Opinion - Page 2

An erudite Buddhist Teacher, monk, and friend

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I was saddened to hear about the passing of a great teacher, a dear friend who I had known since 1984 in London, and who always welcomed me at the Sri Saddhatissa International Buddhist Centre at Kingsbury, Brent, London NW7 1NB, without reservation.

The Ven. Galayaye Piyadassi Nakaya MahaThero passed away on 19 December 2022 at Northwick Park Hospital after a prolonged illness. The cremation takes place at Hendon Crematorium at 09.45 a.m. on 31 December 2022.

 The Ven. PiyadassiThero was a well-known, highly respected monk. He hailed from a dignified family, comfortably well-off in Sri Lanka. Entering monastic life must have indeed been, a difficult choice.

He came to London as a missionary from Sri Lanka, as a young monk, an understudy of the educationist, Late Most Ven. Saddatissa Thero, in early 1984, took over the ongoing missionary work, in a quarter of London which was much the favourite residential area of Sri Lankans, but without a Buddhist Temple.

It had been prepared ready for the teachings of The Buddha, but with the demise of one of the notable missionaries, NayakaThero, Ven. Saddhatissa in the late 1980s, there was a vacuum which had to be filled by a visionary, to carry on the onerous duties. of the late missionary,

It was also a time of much turmoil in Sri Lanka due to civil strife and the unease had spilt over to London and the UK. Many Sri Lankans were eager to congregate, but fear was understandably profoundly rooted in our psyche.

Ven. Galayaye Piyadassi Thero was a simple, trusting mind who brought home the message of The Buddha, in being able to perform a role of bringing solace and comfort to a broken community of Buddhists and also Sri Lankans.

As the years rolled by, Galayaye Piyadassi Thero was given the accolade by late Majesty, Queen Elizabeth II, elevating his service to citizens and country, by the award of the title, MBE, hardly ever before conferred on a Buddhist monk.

He continued his monastic work without fanfare and organised many functions for the Buddhist and Sri Lankan communities, including the Buddha Jayanti celebration and the annual remembrance of the World Peace Day of Prayer for Inter-religions as for the annual Tsunami Remembrance Day each December.

He will be sadly missed by not only the Buddhist community but by many Inter-Faith dignitaries in the Borough of Brent, for spreading the message of oneness. Hiscontinuedmission of being an unpublicised religious Visitor to nearby hospitals to comfort the sick, is legendary, before he became indisposed himself, over recent times.,

Sri Lankans in London had a mentor who will be sadly missed. At the same time, Buddhist temples in our homeland will lose the undivided contact due to his charitable and fundraising activities, which he silently carried on, even with his disability over recent years.

Can Year 2023 Be Better in Anyway?

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Dawn of the year 2023  will be celebrated with people all over the world welcoming the year with bright illumination, bursting of firecrackers and exchange of good wishes, with soothsayers and astrologers predicting the events in the forthcoming year and leaders of various governments across the world greeting the people promising an era of peace and prosperity. Of course, prayers are also offered in religious centres seeking prosperity and happy conditions.

Events in the past several years show that such celebrations and wishes on new year’s eve have not been followed by showering an era of peace and harmony but the world continued to be strife-torn with conflicts and animosity between nations and individuals remaining undiminished.

Of course, in the year 2023, there would continue to be spectacular achievements in the field of science and technology with a greater reach in communication facilities and in a variety of other fields. But, however, what is unlikely to change is the mindset of people.  It appears that violence and self-centredness in the hearts of men and women all over the world would remain at the same level.  This is the experience of mankind over several decades. 

The year 2023 will continue to be confronted, like the previous years,  with several challenges and issues like global warming and climate change, terrorist attacks, conflicts between nations,  atrocities against women and so on. 

Climate challenge :

COP 27, a global meeting to discuss and deliberate on the global climate threat has concluded in Egypt,  after animated discussions and passing paper resolutions, with  COP 27 ending no better than COP 26 earlier. 

The fundamental issues posing climate challenges like the need to eliminate fossil fuels do not look like happening at anytime soon. Oil-rich countries do not want to stop the production of crude oil and natural gas and coal-rich countries do not want to reduce the production of coal.  All promises made in COP 27 look like going for a toss.

Russia Ukraine war :

Russia Ukraine war is now going on for nearly ten months now, with Russia attacking Ukraine, destroying infrastructure, killing innocent people in Ukraine mercilessly and forcing millions of citizens of Ukraine to run out of Ukraine as refugees. 

It is a war taking place on Ukraine’s territory and not on the territory of Russia, obviously indicating that Russia is the aggressor and Ukraine is only a defender. 

With USA and NATO countries supplying arms and ammunition to Ukraine to defend itself and making no real efforts to end the war and  Russia is absolutely not concerned about the world opinion against its aggression and United Nations simply discussing and watching the scenario helplessly, it is obvious that the objective of world peace remains a far cry

Certainly, the year 2023 would continue to be war-torn in one part of the world or the other.

Terrorist attacks :

Terrorist attacks are continuing to take place in different countries, almost every day due to one reason or the other. 

Apart from terrorist attacks due to political reasons, what is known as Islamic terrorism is a grave concern, with people being killed by terrorists due to religious fanaticism.  As yet, it appears that terrorists across the world continue to have a field day.

Slaughter of innocents:

 The frequent shooting down of innocent people in public places in USA and other countries,  for no apparent reason except due to blind hatred feeling of the shooter, only highlights the fact that violence is firmly rooted in the mindset of several individuals and there is no indication that such mindset would be reformed.

Atrocities against women :

While it is claimed that the world is forging ahead due to technological developments, such developments seem to have no impact on modernising the thoughts of certain religious heads and extremists in some countries.

The suppression of women and denial of rights of women,  as a matter of policy,  by governments in Iran and Afghanistan and a few other Islamic countries, clearly point to the fact that prejudice of men against women continues to prevail in some parts of the world.

 While the atrocities against women and restrictions imposed on women’s lives have shocked many people, nothing could be done to stop such atrocities.  The women in such countries continue to suffer,  with people in other parts of the world watching the scenario like fence-sitters.

Poverty issue :

Deep poverty continues to prevail in several African and Asian countries, with no hope that the conditions there would improve anytime soon. 

Developed countries which are in much better positions and have adequate resources, have not come forward to help the poor countries to overcome these poverty conditions in a significant way.

On the other hand, it is often alleged that advanced countries and multi-national companies based in developed countries exploit these poor African nations by exploiting their vast mineral and natural resources.

Offenders go scot-free:

There have been deep atrocities committed by one nation against another and offenders have not been taught a lesson.

An immediate example is the atrocities committed by China against Tibet,   by forcibly occupying the defenceless land after killing the Tibetan protesters.

This indicates that” might is right” conditions have been prevailing in the world for several decades. There is no indication that these conditions will change in the foreseeable future.

Isolated group of good samaritans :

The fact is that there are still small and isolated groups of people in the world, who want to promote compassion, peace and love but these groups are too few and far between and really have no significant impact on world conditions. 

There are great philosophers who try to explain the essence of life and the futility of war and hate feelings. But, their preachings also seem to be ending up as mere listening posts.

Is the world celebrating the new year in a vacuum?

Now, what is the hope and where does the world go from here?

In such circumstances, the pessimism of thoughts as it may look, the ground reality has to be seen and realised without wishful thinking that the year 2023 would be any better than the previous years.

With the thought process and mindset of people in the world not having changed over several decades and wars and conflicts and self-centredness becoming part of the global events amongst countries and people, should we conclude that the wishes and greetings on the new year’s eve have no significance?

The pre-conditions for the wishes on the eve of the year 2023  for peace and harmony to be realised is that the battle for the future has to be fought and won in the minds and hearts of the people.  Will it happen in the year 2023? 

India: Remembering Rajaji

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C. Rajagopalachari (popularly known as Rajaji) was recognised in his time as one of the most enlightened intellectuals in India. Apart from being a freedom fighter, Rajaji excelled in several other areas and was a great writer, speaking and writing on variety of subjects including world peace and disarmament, the need to promote free enterprises, moral and ethical values in public life, religions and so on.

Rajaji was born on December 10th December 1878 and passed away on December 25th 1972 and lived for 93 years.

