Sri Lankans love freebies. This trait has been exploited for the past 74 years by politicians of all hues to dupe voters. At election time, political parties and political leaders make all sorts of promises to canvass votes – once someone even promised “rice from the moon” and another promised “eight grains”. During one fairly recent election, all parties promised to sell bread only for Rs.3.50.
Governments have had to go with the flow when it comes to this dependent mentality, at an enormous, often unbearable cost.
These are generally very popular measures that were used to the maximum effect by all Governments that came to power since 1948.
Yet, there is no doubt that some free services granted by the Government, including healthcare and education, have been highly effective in improving Sri Lanka’s social indices. Free healthcare and free education have propelled Sri Lanka to the front ranking nations in Asia at least in terms of those two parametres.
Our Governments have also been generously subsidising everything from fuel to electricity, leading to massive losses for the Government-run entities providing such services. This is actually one factor that led to the recent economic crisis, from which we are yet to emerge.
It is clear that a nation facing an acute economic crisis can no longer afford to continue some, if not all, of these popular measures. This was in fact the crux of the speech made by President Ranil Wickremesinghe in Parliament, winding up the debate on the Third Reading of Budget 2023, which he presented as Finance Minister. President Wickremesinghe said that the country has had to face adverse repercussions today due to the shortsighted but popular decisions taken in the past and unpopular decisions have to be taken for the future prospects of the country.
While his political opponents will no doubt criticise this statement, it is not clear whether they have any alternatives to certain measures that are being implemented or contemplated. The Ceylon Electricity Board (CEB) has been making losses running into billions of rupees mainly as a result of providing electricity at very low rates to its customers, though other factors such as overstaffing and debts have also played a part. Although the CEB spends around Rs.57 for one unit of electricity, the unit price for consumers remained very low until recently, when tariffs were increased by a certain percentage. Yet, even this is not enough to cover the Rs.400 billion loss incurred by the CEB.
Experts have calculated that the bills need to be raised by around 70 percent to cover this loss. Otherwise, CEB customers could be in the dark for about 7-8 hours in the early part of next year. The lack of foreign exchange needed to import coal and fuel for CEB power plants will only add to this uncertainty. As the President pointed out, there are only three options for the CEB impasse – print money, apply additional VAT or directly charge an increased amount from consumers. But all three options ultimately boil down to one simple equation – you have to pay for what you get, in one way or another.
This may come as a rude shock to Sri Lankans who have been conditioned to receive free or very low-cost goods and services for many decades. But the concept of “pay for what you get” is entrenched in many Western countries where subsidies are often unheard of. In fact, we have to widen the scope of this decision in line with the times. For example, a prominent educationist wondered in a recent newspaper article whether Sri Lanka should charge for tertiary (university) education, as done in many developing and developed countries. There have since been many arguments in favour of this proposal, as today’s graduates do not seem to value their education precisely because it is free. But if they had to pay a fee, even a nominal one, they would certainly not be out on the streets plotting to overthrow democratically elected Governments. They are also more likely to follow job-oriented courses.
As for the health sector, the Government plans to start a paying ward system in all hospitals (Colombo National Hospital already has such a Merchant Ward) where some health services can be obtained for a fee which will still be lower than those charged by private hospitals. This is a commendable move.
Still, it is important to shield the most vulnerable sections of society from the effects of a steep hike in the prices of various goods and services. In fact, the International Monetary Fund (IMF) itself has stressed that such a mechanism should be in place even as Sri Lanka looks to consolidate its financial position through IMF and other loans. In this respect, it is essential to identify those who genuinely deserve such assistance, as even rich businessmen have been known to get Samurdhi and other benefits.
The time has also come to end the era of “promise politics” in Sri Lanka, where voters are “bought” by various promises, most of which are forgotten as soon as the election is over. The stark reality is that many MPs do not even visit their villages once they win their seats. Wittingly or unwittingly, President Wickremesinghe has started a new era in local politics by telling the truth about the difficult path ahead to voters without any attempt at obfuscation. We need such honesty and truthfulness from all our politicians, whether they are in the Government or the Opposition. That – and a collective effort by all – will help Sri Lankans to weather this storm and emerge stronger.