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Can SL benefit from a recession?

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by Kumar David

It is perverse to extract benefits for ourselves from the misery of others – the advanced (rich) economies; but actually, the suggestions I make in today’s column do no harm to anyone. They are passive benefits. The first question though is, will there be a global recession? The World Bank in a recent (15 Sept) press release entitled “Risk of Global Recession in 2023 Rises Amid Simultaneous Rate Hikes” says: “As central banks across the world simultaneously hike interest rates in response to inflation, the world is edging toward a global recession in 2023 and a string of financial crises in emerging and developing economies that will do lasting harm. Central banks are raising interest rates with a synchronicity not seen for five decades—a trend that will continue next year. But this and other policy actions are insufficient to bring global inflation down. Investors expect 4% interest rate increases; 2% over 2021. Unless supply disruptions and labour-market pressures subside, this leaves global core inflation (excluding energy) at 5% in 2023— double the five-year average before the pandemic. To cut global inflation to a rate consistent with their targets, central banks need to raise interest rates by an additional 2%. If this is accompanied by financial-market stress, global GDP growth will slow to 0.5% in 2023 — a 0.4% contraction per capita which meets the technical definition of a global recession.

“Global growth is slowing sharply, with further slowing likely as more countries fall into recession. These trends will persist, with long-lasting consequences that are devastating for developing economies. To achieve low inflation, currency stability and faster growth, policymakers should shift their focus from reducing consumption to boosting production. Policies should generate more investment, improve productivity and raise capital allocation, which are all critical for growth and poverty reduction.

“The United States, China, and the Euro Area have been slowing sharply. Even a moderate hit could tip the global economy into recession. Experience of the 1970s, responses to the 1975 recession, subsequent stagflation, and the global recession of 1982 illustrate the risk of allowing inflation to remain elevated. Fiscal authorities need to calibrate the withdrawal of fiscal support measures while ensuring consistency with monetary-policy, but policymakers should put in place medium-term fiscal plans to provide targeted relief to vulnerable households”.

These extracts from the World Bank (WB) press-release are heavily abbreviated. Many other studies and reports too suggest that a recession is likely in 2023-24. Since I cannot quote a large number, I have limited myself to this WB source that carries credibility. For the purposes of this essay take it that interest rates and inflation will remain high, stock markets depressed, bond yields high and growth retarded for say five years. After that? Hard to say; the options are many.

What I have said so far is not new to those who track economic trends. It is background data for today’s column. A significant point however is that the strategy that is being adopted across the rich world to handle the problems that it creates are contradictory; it is a Janus-Faced strategy of loose fiscal policy side by side with tight monetary policy. A mutually contradictory problematic but unavoidable in the present global political, financial-economic, strategic and paradoxical energy related circumstances. Let me elaborate in a few words.

It’s easiest to use the US as a focal point. The Biden Administration finds it a matter of existential necessity to take stand against extremism (a lurch to racism, “election deniers”, reinvigorated Trumpism, electoral gerrymandering, a fundamentalist abortion surge in Republican controlled states and feminist outrage elsewhere, and a primitivist majority in the Supreme Court). Biden is seeking to survive by enhancing feel-good among the population. So the Administration is pumping money into pockets; fiscal stimulation a $1.9 trillion “American Rescue Plan” () and $370 billion “The Inflation Reduction Act” including tax credits and rebates for energy-efficient appliances, plug-in vehicles and renewable electricity. (Another part of this measure for Climate Change initiatives is bogged down for now by reactionary Democrats in Congress).

These Biden initiatives are inflationary and blatant fiscal stimulus. Fiscal stimulus is starkly in conflict with the tight monetary policy (high interest rates) that the FED is bent on in its attempt to bring US inflation down from a feared 8% to nearer the target rate of 2% per annum. The US dollar is rising across the world because of high FED rates and for other reasons such as the Ukraine war and political uncertainties, e.g. victory of neo-fascists in the Italian elections and strengthening of the far-right in France, Poland Hungary, Denmark and elsewhere in Europe. Both the FED’s actions and the said political factors should motivate tighter financial discipline. Instead we observe a crucial conflict between the fiscal and the monetary, further aggravated by West Germany’s imperative to pour money into consumer pockets to cope with energy bills during winter 2022 and 2023. Other EU countries will have to follow suit.