On Rajaji’s recent birthday on 10th December 2022, the day largely passed off without the people in India or the people in  Tamil Nadu to which state Rajaji belongs, celebrating his birthday,   recognising his contribution to the progress of the country and his achievements.

Of course, Tamil Nadu Governor paid tributes to Rajaji in Raj Bhavan and a few state ministers garlanded his statue elsewhere. This event was not even reported in most section of the media.  This is unlike the way that the nation observes the birthday of Mahatma Gandhi, Jawaharlal Nehru, Sardar Vallabhai Patel.  Former President Dr. Radhakrishnan’s birthday is celebrated as teacher’s day every year.

In this scenario, the non-observance of Rajaji’s birth anniversary on 10th December 2022 adequately to remember his contribution is conspicuous and unfortunate.

Mahatma Gandhi hailed Rajaji as his conscience keeper, which is the ultimate tribute for Rajaji’s sense of honesty and courage of conviction.  Later, Gandhiji declared that Rajaji was his successor.  He further told that “Rajaji sees at least six months ahead of him”

There are several instances that revealed Rajaji’s capability to think beyond his time and make his views clear and providing advice to the existing governments.  Unfortunately, a number of his valid suggestions were not accepted by those in power at that time and the value of some of his suggestions were realized much later and implemented.

Rajaji’s View on prohibition:

Amongst many of Rajaji’s suggestions of far-reaching importance, let us take only one, namely his call for implementing total prohibition in Tamil Nadu.

On a rainy Tuesday evening on July 20, 1971, Rajaji, in his ripe age, met the then Chief Minister of Tamil Nadu Karunanidhi at his residence and pleaded against lifting the prohibition, which   Rajaji believed would hurt future generations adversely. It was reported that Rajaji, the former Governor General of India, was made to wait for some time for the meeting which took place for 20 minutes.

Sadly, this advice was not accepted by the then Chief Minister Karunanidhi and his government, which lifted the prohibition. The adverse consequences of such decision are seen today in Tamil Nadu.

During the last six decades after the lifting of prohibition by the then DMK government, the liquor habit amongst the people of Tamil Nadu have increased by leaps and bounds.  It is reported that more than 50% of men folk in Tamil Nadu have succumbed to liquor habits and even youth and students in the teenage have started taking liquor. What is alarming is that even women are now slowly falling into the liquor habit.   It was really shocking to hear the recent news that school-going girl students joined together and consumed beer in public.

With widespread liquor habit steadily developing in Tamil Nadu, the social fabric of the state have been uprooted and life of women, in whose family menfolk have taken to liquor habit,  have become  hell like. Women are being beaten, harassed and left without earnings of the menfolk, who spend their earnings on liquor.  Many believe that in such condition, Tamil Nadu will be moving towards socially unstable state with value system in life going for a toss.

Rajaji anticipated all these problems and pleaded with the then DMK Chief Minister, who did not listen to him.  Tamil Nadu is now paying the price.

There is no indication that conditions will improve in the near future, as Tamil Nadu government is now heavily dependent on liquor sale income, even though liquor habit is causing social and family disturbance to an extreme level.

Role model ignored:

There can be so many other instances where Rajaji anticipated events, as he could think beyond his time.

It is sad that such a great person is not adequately remembered today, with younger generation not  being well informed of  the role model like Rajaji,  who lived with great wisdom

Patronizing The Culprits?

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Blaming some particular religion, caste or creed and patronizing hatred-based extremism is the worst kind of terrorism. Be it the Judaism, Sikhism, Buddhism, Hinduism or Islam or even Atheism, all philosophies guide their followers to a path leading to just one theme ‘love-humanity’. We see that the followers of all these philosophies have been doing a lot for the betterment of mankind since ever. Philanthropic approach towards life is the only approach all religious philosophies convey to their followers. Religious philosophies are never limited to the betterment of a specific group of people; all religions have an innate desire of flourishing and expanding and this desire could never be fulfilled unless the message they convey has universality in it; no doubt ‘love-humanity’ is the most universal message.

In Pakistan, a Muslim country, there is a 550-bed hospital in Lahore named Sir Ganga Ram Hospital. This hospital was established in 1921 by a Hindu Civil Engineer Sir Ganga Ram. At the time of its establishment, Sir Ganga Ram never intended to specify it just for the Hindu patients; because it was established for the patients, not for the Hindu patients only. Today hundreds of patients are being benefitted from it and majority of the patients treated here are the Muslims. Same is the case with the Gulab Devi Hospital in Lahore. This hospital was established in 1934 by Indian freedom fighter Lala Lajpat Rai in the memory of his mother, Gulab Devi, who died due to tuberculosis in 1927. Another hospital in Lahore is Jan Ki Devi Jamiat Singh which was established by a Sikh doctor Jamiat Singh 85 years back. Multan is a very historical city in the South Punjab region of Pakistan. Here Women’s Christian Hospital is providing marvelous services to the women from surrounding areas. This hospital was established in 1899 by the Church Missionary Society. Same is the example of Aligarh Muslim University India which was established in 1875 by Sir Syed Ahmad Khan, a renowned Muslim educationist. Now-a-days this university is considered a public central university and regardless of their religious beliefs, thousands of students pass out of it every year.

The hatred-based extremism is always a mischievous act of a small number of notorious people who have their ulterior motives behind. Groups consisting of such people could be found in every society and every religious school of thought. If the government is serious, such groups are crushed at very initial stages but in case the government is non-serious rather supportive to them, things become horribly disastrous. We have the ever-worst example of the demolition of the Babri Mosque in Ajodhya, India. That was 6th December 1992 when some Hindu extremist groups under the supervision of the Rashtriya Swayamsewak Sangh, Bajrang Dal, Shiv Sena and Bharatiya Janata Party, ransacked the historic Babri mosque. The situation after this incident turned into a riot-like scenario and ultimately resulted in the killing of thousands of innocent people mostly the Muslims. The most pathetic fact with reference to this incident is the partial rather prejudice silence of the government of India. Indian Court acquitted all accused-figures particularly those who were very active members of the BJP. In other words the Indian judiciary denied justice and failed to hold people responsible for criminally razing down the mosque and to take to task all those who were responsible for this cruel lawlessness.

The partiality demonstrated by the Indian courts paved future-way for targeting of other Muslim religious sites especially in Kashi and Mathura in the Uttar Pradesh State. For the investigation of this sad incident a Commission was also set-up which concluded that the demolition of the Babri Mosque was meticulously planned and the mobilization of the cadres of RSS, Bajrang Dal, BJP and Shiv Sena in Ajodhya was neither “spontaneous or voluntary” but “orchestrated and planned.” The case of Demolition of the Babri Mosque had been under trial for many years, from inquiry commission to the lower courts and then to the Supreme Court but nothing could come out of as the courts intentionally ignored the on-ground realities. As a result of this intentional ignorance 32 accused, including senior RSS & BJP leaders like Lal Krishna Advani, Murli Manohar Joshi and Uma Bharti were acquitted. In short justice was denied to more than 200 million Indian Muslims. In this way, the verdict by Indian court delivered victory to hate, intolerance and chauvinism and thus encouraged the Hindu extremists to be harsher, more narrow-minded and more prejudiced in their approach towards the minorities in India. This criminal biasedness of the Indian courts shamefully confirmed Indian judiciary connivance with Hindutva agenda.

Recently on November 22, Georgetown University USA published a report titled ‘Is a Genocide of Muslims underway in India?’  It was stated in the report that there are more than 200 million Muslims in India whom the Hindu extremists see as ‘an impediment of Hindu nationalist’s goal of remarking India as Hind-only nation.’ The said report was shared at different forums and it certainly gave rise to various questions. Unfortunately such reports never reach the US authorities; if such reports have reached them, they would certainly have shifted their kind ‘patronizing-hand’ from the tormenters to the crushed ones.

Views expressed are personal

Twists and Turns of Megatrends and Their Indicators in 2023

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You cannot escape the responsibility of tomorrow by evading it today ~ Abraham Lincoln

We are barely a month away  from 2023 and the world has moved in unprecedented ways in 2022, forcing us to  hold our breath against the unrelenting winds of change.  A bewildered international community has witnessed a  rules-based international system being upended. Arbitrary and capricious geo political tactics; our implacable attitude towards climate change and lack of collective commitment; the exponential advance of technology playing to the inexorable strings of  Moore’s law ( the number of components in integrated circuits doubles every two years); the portentous disaster from nuclear abuse; and unexpected economic shifts, all stare at our faces as we prepare for a new year of hope. Hope that we may gradually get rid of the pandemic threat present and future; hope that the geo political trends will stabilize; and above all that we could have a better standard of living from the base of Abraham Maslov’s pyramid of needs to its apex.

