15 DECEMBER 2018
End Sri Lanka’s crisis
Rajapaksa’s resignation is the first step, but the President must reinstate Wickremesinghe
Mahinda Rajapaksa’s decision to resign as Prime Minister, an office to which he was controversially installed by President Maithripala Sirisena, is the first sign that the dragging constitutional crisis in Sri Lanka is heading slowly towards a resolution. He had also played a part in the unfolding of the crisis set off by Mr. Sirisena, who made ill-advised moves by invoking his executive powers repeatedly for political and partisan ends. The two leaders had come together against common rival Ranil Wickremesinghe, who was removed as Prime Minister unceremoniously on October 26 to make way for Mr. Rajapaksa. However, they saw little success either in Parliament or before the courts. Despite Mr. Rajapaksa failing to prove his majority in several motions in the House, he had steadfastly remained in office, seeking fresh elections instead of stepping down. Sri Lanka’s politics and economy have been caught in a downward spiral due to a constitutional crisis since Mr. Sirisena appointed Mr. Rajapaksa as Prime Minister. However, Mr. Rajapaksa was unable, or unwilling, to demonstrate the extent of his support in Parliament. At one point the President prorogued Parliament, and later dissolved it. However, the Supreme Court restored the legislature in an interim order. Thereafter, in a series of votes, a majority of the 225-strong House has been voting against Mr. Rajapaksa.
Mr. Rajapaksa’s resignation offer has come at a time when several parliamentarians moved the country’s Court of Appeal seeking a writ of quo warranto for Mr. Rajapaksa’s removal. In an interim order, the court restrained him from functioning as Prime Minister. The absence of clarity on whether there was a legitimate government in office placed other countries and multilateral financial institutions in a quandary as to who they should deal with. Mr. Rajapaksa’s resignation may pave the way for the installation of a government that enjoys a majority in Parliament. Meanwhile, the President’s credibility has taken yet another beating after the Supreme Court ruled categorically that his dissolution of Parliament on November 9 was illegal and void. The court has rejected his claim that he had an unfettered right to dissolve Parliament at any time, notwithstanding provisions in the Constitution that barred such action for the first four and a half years of the legislature’s term. The court dismissed his camp’s attempt to stretch and twist the meaning of some constitutional provisions in order to justify his bizarre actions. Although Mr. Sirisena has been obstinately sticking to his position that he will not appoint Mr. Wickremesinghe as Prime Minister “even if all 225 members” were with him, there are indications he may be forced to alter his stand. Nothing short of respecting the current composition of Parliament and reinstating Mr. Wickremesinghe as Prime Minister will solve the current imbroglio.
Falling food prices will intensify rural distress; the solution is meaningful agricultural reform
The days when inflation could topple governments appear to be gone. It is now time for the government to worry about falling prices, especially of food. Retail inflation dropped to a 17-month low of 2.33% in November, as compared to 3.31% in October, primarily due to the fall in the prices of various essential food items. Food prices fell by a huge 6.96 percentage points compared to a year ago and, at minus 2.61%, are now in deflationary territory for the second successive month. The fall in inflation is obviously good news for consumers, particularly those in urban India who are happy to pay less for their purchases; also for the Reserve Bank of India, which will now have more room for manoeuvre in the matter of interest rates. But it is bad news for the producers of basic food items who are located in the distress-affected rural parts of the country, with falling farm incomes also impacting landless labour and rural demand. At the heart of this problem is the unpredictability of farm prices, which are known to exhibit extreme levels of volatility owing to various supply-side issues that plague the agricultural sector. Though farmer producer companies have stepped in with help and guidance to farmers to use hedging tools to minimise price risks, they are too few and far between to make a difference. And even when their produce finally commanded impressive prices in the retail market, the cartelised agricultural marketing system has made sure that farmers received little to nothing.
Ahead of the general election next year, State governments across the country are likely to resort to short-term relief measures such as farm loan waivers to temporarily relieve farmers of their deep distress. Further, with the issue of rural distress now expected to significantly affect the general election verdict, the Bharatiya Janata Party and the Congress are already engaged in a competitive battle to offer the highest extent of loan waiver to farmers. There will also be pressure to announce higher minimum support prices for various agricultural goods. It is another matter that no government has ever had the wherewithal to deliver on such lofty promises. In fact, the poor implementation of MSPs is one of the reasons for farmers taking to the streets in protest. The Centre may prod the new RBI Governor to adopt a more dovish monetary policy stance in the run-up to the election citing falling inflation figures. But none of these measures will help farmers, who have increasingly taken the protest route of late to make their demands heard, in any meaningful manner in the long run. Real agricultural reform is crucial to enable farmers to freely make their own business decisions without the grabbing hand of the government.