Title : FOOD CRISIS: Government's Role

Date : Nov 25, 2021

Description :

Based on a News Article published in the ‘The Hindu’ on 25^th November 2021 on Page Number 7

 

Useful for UPSC CSE Prelims and Mains (GS Paper II)

• Sri Lankan President Ranil Wickremesinghe had recently declared an economic emergency to combat soaring food costs, a sinking currency, and rapidly diminishing foreign exchange reserves.

 

• The Public Security Ordinance on the Supply of Essential Goods was invoked to declare an emergency.

 

Factors to Blame for Sri Lanka's Economic Crisis:

 

• Tourism Industry underperforms: The coronavirus pandemic has wreaked havoc on the tourism industry, which accounts for about 10% of the country's GDP and generates foreign cash.
• As a result, foreign exchange reserves have fallen from over $7.5 billion in 2019 to roughly $2.8 billion in July 2021.
• Currency Depreciation: The amount of money that Sri Lankans have had to spend to purchase the foreign exchange needed to import products has increased as the supply of foreign exchange has dried up.
• The Sri Lankan currency has fallen by roughly 8% so far this year as a result of this.
• Rising Inflation: Even basic food supplies, such as sugar, dairy products, wheat, and medical supplies, are significantly reliant on imports in Sri Lanka.
• As a result, food prices have grown in lockstep with the rupee's depreciation.
• Reduced Foreign Currency Inflow: The epidemic has impacted all main sources of foreign exchange revenues, including exports, worker remittances, and so forth.
• Food scarcity: Sri Lanka's recent decision to prohibit the import of artificial fertilisers in favour of a "organic only" policy.
• This abrupt switch to organic fertilisers could have a significant influence on food output.

 

 

 

 

Measures Taken During an Emergency:

 

• The government can impose retail pricing for vital food goods and seize traders' stocks under the emergency laws.
• Authorities can hold people without warrants, confiscate property, enter and search any location, suspend laws, and issue directives that cannot be challenged in court under the emergency law.
• Officials who issue such instructions are also shielded from legal action.
• The military will be in charge of overseeing the measure, which provides officials the authority to ensure that critical commodities are sold at government-set prices.

 

The Move's Critics:

 

• The worry is that, given the current administration's proclivity for suffocating dissent, emergency measures will be utilised to suppress protests and other forms of democratic expression.
• Sri Lanka lacks a universal public distribution system or ration cards to ensure that basic items are distributed to all consumers.
• Current restrictions fail to address the country's basic economic challenge, and instead risk developing a black market.
• Concerns have been raised over the militarization of state institutions.
• Sri Lanka's economic emergency differs significantly from the Indian Constitution's financial emergency.

 

Indian Constitution declares a financial emergency under the following provisions:

 

• Article 360 authorises the president to declare a Financial Emergency if he believes a situation has emerged that jeopardises India's financial stability or credit in any portion of its territory.
• Approval by both Houses of Parliament and Time Limit: A proclamation proclaiming a financial emergency must be approved by both Houses of Parliament within two months of its issuance.
• The Financial Emergency, once approved by both chambers of Parliament, lasts indefinitely until it is cancelled.

 

The Consequences of a Financial Emergency:

 

• Extension of the Union's executive jurisdiction over the states' financial affairs.
• Salary and allowance reductions for all or any class of people working for the government.
• All money bills and other financial bills are reserved for consideration by the President once they have been passed by the State legislature.
• The President's directive to reduce the salaries and allowances of all or any class of persons serving the Union, including Supreme Court and High Court judges.

Tags : emergency, national emergency srilanka