Amidst this chaos, the megatrends we have so far identified – which are powerful global transformative forces that affect our existential future and change the global infrastructure, economy, business and society – will still remain. These megatrends are: shifting global economy; climate change and resource security; technological change; shifts in demography, social change and choices; population explosion and rapid urbanization; and inter connectivity.  All these have shown twists and turns, adding two possible trends which could possibly emerge as mega trends in the near future. These are  water scarcity and water wars (which can be identified as corollaries to climate change as well as geopolitics) and  the global rise of the middle class.

Before getting to the water crisis, mention must be made of the rise in middle class at the global level adding another twist in megatrends and that is the rise of Africa, and the significant economic shift toward the continent which cannot be relegated to the background anymore.  Africa has the fastest growing middle class in the world.

Rana Foroohar, Global Business Columnist and an Associate Editor at the Financial Times, and CNN’s global economic analyst says: “Africa has the fastest growing middle class in the world. Sure, we are talking about people spending about $2-20 a day, but this is a huge increase from only a few years ago. In my mind, Africa is where China was a few decades ago. Massive, unorganized, underutilized, but with a huge untapped potential. Of course there are striking differences in culture, history and social structures (plus Africa is a continent comprising several countries), but they seem to follow a similar path towards growth.

On a same note, China seems to be entering a maturity phase after years of massive growth. Its economy is slowing down and its population is ageing. People are finally starting to spend more. Frankly, it reminds me a bit of Europe a couple of decades ago”.

The water crisis is mainly due to the unequal distribution of water. Water is crucially essential to human beings. Arguably, water is the essence of human existence and we can barely survive a few days without access to it. Historically, it is an incontrovertible fact that that human societies and civilizations sttled in areas that had abundance of water. In the modern world, growing population and the climate crisis are two contributary factors to the acute water crisis we face. Experts at the World Resources Institute have said: “Water is likely to cause the most conflict in areas where new demands for energy and food production will compete with the water required for basic domestic needs of a rapidly growing population”.

Within these megatrends – which take years to unfold – are indicators which are seen in the short term transitioning from year to year with characteristics that are embodied in megatrends. Ruchir Sharma, Chairman of Rockefeller International and Founder and Chief Investment Officer of Breakout Capital, and author of 10 Rules of Successful Nations, in a recent interview unfolded ten indicators.  I give below my understanding of what Dr. Sharma said at the interview with the caveat that any error in the  erroneous explication of Dr. Sharma’s views are mine alone.

Dr. Sharma began by saying that trends are determined on a decadal pattern, where economic trends evolve decade by decade.  In 2023, Dr. Sharma predicts that the United States will peak economically (giving a twist to the megatrend which indicates that there will be an economic shift from the West to the East) while the rest of the world would also rise. Also, in 2023 the top ten companies in the world will struggle in the next decade and small companies will flourish.  Dr Sharma sees a potential fall of the big tech companies which will still remain strong but diminish in growth and wealth creation.  Next year will also see a trend toward de-globalization where capital, migration and protectionism will take center stage, largely due to populism.  The trend that has already started on emphasis being laid on local goods and services will continue, prominent among which will be data localization, again as a corollary to rising nationalism, protectionism, and surveillance.  The end result would be that de-globalization will make way for localization.

Another trend identified is the shrinking working population where a distinct decline in working age population can be observed.  There will be fewer people joining the workforce, bringing to bear a negative effect on the global economy where fewer people at work would mean lower growth.  Another trend is that there will be changing consumer spending, particularly by the new generation – millennials who are between the ages 22-37 ( the generation gap is chronologically identified as Generation Z- under 21 years of age; Millennials – 22-37; Generation X – 38-55 years, baby boomers – 54-71, and the silent generation – over 72).  The new generation will perpetuate new consumption habits based more on experiences rather than material goods.  Gaming will be the largest generator of consumption and wealth creation.

Another indicator identified by Dr. Sharma is that populism will surge, and polarization will increase politically notwithstanding that it has already deepened to unacceptable proportions. Added to this disturbing trend will be the undesirable return of inflation due to low growth which will be the result of low employment. The Fourth Estate – the media – will continue to diminish in usage (and perhaps credibility) as people are receiving less news due mostly to the decline in print media.  Traditional media, which has been the bulwark of democratization of society will continue to give way to what Dr. Sharma calls the Fifth Estate – online news (such as twitter) which will continue to serve as the more popular medium.  Finally, there will be a continuation in the rise of inequality – which President Obama called the defining factor in our lives – as an example of which Dr. Sharma cites India, which had 49 billionaires in 2010 whereas there were 106 billionaires in 2019.

Admittedly, Dr. Sharma, who is an expert on finance and economics, focused more in his areas which inexorably have an impact on all the megatrends and indicators.  To this one might add public health, the resources of which were seriously impeded and impacted  to unbearable proportions during the Pandemic.   In 2023 one could look forward to a heightened sense of awareness in this area. There are four scenarios to envision as plausible: that the Covid-19 virus might stay on continually, whether in Pandemic form or not; that the Pandemic and the virus will go away like the SARS virus did; and that, depending on these two scenarios our lifestyles will change; or we would go back to living the way we were.

There are two certainties that the Pandemic would bring to bear in any of these scenarios.  These are a health revolution and a communication revolution of sharing information, both of which the world had not seen before in the intensity that they would be present in the future.  In this context the generation that would impact the next 5 to 10 years most would comprise the Millennials.  Whichever way we go in the scenarios mentioned above, Millennials would take center stage in the health revolution and the communication revolution.

Why is there a winter of discontent in UK?

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The widespread industrial unrest in the run up to Christmas and into January 2023, is nothing new, as workers all over Britain demand better pay and working conditions. Their leverage is to cause the most amount of tolerance, inconvenience and resilience.

We’ve just come out of summer and autumn with rail and postal strikes, now we face strike action planned by Nurses, Teachers, Train drivers, Emergency services, Ambulance drivers, Civil Servants, all jumping on the bandwagon. After a decade of wage stagnation workers across the country are now calling for pay rises that match inflation. However, it is fair to say, that during the past decade inflation was below 2 %, but has now overshot expectation.  

The last time there was a winter of discontent that I can remember?

I reckon it was during the days of Labour Prime Minister James Callaghan.

I can remember the winter between November 1978 and February 1979 when rubbish on the streets piled up, not cleared for days, perhaps, weeks as “Bin men” Council workers went on strike. First, it was the private and later the public sector Trade Union workers, demanding Pay rises greater than offered by the Labour government. It was no joke, when lights used to flicker as power cuts made us to keep candles at the ready. Domestic services in hospitals were on poverty wages of £39.50 per week at that time.

We cannot of course, compare today’s scenario to either the days of the General Strike of 1926 or the strike in 1978/79. But, a picture is building of what this winter 2022/23 will look like.

Why the strikes in NHS, in particular?

How many of you know that 25,000 Nursing staff left their job in the past year, with staff shortages affecting patient safety?

How many know there are 47,000 unfilled NHS Registered Nursing posts in England alone?

Has this shortage anything to do with the minimum 5, sometimes 10 hour wait at A& E wards in hospitals up and down the country?

Nurses in UK are going on strike for the first time, the first official strike in their 106 year history, on 15 and 20th December 2022. The Royal College of Nursing (RCN) announced it has reluctantly called a national strike over pay and patient safety. It said their action will be as much for patients as it is for nurses.

Emergency care will still be provided, under a “life–preserving care model,” but routine services are expected to be affected by the strike. RCN stated the level of service during walk outs will be that dialysis and planned surgery cancelled.

Nurses are paid according to their level of seniority and how many years’ experience they have. The Nursing career is not a bed of roses, but a bed of patience?

For those who hope to apply to fill these empty nursing posts, almost all nursing staff are on contracts under a system introduced in 2004 to bring together different pay scales across the NHS.