I have expended a few paragraphs on the trends circumscribing the global economy as it is essential background. The recent fashion in the writings of Lanka’s old left, broad left, Maoist and Fidel-loyalist left is to pour scorn on Ranil’s inadequacies which are legion. But Ranil is small change; what is needed is to understand the processes maturing in the innards of global capitalism and flesh it with analytical and empirical content. For example, the likelihood or otherwise of a decade of global capitalist durability, or alternatively, recession, deep-depression or depression. My few paragraphs are intended to alert readers to important issues in fiscal, monetary, financial and equity markets. (I have not even touched on one important issue, Lanka’s indebtedness to international capital markets). It is inattention to empirical data and detail among leftists that is undesirable. If empirical detail is disregarded and objectivity lost, all is lost. I will come back to these concerns again and again in future columns.

What is directly relevant to my topic today is how Sri Lanka can find spaces, crevices and loop-holes that it can to exploit to its benefit in midst of these stresses force upon the rich world. Since there will be money in the pockets of rich country middle, upper class and older consumers (a few hundred billion dollars) an obvious beneficiary can be our tourism sector. Ecotourism, cultural tourism and climate change related tourists are the sectors to watch for. The downside of reckless tourism – drugs and harmful sex tourism -are dangers to be alert to. We are familiar with employment generated remittances but SL expatriates too are (were) keen to inject funds into families to upgrade homes and open small businesses. A rush was visible in Jaffna soon after 2009 but choked on unbridled political corruption and rampant government racism.

These earnings have to be supplemented with a drive to expand the use of English in education. One has to be careful to encourage only UK English, not the American dialect to avoid snarl ups and to exploit the benefits of Lanka’s membership of the Commonwealth, one of the largest, and a still expanding association of nations. Other options such as permitting small property purchases by non-citizen individuals and non-resident expatriate families has also got to be examined.

Let me now comment on the big-capital picture. The world is awash with excess capital and now is a crucial opportunity to exploit access to large investment. It would be wise to channel investment into avenues that will be amenable to compliance with the role of the state in long term economic directions. This is tricky and a separate topic best left to another day. The point is that rising interest rates in the rich countries encourages money to move out of stocks, and there is some reluctance in the rich-world to invest in sovereign bonds and private equity, so there is a pool of big capital searching for investment openings overseas. To attract some of this as FDI requires tinkering with the exchange control mechanism and the exchange rate. Both the SL Central Bank and the government are well aware of the opportunities and perils; I mention it here only to slake the curiosity of my laymen readers. Everybody, government and CBSL are very cagey about flexibility in the exchange rate or reducing foreign currency restrictions!

Turning to the corruption theme, to attract large manufacturing investors and moderate sized investment in commercial farming (orchards for example) the biggest single disincentive is state protected corruption. Now allow me a politically incorrect remark: Retroactive capital punishment for the biggest crooks, the billion-dollar types, will be salutary. But sigh! It will never happen; who will touch the Rajapaksas or rogue Ministers and MPs? A minimum that can be done is to cultivate Lee Kwan Yew type morality in the public service – ruthless punishment of corrupt officials – and to install a Hong Kong style Independent Commission Against Corruption (ICAC) which in its best days prosecuted and imprisoned a Chief Executive the moment he stepped out of office and lost immunity.

One last point before I sign off is a briefing in the Economist of October 15 entitled ‘Mothering Invention’ about the role of the state in directing long-term economic policy. Dirigisme is a doctrine where the state plays a key policy role in setting long term economic policy. It is canvassed by the left internationally and in Sri Lanka. This Economist article provides considerable insight.

For access to the quoted World Bank text, Google (verb): “Will there be global economic crisis?” And click on the ‘Risk of Global Recession’ site that appears]. The compete

URL is: https://www.worldbank.org/en/news/press-release/2022/09/15/risk-of-global-recession-in-2023-rises-amid-simultaneous-rate-hikes#:~:text=WASHINGTON%2C%20September%2015%2C%202022%E2%80%94,lasting%20harm%2C%20according%20to%20a



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Partnering India without dependence

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President Dissanayake with Indian PM Modi

Indian Prime Minister Narendra Modi once again signaled the priority India places on Sri Lanka by swiftly dispatching a shipload of petrol following a telephone conversation with President Anura Kumara Dissanayake. The Indian Prime Minister’s gesture came at a cost to India, where there have been periodic supply constraints and regional imbalances in fuel distribution, even if not a countrywide shortage. Under Prime Minister Modi, India has demonstrated to Sri Lanka an abundance of goodwill, whether it be the USD 4 billion it extended in assistance to Sri Lanka when it faced international bankruptcy in 2022 or its support in the aftermath of the Ditwah cyclone disaster that affected large parts of the country four months ago. India’s assistance in 2022 was widely acknowledged as critical in stabilising Sri Lanka at a moment of acute crisis.

