Sri Lanka: Citizens fleeing, food and fuel prices skyrocketing, people starving and dying amidst worst Economic Crisis.

Just 24kms away from the Indian coastal town of Dhanushkodi in Tamil Nadu, the island nation of Sri Lanka is supposedly facing its worst-ever economic crisis. The prices of basic commodities such as rice (500 Sri Lankan rupees per kg), milk powder (Rs 790 for 400 grams), sugar (Rs 290 per kg) have shot up manifolds in the past few days and are expected to further rise by up to 50% in coming days. The fuel prices have already increased by 88% as compared to last year and are estimated to further rise owing to their economic crisis and the waging war between Russia and Ukraine.

The situation is so grim that the dearth of essential items is forcing the citizens to flee their country to the neighbouring Indian state of Tamil Nadu. The profile of such people seeking refuge in India is of daily wage workers mostly who can no longer find work in Sri Lanka. It is being reported that so far around 16 Sri Lankans have landed on the shore of India illegitimately, these helpless people had to spare almost all of their savings to afford a boat trip across to India. As per experts, the number of Lankans fleeing and coming to India is expected to reach between 2000-4000 in the coming days.

The picture on the ground is even more worrisome as in the past few days, three elderly men died while waiting in a queue to buy fuel in scorching heat, in a separate incident an auto driver stabbed a man to death in an argument over the scarcity of supplies. The present circumstances have also resulted in exams being cancelled due to acute shortage of printing paper and ink, many women fainting while waiting for cooking gas, people camping overnight outside fuel stations awaiting their turns and long and frequent power cuts have hampered all types of activities. The rise in violence as a consequence of the depleting reserve of resources is so bad that Lankan troops have been ordered to administer the distribution of important commodities such as fuel.

The ongoing crisis has erupted as a consequence of failed policies adopted by the present as well as erstwhile Sri Lankan governments which have crippled the economy over the period. In the present scenario when the incumbent government and opposition should both work in tandem, none of the sides is stopping from playing a blame game. On one hand, the opposition led by Sajith Premadasa is trying to stage massive protests and almost barged into the presidential secretariat recently and on the other hand, some experts have blamed it on the past government of President Mahinda Rajapaksa who started colossal unwanted projects in Hambantota, his hometown which are apparently of no use but have definitely amounted exuberantly to the debt-ridden economy of Lanka.

A frustrated Lankan waiting in line to buy fuel for hours told a local Daily, that since independence this is the game these politicians have been playing, when one is not in power, they promise a lot of things and assure us of change, once elected nothing happens and they care only about their own interests and this cycle goes on and on. Looking at the current government other than President Gotabaya Rajapaksa himself, another brother Basil Rajapakse is the finance minister, eldest brother Chamal is a cabinet minister while their nephews and sons have been handed over other key positions in the government. Previously another brother Mahinda Rajapaksa had also served as the president as previously stated and now holds important ministries in the current government. Today Rajapaksas’ are enjoying the same luxury that once Bandaranaikes’ and the Senanayakes’ did, while the 22million people of the island have suffered consistently.

As for its economic crisis the country’s tourism industry which it depends upon to a great extent was first hit after the bomb blasts on Easter Sunday in 2019 by ISIS-motivated terrorists and the onset of the pandemic did little to help the already dwindling tourism in the nation. In addition, the crisis was triggered by the short-sightedness of the current government who soon after coming to power ordered a ban on chemical fertilizers in favour of organic content but little did they know that the country which is still primarily agriculture-based will bear its brunt as a result of increased cost as well as time and the actions rather caused more harm than good by decreasing yields from grains and farm products. Of many, another notable blunder was a sudden cut in taxes where personal taxpayers were given a 40% relaxation and VAT taxpayers were given a relaxation as huge as 70%. The debt stock of the country has grown by 42.8% alone between 2015 and 2019 out of which nearly 90% increase was due to the cost of interest added on the previous debts.

The financials as of date look very alarming as the country has accumulated $11.8 billion worth of debt through International Sovereign Bonds (ISB) out of which $1 billion ISB dues are maturing in July and is due for payment. Lanka also borrowed $1 billion from China and leased its Hambantota port to China, later it took an additional loan of $500 million in the wake of the pandemic. Recently, India has also offered $1 billion in credit lines to supply essential commodities for procuring items such as food and medicines. But the measures adopted by Sri Lanka have caused a fatal blow to its foreign currency reserves and fiscal deficit. The outlook for an improvement is not very positive in the near future as can be seen from all global rating agencies such as Moody’s, S&P and Fitch who have downgraded Sri Lanka’s sovereign ratings to junk.

The meltdown can be seen as anti-government sentiments are continuously rising with people fleeing not because of war but because of hunger. However, the world and various international agencies stay aloof of the forming trends in the small nation where the rise in hunger, unemployment, and the number of refugees is imminent. These agencies need to act now or else one should not be surprised if Sri Lanka sees another civil war unravelling.