A newly qualified Nurse under 2 years’ experience earns £27,055 in England, topped up by London Weighting Allowance rising to £32,934 after four (4) years. A Senior Nurse – Matron earns £48,526 to £54,619 after five (5) years.

RCN Nursing Union is asking for 19 % pay rise. This Union wants a rise of rise of 4.5% above the Retail Price Index (RPI); a pay hike of 19.2%, which the Government says is unaffordable and unacceptable. National inflation is currently at 12.6%,

The Government accepted the Independent Pay Service body recommendation for 1 million workers a pay rise of at least £1,400 this year equivalent around 4 to 5% for most nurses.

The Government also states that for every one (1) percent rise it costs £700 million taking the total demand to £10 billion or 6.5 % of the total NHS Budget.

When are some of the other Unions on strike?

Railways, 40 million RMT members –

Walk out on December 13-14; 16-17; January 3-4; 5-7, 2023.

Postal Workers, 120 million CMU members –

Walk out on November 30; December 1, 9, 11, 13-15; 17, 23-24.

Buses in London, Unite Members –

Almost 1000 bus drivers to stage a series of strikes for 10 intermittent days in December.

Teachers   750,000 NEU and NASUWT members –

Balloting for strike action voting closing on 9 and 13th January 2023.

Emergency Services – 15 million Ambulance Staff/ Para Medic members, also thinking of strike action, of some sort, perhaps, a work to rule.

Will strikes cripple Britain?

The Unions believe that the wave of strikes hitting “every sector of the economy” this winter, will help get a square deal for their members.

But neither the Government, nor the General Public believe, that other being greatly inconvenienced, they will not be “broken”?

The Government wants a fair deal to keep the economy afloat; while “what the people expect, is that they get at least a square meal in a round can,” this Christmas, at an affordable price.

Sri Lanka: Mahindagamanaya 3

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“We have not abandoned our people, neither will we do so.” ~ Mahinda Rajapaksa (Budget 2023, second reading debate)

The seminal event of the 2023 Budget cycle was not Budget 2023. The Budget was more good than bad, but too tepid overall to be an inflection point. The real stunner was the speech by Mahinda Rajapaksa during the second reading. To call it the first salvo of his Third Coming is no exaggeration.

The morning after he lost the 2015 presidential election, Mr. Rajapaksa returned to Medamulana, clung to a window in his ancestral pile, and blamed traitors and conspirators for his electoral loss. “We must remember they got their majority vote from Eelam,” he told his supporters. Sinhala-Buddhists, the true owners of the Motherland, have lost power which can be regained only by bringing the Rajapaksas back to power. That anti-democratic and racist interpretation of the 2015 presidential election would form the basis of Rajapaksa political platform for the next five years, starting with the Mahinda Sulanga rally in Nugegoda and ending in Gotabaya Rajapaksa’s historic victory.

Like that Count from Transylvania with nocturnal habits and strange appetites, the Rajapaksas won’t stay politically dead. And they can keep on returning so long as enough Sinhala-Buddhist voters wallow in minority phobia.

Traitors and Conspirators form a key thesis of Rajapaksa theory of politics. “It has been revealed who was behind the crisis,” Mahinda Rajapaksa said during the Budget debate. “The people will come to know more information in the near future. These elements are not letting this country rise. Instead they attempt to ensure the country’s downfall… It was their puppets who put on a show recently. The economic collapse was an organised act. They caused the destruction of the economy. As evidenced by past incidents, these groups have acted in the same manner every time the country was making progress.”

The corollary of the Traitors and Conspirators thesis is that the Rajapaksas never have to own their crimes, errors, and stupidities. It’s always someone else’s fault.

The debt crisis, and the resultant sovereign default, for instance, is the fault of the Sirisena-Wickremesinghe administration. That government took “the largest debt in the shortest period,” claimed Mr. Rajapaksa, prancing about on his moral high-horse.

The website factcheck.lk analysed the issue factually by comparing interest due to pre 2015 debt and  the increase in debt between 2015 to 2019. Accordingly, 117.6% of rupee debt and 59.3% of the dollar debt incurred under the Sirisena-Wickremesinghe administration was to service pre-2015 debt. So 89.8% of the total debt incurred by the ‘Good Governance’ administration was to pay the interest on the debt outstanding by 2015 (https://factcheck.lk/factcheck/deputy-unp-leader-ruwan-wijewardene-does-no-disservice-to-past-debt-servicing-costs/).

A few days before the 2019 presidential election, then finance minister Mangala Samaraweera asked candidate Gotabaya Rajapaksa how he was going to make good the revenues that’ll be lost from his tax cuts. Mr. Rajapaksa didn’t bother to answer because most of the electorate didn’t bother with facts. So the Family slashed and burned the country’s tax base. In one year, tax revenue fell from 11.6% of GDP in 2019 to 8.1% of the GDP in 2020. The money lost to the nation was pocketed by business and professional classes. The ordinary masses who bear the brunt of indirect taxes got nothing. Though VAT was slashed from 15% to 8%, inflation increased in January and February, proving that the benefit of VAT reduction accrued not to poor people but to business owners.

Having gutted national income, the Rajapaksas increased expenditure, burning the candle at both ends. President Gotabaya’s project of providing state employment to 50,000 unemployed graduates and 100,000 Samurdi recipients without OL was quintessential Rajapaksa economics. The military was involved in selecting candidates and training them. Today most of them waste their time and public money in various state institutions. In these already overstaffed entities, there’s no work for 150,000 new employees.

The SLPP’s Rise from the Ashes campaign had to be abandoned because enough Lankans still remember that the ashes are from the fires the Rajapaksas themselves lit and stoked. Meatier issues, more incendiary slogans are needed. Mr. Rajapaksa, in his budget debate speech, gave a hint about the way ahead. No selling of national assets, he proclaimed, not even loss-making ones. Selling national assets equals undermining national security equals betraying the nation. Rata, Jathiya, Agama, Ape Hamuduruwane, Rana Wiruwo, Janathava… Terrify the country into strangling itself with the Kurahan satakaya, again.

Factually-challenged Counts of Medamulana

In 2007 December, Mahinda Rajapaksa, with an entourage of 35, paid a private visit to the UK to watch the graduation of his second son from the Dartmouth Naval College. When the president demanded that not only he but his entourage be accommodated on the return Sri Lankan flight of his choice, the management said a polite no. It was the height of the holiday season. Acceding to the presidential request would have meant offloading 28 paid business class passengers. A furious president chartered a Mihin Lanka flight. Doubtless, like Basil Rajapaksa’s recent bill at the airport lounge, people paid the price. (Was Prof. GL Peiris, now reborn as anti-corruption crusader, a part of that entourage, one wonders).

Emirates-appointed Sri Lankan CEO, Peter Hill, would have thought he was making a sensible business decision. In fact, he was causing lèse majesté. When Mr. Hill’s work visa came up for renewal in January 2008, a petulant government said no, and demanded a greater say in the management of Sri Lankan. Emirates refused and opted not to renew its 10 year contract. (Incidentally Mr Hill returned in September 2022 to manage a local private airline).

Since the Chandrika Bandaranaike Kumaratunga government sold a 44% stake of Sri Lankan to Emirates for 70million dollars, the airline’s fortunes had revived. By 2007/8 its accumulated profit was 9.29billion rupees. In 2007 alone, it made a net profit of 5billion rupees. Then Sri Lankan fell back into the patriotic Sri Lankan hands of the Rajapaksas. In the first year itself, the airline made a loss of around 9billion rupees. By the end of 2021, the accumulated loss was 372billion rupees.

Is Sri Lankan national asset or national liability?

In the year 2020-21, Sri Lankan loss was a staggering 45billion rupees. If that money had been spent on social welfare, the 56,000 children facing severe acute malnutrition and the 2.43million people who are on the verge of malnutrition (according to the WFP) could have been fed not just adequately but sumptuously. That then is the real choice.

At a Himalayan 860billion rupees, the losses of SOEs in the first four months of 2022 is higher than their total loss in 2021. So, do we pump more money into a host of SOEs or do we help the wretched of Sri Lanka to survive? And when the Rajapaksas wage the patriotic battle to save the nation by saving Sri Lankan, where would the Opposition be?

