are helping us. India has been helping us in a big way since the beginning. We are grateful to India for this.”
At a time when the people of Sri Lanka are thanking India for its help, there are busybodies on social media who are raising questions. They are questioning why India is helping its neighbouring country. They are also warning that India may soon face a Sri Lankan-type economic crisis. On WhatsApp, messages of warning are being circulated telling people that India, too, may face a shortage of medicines, cheaper food and fuel very soon. Some of our opposition parties have also started giving such messages a boost. They are citing figures of unemployment, fall of the Indian rupee, price rise and the conditions of farmers.
Telangana Rashtra Samiti chief and Telangana CM K Chandrasekhar Rao even said, “Modi Ji is unable to provide food, water and work to people. He must resign.” KCR is trying to project himself as a leader of the Opposition camp and as an alternative to Modi. But, Congress leader Rahul Gandhi feels it is he who can run this country. Congress is unwilling to cede its opposition space to others. Congress spokesperson Supriya Shrinate said, “under Modi’s leadership, the Indian economy is heading the Sri Lankan way, the Rupee is falling, and inflation and unemployment are increasing.”
After KCR and Rahul Gandhi, there is a third opposition leader Mamata Banerjee, who dreams of becoming the leader of the anti-Modi front. Her party MLA Idris Ali said, “India will face a similar situation like Sri Lanka. Modi will face the same fate as Sri Lankan President. The people will remove him from power and Modi will have to flee.”
BJP MP from West Bengal, Soumitra Khan replied to Idris Ali’s remark. Khan said, “There are several cases filed against Idris Ali. He is himself fleeing from the hands of law and making funny comments about our PM.” BJP spokesperson Sudhanshu Trivedi said, “The opposition is frustrated because of Narendra Modi’s popularity. The opposition parties are unable to find a way out. That is why, wherever there see a crisis, they sniff an opportunity for themselves.”
Spreading rumours is easy because of the all-pervasive social media nowadays. Moreover, negative comments become viral immediately. This is the reason why some busybodies are making doomsday predictions about India going the Sri Lankan way. These comments reflect the suppressed desires of Modi-haters. These are people who want Modi to lose, by hook by crook. They failed to defeat Modi in two successive Lok Sabha general elections and several state assembly elections. At one point, they felt that the agitation against Citizenship Amendment Act will spread. At another point, they felt that the Muslims in India have stood up and it will be difficult for Modi to survive. They also felt that the farmers’ agitation would bring Modi down.
When the Covid pandemic struck India, these people thought, that Modi, will be unable to face the fury that would engulf the country because of the rising death toll due to weak health infrastructure. At times, they felt that China will bring Modi down, or the US will bring Modi down as it did to Imran Khan. When youths came out on the streets against Agniveer policy and set fire to railway coaches, their hopes again rose. Now that people in Sri Lanka have forced their President and Prime Minister to leave, the hopes of some opposition leaders have again risen. But all their dreams right from CAA, farmers’ agitation, and Covid deaths to Agniveer protests have come crashing. Their dream of a Sri Lankan situation taking place in India is also bound to crash.
Let me explain the position in some other countries. In China, there are protests after six banks collapsed when China’s central bank stopped the supply of money to these banks. There were huge protests and stoning at police by thousands in Zhengzhou, who have lost millions worth of savings. The US is staring at a big recession in the next 12 months, according to a rating agency report. The Federal Reserve is raising interest rates to stave off recession, but economists agree that the US is slowly moving towards recession. Bank of England has warned that the earnings of people across the world are on a decline due to high inflation rates. Britain's GDP growth rate is declining due to inflationary pressure. Several European countries are also facing inflation due to the Ukraine war.
I spoke to several economists and asked about India. Most of them said, there is no basis for the assumption that the Indian economy is in dire straits. When I asked about rising inflation, they said, inflation is not a big indicator for an economy. The Ukraine war has brought about inflation in most countries. In the US, the inflation rate is nearly 11 pc, in Europe, it if 12 per cent, and in India, it is 6-7 per cent. It cannot be said that the Indian economy is facing a crisis.
We have a foreign exchange reserve of 601 billion dollars apart from 40 billion dollars of gold reserves. The inflation rate is under control. Prices of several commodities have risen, and the unemployment rate is also on the rise, but this situation prevails in other countries too, because of the Covid pandemic. Instead of believing in doomsday predictions on social media, we should trust what our economists say.
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