In his budget debate speech Mahinda Rajapaksa said, “There is no benefit to the people by merely presenting the budget or by inciting them.” That was a double swipe, at Ranil Wickremesinghe for just presenting the budget without giving relief to the people and at the opposition for inciting the people.

Mr. Rajapaksa’s claim that Budget 2023 does not provide relief is as specious as his other claims. True, defence costs should have been pruned and were not. Yet, the money allocated to education and health exceeds money allocated to defence (including police), possibly for the first time in a long time. Total defence allocation is 539billion rupees while the total allocation for health and education is 554billion rupees. The allocation for social welfare is 852billion rupees amounting to 10.08% of the total budget. These are positive developments, despite the Budget’s pie-in-the-sky estimates and silly contradictions.

That the Rajapaksas should ignore these positives is understandable. In their eyes, only they can be praised since We did the best work (Api thamai hondatama kale). Unfortunately instead of adopting a nuanced approach, the Opposition too has opted to be blind to these positives. Ranil Wickremesinghe should be criticised for trying to clamp down on constitutionally guaranteed right to peaceful protest. But do his many political wrongs justify voting against the budget wholesale, relief measures and all?

            Has the Opposition decided to oppose anything Ranil Wickremesinghe does, simply because he does it? How else can they accuse him of being right wing/reactionary and then slam him for embracing progressive taxation? It is one thing to question how the tax money would be spent, as the Supreme Court did, when it gave its nod to the Inland Revenue Amendment Bill, stating that “corruption and wastage of public finance must be addressed and violators dealt according to law irrespective of standing.” But it is another thing to scream that people are being taxed. People were always taxed indirectly, with the lower income groups bearing the brunt. The new tax policies tries to right that wrong, a little.

            As world slips into recession, the issue of fair taxation has assumed a global importance. The General Assembly recently mandated the UN to play a global tax leadership role. The IMF has come out in favour of Latin American nations’ adoption of progressive taxation. As Nigel Chalk, a top IMF official said, in backing Chile’s ambitious tax reforms (including a capital income tax), “A tax reform that generates more revenue, and puts more money in social systems, in supporting lower income families, supporting middle class, that’s definitely a more progressive system…” (Reuter – 2.11.22). It’s one thing to savagely criticise increasing Cess on paper (thus school books), quite another thing to oppose re-imposition PAYE taxes. If Ranil Wickremesinghe actually brings in a wealth tax, will the Opposition oppose that too? Where will this irrationality end? In an alliance led by the Rajapaksas to save the Motherland by saving the SOEs?

When the bough breaks

There was no danger of Budget 2023 being defeated. Had that happened, the parliament would have stood dissolved. And the SLPP is not ready to face elections, not yet. It is for that, and no other reason, did the Rajapaksa-led SLPP support the budget.

The alliance between Ranil Wickremesinghe and the Rajapaksas is an opportune one, like most political deals. Both sides have something to gain from it. Each side is using the other. The Rajapaksas do not enjoy playing second fiddle to anyone and would cut the ground under Ranil Wickremesinghe as soon as they feel strong enough. Mr. Wickremesinghe would do the same to the Rajapaksas when he can.

So once the use value diminishes, the Wickremesinghe-Rajapaksa alliance will fall apart. That is a political inevitability. The only question is who cuts whose throat first.

The Rajapaksas are the greatest threat to Sri Lanka’s democratic health, economic sanity, and public well being. As was amply proven in the last two plus years, they are structurally blind when it comes to anything other than familial interests, in the narrowest possible sense. Just one example would suffice. Had the preferential vote contest between Nipuna Ranawaka and Dulles Alahapperuma (not to mention Kanchana Wijesekara) been better managed, the Rajapaksas could have ensured their nephew’s victory without antagonising two faithful acolytes who had served them well for decades. But such restraint is alien to them. Like Vellupillai Pirapaharan, extremist responses are in their political blood.

So the Rajapaksas in power or in a position of serious influence would retard the task of getting Sri Lanka out of this abyss of Rajapaksa creation. Currently, they have no control over economic policy even though they can win some concessions, like the appointment of state ministers. Even that influence will diminish when President Wickremesinghe becomes constitutionally able to dissolve the parliament at will.

Which is why the Rajapaksas will look for an issue that can set the country on fire. It could be the restructuring of the SOEs. It could be a wealth tax. Or a proposal to solve the ethnic problem, or even a prelude to such a solution, such as the full implementation of the 13th Amendment or returning military-occupied North Eastern lands their owners. If none of these happen, there will be the suffering of the masses which is not likely to abate for a while.

The Rajapaksas probably know that any attempt to dress as economic saviours will not carry conviction. But if the Motherland is in danger, if international conspiracies are afoot, if traitors are at work, then the patriotic banner can be unfurled. Mahindagamanaya 3 will not be different to Mahindagamanaya 1 or 2. The Family will divide everyone else, appeal to the worst in Sinhala-Buddhists, and encourage reactive extremism in minorities.

The Rajapaksas are focused on regaining power. Ranil Wickremesinghe, Sajith Premadasa, and Anura Kumara Dissanayake are preoccupied with hurts and resentment, pique and chagrin. By the time they see the common danger, the Kurahan satakaya might be close to throttling the nation, again.

Sri Lanka:  Correct The Price Distortion for A Sustainable Development – Part 3

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This is the third and final part of this series by the author, Click here and here to read previous parts -Editors

Excess Staff in the Public Service 

Compared to developed and developing countries, Sri Lanka has extensive public service, with about 1.5 million employees for a 22million population, which means one public servant for every 14 people and 19% of the country’s workforce. According to the Central Bank Statistical bulletin, 84.6% of the government tax revenue (Rs.1.1 trillion) of the year 20221 has been spent on public servants’ salaries and pensions, leaving little room for other recurrent expenditures and capital investments. This figure doesn’t reflect the salary bill of the semi-government institutions. Currently, there are 675,000 pensioners, and this number keeps increasing every year, and at a point, this will exceed the number of serving public servants. Most public sector workers have no sufficient work but enjoy the total salary and all other fringe benefits. If we estimate 40% is redundant, 40% of the Rs. 1.1 trillion (Rs.0.44 trillion) is a wasteful expenditure annually, which amounts to another massive subsidy for a privileged group who otherwise could have been unemployed.  If the government employs someone at the age of 18 years, serves for 42 years and lives for 81 years, the government will have to maintain him for 63 years. After his death, if the dependant lives for another 21 years, altogether government is committing to 84 years to obtain his services for 42 years. The above simple example is sufficient to understand the gravity of the problem created by the oversized public service.

 In 1990, recruitment to the public sector was frozen, and a voluntary retirement scheme (VRS) was introduced to reduce the size of the public service. Most of the excess cadre was unskilled, who couldn’t be employed anywhere else for that remuneration. Therefore, many did not agree to early retirement, which could have resulted in a low pension for the lifetime and dependents after their deaths. However, the opportunity availed under VRS was capitalised by essential categories such as nurses, engineers, accountants, science and mathematics teachers, and technicians of various fields, creating a vacuum of those skills in the public sector. The government was compelled to fill those vacancies again with qualified but inexperienced people while paying the pension for pre-mature retirees. In 1995, 2005, and 2015, the size of the government service jumped upward due to political reasons.

In 2022, in place of VRS, the government adopted a new approach. According to the circular issued by the Ministry of Finance, public sector employees can avail of no-pay leave to work abroad for a maximum of five years without affecting their seniority and annual increments. This has created great enthusiasm among the employees. However, unwanted cadres (unskilled) may face difficulties securing foreign jobs. Professionals in various fields have a good demand, and heads of departments may find it challenging to prevent them from obtaining five years’ leave. Like in 1990, a vacuum may create again in the essential cadres of public service, compelling the government to do new recruitments. As employees are not retiring under this scheme, vacant positions can’t be filled without creating additional cadres. If that happens, while the new cadre is in the service, employees on leave also shall accommodate after five years, doubling the burden. 

Instead of attempting to reduce the size of the government service in general, a scheme targeted towards unwanted cadres may produce better results. For instance, heads of institutions shall identify such people by name, and provisions of the circular shall apply only to them. Until they find foreign or private sector jobs during the five-year leave period, allow them to stay home with half the salary.  Half of the salary, overtime payments, electricity, telephone bills, and office space will be saved in that case. As a by-product, traffic congestion will be reduced, and the efficiency of the remaining workers will be improved.  Another solution is establishing a combined service for all SOEs, like in the public service. Then employees may be transferred to needy institutions from excess institutions without new recruitments. That would prevent unwarranted competition among institutions for salary and promotion schemes. Also, Politicians will not be able to overload the staff with unwanted cadres. Moreover, excess staff from SOEs may be transferred to public service vacancies instead of new recruitments. Further, in establishing new institutions and expanding the operation of existing institutions, excess staff may be transferred to those places without new recruitments.

Fraudulent Practices

According to various media reports, from time to time, governments write off unpaid taxes and duties from companies. In addition to the above-discussed futile expenditure, many public funds are being drained from public coffers due to the above tax alienation.  However, I don’t have data to highlight the seriousness of the issue.  But the importance of the problem can’t be underestimated. Even with the tax reduction in December 2019, the revenue loss was about Rs500 billion per annum, which continued until the tax revision in 2022. Unpaid accumulated indirect taxes, such as customs duties, excise duties, VAT, etc., are also being written off from time to time. Consumers pay indirect taxes, and companies are only tax collectors. Therefore, companies have no right to keep those; they should pay those to the government or return them to the consumers who paid. But governments have allowed companies to keep these silently, which amounts to fraud. Authorities are allowing tax evasion and accumulating unpaid taxes, compelling the government to costly borrowings to fill temporary gaps. Tax alienation, as well as allowing tax evasion, amounts to a significant subsidy in disguise to a few privileged/corrupt individuals and companies.

Poverty alleviation

The Samurdhi program was launched in 1995 and implemented over the last 28 years as the national poverty alleviation strategy. Conceptually, it has several components for sustainable poverty alleviation. (Income transfer, credit for self-employment, infrastructure rehabilitation, social welfare, awareness building, etc.). As of 2020, 35% of the households (1.8 million) were receiving Samurdi benefits, and another 800,000 were on the waiting list. Including them, it will come to 51% of the households in the country.  While the number of families below the official poverty line has come down to 4%, Sumurdhi relief recipients remained at a very high level of 35% of the total families. It has created a permanent dependency, and no one wants to get out of the program. There are many criticisms about the targeting of the benefits. While non-eligible families are receiving benefits, many eligible families have denied them. Also, there is no regular exit and entry mechanism for the benefits. The government spent 52.47 billion on samadhi relief payments in 2020, which accounts for 0.35 % of the GDP.

Under the Samurdhi banking system, assistance is extended for self-employment/micro-enterprises. But rarely someone comes out of poverty. While a large majority who can work receive the relief grant, the vulnerable without breadwinners in the family are receiving insufficient amounts to meet their basic needs. Self-employment is a mythical solution for most unskilled people. It will help only a few people with entrepreneurial skills and attitudes. Others must be employed for monthly or weekly wages to escape poverty.  

Most Samutdhi recipients can be easily diverted to an Employment Guarantee Program (public work /cash for works program) to maintain public properties, which are hitherto neglected due to a lack of funds. (Irrigation schemes, provincial and local authority roads, landscaping, schools, hospitals, etc., and various local government functions). The issue of targeting or selecting beneficiaries does not arise as only the unemployed, and the absolute poor will participate in such a program. Under such a scheme, the number seeking the Samurdhi relief grant will decrease drastically, and the public assets will be maintained.  Suppose a reasonable percentage of the above-discussed fruitless expenditure is saved through appropriate strategies. In that case, sufficient funds will be available to implement a National Employment Guarantee Scheme (cash for work) and adequate assistants to vulnerable families to alleviate absolute poverty.

 Conclusions

The above is a brief account of significant subsidies and wasteful expenditures, resulting in price distortion in the market and mal allocation of scarce resources. There may be many more such futile public expenditures contributing to the problem.  As people do not pay the actual economic costs for many things, they have gotten used to an artificial style of living, which is unaffordable to the overall economy. If we can correct a significant percentage of these distortions and unproductive spending, adequate resources can be generated to invest in a rapid growth phase and support the poor without many public debts. The government must allow SOEs to sell their products at a cost-reflective price with a reasonable profit margin, enabling them to sustain and invest further. The poor, who cannot afford market prices, should be supported sufficiently to satisfy their basic needs. Overall savings from economic reforms would be adequate for that purpose. However, cash grants will go to the wrong hands, like in the Samurdhi. Therefore, launching an employment guarantee scheme is more advisable and manageable. Then the cash grant should cover only vulnerable families. However, over the decades’ distortion of market prices and subsidies have been used as bait to lure voters, and now it is a structural issue, embracing the whole economy and the gamut of life, creating a cancerous effect. This needs far-reaching reforms, but such an attempt may backfire on the government. It shall be done with a cautious approach, step by step, with a holistic approach.

Concluded

Sri Lanka:  Correct The Price Distortion for A Sustainable Development – Part 2

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This is the second part of this series by the author, Click here to read the first part -Editors

Water Supply

Providing safe drinking water and improved sanitation services have been the government’s priority for many decades. In 1975 National Water Supply and Drainage Board (NWSDB) was established, and the responsibility was transferred to it. Before that, it was a local government function, and cost recovery was not considered an important issue. The local authorities provided Dug wells in rural areas, and the pipe-boned water supply was limited to urban areas. Their priority was to roadside public stand posts for free water, and the domestic connections were charged a nominal amount. Hence water was considered a free public good without a price.  Irrigation for agriculture is still a free public good with no price.

With the introduction of the Community Water Supply Projects, pipe-borne water supply was expanded to many rural areas, and today 58% of households have access to pipe-borne water. Gradually NWSDB expanded its operation to rural areas with high population density. The capital costs of projects are now shared 50:50 between the treasury and NWSDB. Still, domestic water is considered a government responsibility and only a part of the cost is recovered from the poor. Yet 25.8% of the total production falls under the non-revenue water category, which is put into the water supply system but not billed. This is mainly due to poor maintenance, leakages, and management issues such as water thefts, calculation errors, etc.

The average unit cost of producing potable water has increased from Rs.48.87 in 2020 to Rs. 60.63 in 2021 (Economynext 05.06.2022). According to the Water Tariff Revised in 2022, water is billed under 12 different categories for different purposes at different rates. Samurdhi beneficiaries are charged a nominal tariff of Rs.5.00 per unit for the first five units (5000Lt.), Rs. 10.00 per unit for the second 5 units, and Rs. 15.00 per unit for the following five units. Accordingly, 15,000 Lt. per month is highly subsidised for them, and the subsidy element (tariff below the cost of production) exists for up to 25 units (from 16to20 units Rs. 40 and 21 to 25 units Rs.58 per unit). In contrast, Domestic(other) Category consumers will have to pay four times higher than the Samurdhi recipients for the first five units (Rs. 20.00 per unit), and the subsidy element exists only for up to 15 units. Beyond that, an exceptionally high punitive tariff, which increases with the usage from Rs.86.00 up to Rs. 238 .00 per unit, is being changed.

There are four other categories where the tariff is much below the cost of production, namely, (a) Non-Samurdhi Tenement Gardens, (b)Public Stand Posts, (c)Schools, religious and charitable institutions, and (d) Local Authorities.  It means that out of 12 categories, 5 have a substantial subsidy. The tariff for the other seven categories (production-oriented) is much higher than the cost of production. In addition to the usage charge, a monthly service charge, increasing parallel to the consumption, is also levied from those categories. Therefore, the tariffs applicable to production-oriented and non-samurdhi household categories are punitive and discouraging. For instance, tariffs for the port and shipping, SOEs, BOI companies, and industries are Rs670, Rs.116, Rs.85, and Rs 82 per unit, respectively.

However, the NWSDB has demonstrated that it can recover a considerable portion of the subsidy cost through punitive tariffs from production-oriented and high-user domestic categories. According to the 2019 Annual Report, the losses for 2018 and 2019 were Rs. 1,176 and Rs. 580 million, respectively. According to the Economynext-05.06.2022, the NWSDB had posted a profit of 507 million rupees in 2020 but again lost 3,087 million in 2021, with salaries rising 19 per cent. If not for the salary increase, the NWSDB could have remained at least at the break-even point in 2021. With the tariff revision in 2022, it may reach the break-even point. Unlike other SOEs, NWSDB delivers essential public goods without a massive loss. This is mainly due to the capital costs subsidy granted by the treasury and the tariff structure to charge more from whom it is affordable to pay. But NWSDB is also overstaffed, and remunerations are relatively high.

Due to the scattered nature of housing and settlements, the capital cost of water distribution in rural settlements is very high. Many rural water supply schemes are found in hilly terrain in the wet zone, where water sources are abundantly available in good equality. Still, due to the hilly terrain, the capital cost of the distribution network is high. But in contrast, drinking water is a critical issue in the dry zone, covering about 70% of the country’s land area. This is the area chronic kidney disease is prevalent and suspected that the cause is poor-quality drinking water. Unlike in the wet zone, water sources are not found easily, and the quality is also unacceptable. Dry zone communities face many inconveniences and opportunity costs, such as risky long-distance travel and consuming many hours of the day to collect a pot of drinking water. If they purchase potable water from the market, they will have to pay more than Rs.50.00 a litter. Under this scenario, selling one unit (1000 litres) of water for Rs. 5.00 or Rs 20.00 in the wet zone and urban areas can’t be justified on humanitarian grounds. Therefore, financing potable water for the dry zone is justifiable, even at a higher cost, considering social justice and equal access to safe water. Further, the NWSDB must take serious action to reduce the 25.8% non-revenue water supply to a technically acceptable minimum level to increase its revenue. Currently, six tariff categories are below the cost of production, which seems highly irrational.

Instead of ad-hoc political decisions to revise the tariff for electricity and water from time to time, it is more logical to commission an in-depth study to restructure the tariffs to make water and electricity prices affordable to domestic users, discourage excessive unproductive use of subsidised products and remove punitive tariffs from the production-oriented categories.

Aviation

The national carrier rebranded as Sri Lankan in 1998 following its partial acquisition by Emirates. In 2008, the government re-acquired all the shares and management rights from Emirates. Then the accumulated profit of Sri Lankan was Rs. 9.288 billion (Wikipedia). In any case, Sri Lankan was not a burden to the treasury; instead, a share of the profit was paid to the treasury from time to time. It was revealed at the COPE meeting in July 2022 that the loss of the Sri Lankan as of 31 March 2021 from the day it was taken over from the Emirates was 372 billion, and the daily loss is about Rs 84 million.  Mihinlanka, which commenced its business in 2007, also amalgamated later with Sri Lankan with an accumulated loss of Rs 13 billion.  In 2020 Sri Lankan’s debt obligation exceeded Rs 372 billion. Also, its net worth was negative Rs.262 billion. Most of the above debts are to the Bank of Ceylon, the People’s Bank, and the CPC. Further, it had sovereign guaranteed internationally issued bonds worth UDS$ 175 million. If the government declares insolvent or shuts down the airline, the two banks and the CPC must write off all debts. This will severely affect the two banks’ liquidity, sustainability, and profit. The CPC is also heavily indebted to the above two banks. So eventually, that burden also will pass to two banks. The government owns two banks, and finally, all these responsibilities fall on the shoulders of the taxpayers. Moreover, the government could face multiple jurisdictions worldwide regarding the non-settlement of foreign liabilities.

Subsidising essential services is understandable. But subsidising foreign travel by affluent Sri Lankan citizens and foreigners has no meaning for the taxpayers. More than 99% of taxpayers do not benefit from this colossal subsidy. Many airlines provide services from and to Colombo to many destinations, even at a lower price than Sri Lankan. So, Sri Lankan does not fill any service gap too. If there is any justification for continuing the operation of Sri Lankan with subsidies, it would be to support tourism and strengthen linkages with foreign economies. In any case, earning from tourism cannot compensate for such a colossal loss/subsidy. It may be possible to justify the operation of a national carrier for national pride. If so, the airline must be restructured and scale down its operation to match that intention without a loss, at least on a cost-recovery basis.

 However, the establishment of Mihinlanka Airlines, re-acquiring Sri Lankan from the Emirates, and pumping public funds to Sri Lankan to expand its operation without a well-thought business plan are economic crimes for which the decision makers are responsible.

 Lose-Making SOEs

Subsidising the losses of state-owned enterprises (SOEs) and selling their products below the cost of production also amounts to direct subsidies to their employees and indirect subsidies to consumers while distorting the market prices. Sri Lanka has 527 SOEs. Of which 52 have been classified as “Strategically Important “enterprises by the general treasury. But some strategic enterprises, which are involved in purely commercial activities, such as CEB, CPC, CWE, CTB, Sri Lankan, Hotel Development Lanka Ltd, etc., have been running as loss-making enterprises for many years.

 Out of the non-strategic enterprises, 287 SOEs are also commercial ventures that can be run more efficiently by the private sector. According to the information available from the Department of Public Enterprise, out of 527 entities, only 57 are self-funding. In 2019, the total losses sustained by 52 SOEs amounted to Rs 151 billion. According to the above information, budgetary support amounting to Rs. 49 billion has been provided to loss-making institutions, of which Rs. 20 billion was for recurrent expenditure. Most SOEs’ pricing is not cost-reflective and sells their goods and services below the cost of production(subsidising). Perhaps, if the price becomes cost reflective, their products may be unaffordable to the people because the cost of production is very high due to inefficient management, wastage, and corruption.

 The private sector may produce those at a lesser cost resulting in lower selling prices and tax revenue for the government. According to the Advocata research team, the total accumulated loss of strategic SOEs from2006 from to 2020 amounted to Rs 1.2 trillion. As per the Public Finance Data, the top five losers, namely, CPC (Rs.628 bl.), Sri Lankan (Rs.248 bl.), CEB(Rs.47 bl.), Airport and Aviation Services (Rs.6 bl.), and SLTB (Rs.1 bl.) have recorded a total loss of 930 billion for the first four months of 2022. The government revenue for the same period is only Rs 543.6 billion. SLTB has a loss of Rs.1 billion in providing transport facilities for many middle- and low-income commuters. But Sri Lankan has a loss of 248bl., which provides aviation facilities to a minimal number of well-to-do Sri Lankans and foreigners.

When SOEs in short of funds or on the verge of bankruptcy, they do not follow the due process to borrow, liquidate or re-structure the business. They borrow inputs from other SOEs or borrow money from state-owned commercial banks. But it is done not on the strength of their balance sheets but at the request of the treasury, sometimes on verbal instructions, even without a treasury guarantee.  They continued to do so for many years. For instance, Sri Lankan, GCR, and CEB borrow their inputs from the CPC and keep accumulating debts.  The CPC borrows from the Peoples Bank and Bank of Ceylon to fill that gap. If CPC can’t borrow further due to cumulative outstanding debts, the treasury issues a long-term financial instrument to the CPC and passes the liability to the next generation. The CPC trade it and settle previous loans, and continues borrowing. This is a big cross-subsidy between SOEs. This amounts to a pyramid operation by the government. This can’t continue forever, and all resources will get exhausted and may collapse all institutions at once. It is advisable to allow major institutions to operate independently. Then who can sustain will sustain on its own strength. Others may get a boost to adopt sound management practices or restructure/privatise/liquidate.

But trade unions and politicians argue that those enterprises should come under state ownership to ensure the national interest and to prevent exploitation. As discussed above, the exploitation of consumers and taxpayers is very high under state ownership. However, policymakers may have a genuine interest also to keep essential services like energy, transport, health, education, etc., under government control to ensure the national interest/national security, respond to disasters, and assist the poor. But there are many low-cost and efficient solutions to achieve such objectives.  For instance, petroleum infrastructure and regulatory power may be kept with the CPC while allowing the private sector to import and sell fuel competitively. Railway Department can own the railway infrastructure and regulatory authority, while the private sector is running trains. Such arrangements ensure the government’s control over the service while the advantage of quality and price competitiveness passes to the consumers.

The impact of subsidising the loss of SOEs is not trickledown down to the large segment of the population, the consumers, and the taxpayers. But some groups with a vested interest have developed private sector phobia and hold the taxpayers and consumers to ransom for their economic, political, and power gain. Employees want to keep those under state ownership to secure higher income and fringe benefits with little or no work. Trade union leaders want to maintain SOEs at any cost to demonstrate/excise the power and authority and strengthen linkages with the upper echelons of political parties. Politicians wish to use the employees and other resources free for election campaigns and give jobs to their supporters. Further, they can support campaign funders by appointing them to management boards and promoting business linkages such as contracting, outsourcing, granting business permits, etc. Also, sometimes they can financially benefit by being involved in corrupt practices in procurement, service delivery, and recruitment.

But the public is happy if the quality of goods and services is satisfactory and reliable at a reasonable price, regardless of the ownership of the business. For instance, if a reasonably priced, reliable power supply is available, the customers don’t want to verify whether it is by the CEB or a private supplier. The customers don’t consider whether the fuel is from the CPC or Indian Oil Company if it is reliable, convenient and reasonably priced. But without knowing the facts, the taxpayers and the consumers also fight against the privatisation of loss-making entities.    

In the case of infrastructure or capital expenditure, passing the liability to the next generation is justifiable because they also become beneficiaries of those investments. But recurrent /consumption expenditure incurred by SOEs like SLTB, Sri Lankan, and Railways is only for the benefit and convenience of the present generation. Accumulating losses, defaulting and long-term borrowings for such expenses means passing the liability of luxurious consumption of the present generation (politicians, employees, trade unions) to the next generation, for which decision-makers have no rights. It is an unforgivable, very dangerous economic crime. If the private sector runs those commercial activities, the government can collect more revenue as taxes instead of subsidising the losses. Also, the government will have more time and resources to do its primary function, governing the country, which has been neglected hitherto by all governments.

To Be Continued

Biden nods to compromise in Ukraine

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The midterm elections in the US witnessed razor-thin races as Senate and House control hangs in the balance. But that didn’t discourage President Biden from holding a press conference on Wednesday to stake claim that the “giant red wave” didn’t happen. 

Biden said: “Democrats had a strong night.  And we lost fewer seats in the House of Representatives than any Democratic President’s first midterm election in the last 40 years.  And we had the best midterms for governors since 1986.” 

Biden, however, eschewed triumphalist rhetoric and committed “to continue to work across the aisle… (although) it’s not always easy.” 

For the world capitals, Biden’s remarks relating to Ukraine were the most keenly awaited segment. Succinctly put, Biden was far from emphatic that Republicans in control of the House now would be cooperative. 

He said: “I’m prepared to work with my Republican colleagues.  The American people have made clear, I think, that they expect Republicans to be prepared to work with me as well. In the area of foreign policy, I hope we’ll continue this bipartisan approach of confronting Russia’s aggression in Ukraine.” 

When asked whether US military aid to Ukraine will continue uninterrupted, Biden merely replied, “That is my expectation.” He contended that the US hasn’t given Ukraine “a black check” and only equipped Kiev to have “the rational ability to defend themselves.”

Biden had an impressive record as senator in coalition building in the Congress. But today, his bid for a second term as president comes in the way.  If he chooses to be a candidate in 2024, that would leave Republicans with no choice but oppose him viscerally — personally and politically.

Biden had some interesting comments on the announcement in Moscow earlier on Wednesday regarding Russian troop withdrawal in Kherson city. Biden said the Russian move was on expected lines and the interesting part is that Moscow waited till the midterms got over.

Biden avoided giving a direct answer when asked whether the Russian evacuation would give Kiev the leverage to begin peace negotiations with Moscow. But he didn’t refute such a line of thinking, either. Instead, Biden added that “at a minimum, it (evacuation) will lead to time for everyone to recalibrate their positions over the winter period. And it remainsto be seen whether or not there’ll be a judgment made as to whether or not Ukraine is prepared to compromise with Russia.” (Emphasis added.) 

Biden said that on the sidelines of the G20 summit at Bali (November 15-16), there there might be consultations with world leaders, although Putin himself was not going to be there. Indeed, some sort of diplomatic messaging is going on. In fact, the Kremlin spokesman Dmitry Peskov told Tass on Thursday that “It was decided that Russia will be represented by (foreign minister) Sergey Lavrov at the G20 summit.” 

Biden took a second question on Kherson developments to say furthermore that the Russian evacuation will not only help the sides to “lick their wounds” but “decide whether — what they’re going to do over the winter, and decide whether or not they’re going to compromise.” (Emphasis added.) 

Notably, Biden has spoken twice about “compromise” (read territorial concessions) by Kiev, which is a major shift from the US stance that the Russian forces should get out of Ukraine. Biden concluded: “That’s — that’s what’s going to happen, whether or not. I don’t know what they’re going to do.  And — but I do know one thing: We’re not going to tell them what they have to do.” 

Taken together, Biden’s remarks are consistent with the “scoop” by NBC News on Wednesday, citing informed sources, that during the National Security Advisor Jake Sullivan’s unannounced visit to Kiev last week, he studied Ukraine’s readiness for a diplomatic solution to the conflict. 

The NBC channel reported that Sullivan was exploring options for ending the conflict and the chance of starting negotiations and raised the need for a diplomatic settlement during meetings with Ukrainian authorities. It said some US and Western officials increasingly believe that neither Kiev nor Moscow can achieve all of their goals, and the winter slowdown in hostilities could provide a window of opportunity to start negotiations.

Interestingly, Kremlin-funded RT promptly picked up the NBC report and highlighted it. Russian Foreign Ministry spokesperson Maria Zakharova also chipped in commenting, “We are still open to negotiations, we have never refused them, we are ready to conduct them – taking, of course, into account the realities being established at the moment.”

The Russian authorities continue to maintain that the evacuation of their forces in Kherson stems purely out of security considerations. The onus has been put on the recommendation by Army General Sergey Surovikin, the commander of Russia’s military operation in Ukraine. The general claimed in a televised speech that the evacuation from Kherson  creates stronger defensive lines for the troops and will save the lives of soldiers and civilians. 

Suffice to say, Lavrov’s presence in Bali will be of pivotal importance. Presumably, he will have contacts with western counterparts. Indeed, Biden’s remarks about territorial compromise signal a sea change in the calculus. 

Also, Gen. Mark Milley, chairman of the Joint Chiefs of Staff, while opening a discussion with the Economic Club of New York on Wednesday about the possibility of peace between Ukraine and Russia, confirmed that there is indeed “a window of opportunity for negotiation” moving forward. 

The general urged, “When there’s an opportunity to negotiate, when peace can be achieved, seize it. Seize the moment.” To be sure, he spoke with an eye on the Russian military command. 

The backdrop is that the Democrats’ loss of control of the House of Representatives makes it difficult for them to freely promote the foreign policy line of the Biden administration, including assistance to Ukraine. Henceforth, Biden will have to negotiate decisions on Ukraine with the Republicans. This is one thing. 

Second, the cascading economic crisis in Europe holds explosive potential for political turmoil, especially if there is another refugee flow from Ukraine in the harsh winter conditions, which is a real possibility.

The blowback from sanctions against Russia has lethally wounded Europe, and bluster aside, there is really no replacement for the inexpensive, reliable, abundant Russian energy supplies via pipelines.

All this is becoming hugely consequential for western unity. The recent visit of German Chancellor Olaf Scholz to China shows that dissent is brewing.

Above all, the massive Russian mobilisation threatens to give a knockout blow to the Ukrainian military, but there is no appetite among Europeans for a confrontation with Russia.

The UK, Washington’s steadfast ally in Ukraine, also is under immense pressure to disengage and concentrate on the domestic crisis as the new government tackles a funding hole of the order of £50bn in the budget.

Going ahead, the notions of regime change in Moscow that Biden had once espoused publicly and the neocon project to “cancel” Russia has hit the wall and crumpled. That said, the US can draw comfort that the Russian pullout from the west of Dnieper implies that Moscow is not intending to make any move on Nikolaev, leave alone Odessa — at least, in the near term.

On the other hand, if the Ukrainian forces surge and occupy Kherson and threaten Crimea, it will pose a big challenge for the Biden Administration. From Biden’s remarks, the is confident that it has enough leverage in Kiev to ensure that there is no escalation.

For the present, it is premature to estimate that Moscow only took the bitter decision to abandon Kherson city, which was founded by a decree of Catherine the Great and is etched deeply in the Russian collective consciousness, with a reasonable certainty that Washington will restrain Kiev from “hot pursuit” of the retreating Russian army to the eastern banks of the Dnieper river.

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