This record of assistance suggests that India sees Sri Lanka not merely as a neighbour but as a partner whose stability is in its own interest. In contrast to Sri Lanka’s roughly USD 90 billion economy, India’s USD 4,500 billion economy, growing at over 6 percent, underlines the vast asymmetry in economic scale and the importance of Sri Lanka engaging India. A study by the Germany-based Kiel Institute for the World Economy identifies Sri Lanka as the second most vulnerable country in the world to severe food price surges due to its heavy reliance on imported energy and fertilisers. Income per capita remains around the 2018 level after the economic collapse of 2022. The poverty level has risen sharply and includes a quarter of the population. These indicators underline the urgency of sustained economic recovery and the importance of external partnerships, including with India.

It is, however, important for Sri Lanka not to abdicate its own responsibilities for improving the lives of its people or become dependent and take this Indian assistance for granted. A long unresolved issue that Sri Lanka has been content to leave the burden to India concerns the approximately 90,000 Sri Lankan refugees who continue to live in India, many of them for over three decades. Only recently has a government leader, Minister Bimal Rathnayake, publicly acknowledged their existence and called on them to return. This is a reminder that even as Sri Lanka receives support, it must also take ownership of its own unfinished responsibilities.

Missing Investment

A missing factor in Sri Lanka’s economic development has long been the paucity of foreign investment. In the past this was due to political instability caused by internal conflict, weaknesses in the rule of law, and high levels of corruption. There are now significant improvements in this regard. There is now a window to attract investment from development partners, including India. In his discussions with President Dissanayake, Prime Minister Modi is reported to have referred to the British era oil storage tanks in Trincomalee. These were originally constructed to service the British naval fleet in the Indian Ocean. In 1987, under the Indo Lanka Peace Accord, Sri Lanka agreed to develop these tanks in partnership with India. A further agreement was signed in 2022 involving the Ceylon Petroleum Corporation and the Lanka Indian Oil Corporation to jointly develop the facility.

However, progress has been slow and the project remains only partially implemented. The value of these oil storage tanks has become clearer in the context of global energy uncertainty and tensions in the Middle East. Energy analysts have pointed out that strategic storage facilities can provide countries with greater resilience in times of supply disruption. The Trincomalee tanks could become a significant strategic asset not only for Sri Lanka but also for regional energy security. However, historical baggage continues to stand in the way of Sri Lanka’s deeper economic linkage with India. Both ancient and modern history shape perceptions on both sides.

The asymmetry in size and power between the two countries is a persistent concern within Sri Lanka. India is a regional power, while Sri Lanka is a small country. This imbalance creates both opportunities for partnership and anxieties about overdependence. The present government too has entered into economic and infrastructure agreements with India, but many of these have yet to move beyond initial stages. This has caused frustration to the Indian government, which sees its efforts to support Sri Lanka’s development as not being sufficiently appreciated or effectively utilised. From India’s perspective, delays and hesitation can appear as a lack of commitment. From Sri Lanka’s perspective, caution is often driven by domestic political sensitivities and concerns about sovereignty.

Power Imbalance

At the same time, global developments offer a cautionary lesson. The behaviour of major powers in the contemporary international system shows that states often act in their own interests, sometimes at the expense of smaller partners. What is being seen in the world today is that past friendships and commitments can be abandoned if a bigger and more powerful country can see an opportunity for itself. The plight of Denmark (Greenland) and Canada (51st state) give disturbing messages. Analysts in the field of International Relations frequently point out that power asymmetries shape outcomes in bilateral relations. As one widely cited observation by Lord Parlmeston, a 19th century prime minister of Great Britain is that “nations have no permanent friends or allies, they only have permanent interests.” While this may be an overly stark formulation, it captures an underlying reality that small states must navigate carefully.

For Sri Lanka, this means maintaining a balance. It needs to clearly acknowledge the partnership that India is offering in the area of economic development, as well as in education, connectivity, and technological advancement. India has extended scholarships, supported digital infrastructure, and promoted cross border links that can contribute to Sri Lanka’s long term growth. These are tangible benefits that should not be undervalued. At the same time, Sri Lanka needs to ensure that it does not become overly dependent on Indian largesse or drift into a position where it functions as an appendage of its much larger neighbour. Economic dependence can translate into political vulnerability if not carefully managed. The appropriate response is not to distance itself from India, but to broaden its partnerships. Engaging with a diverse range of countries and institutions can provide Sri Lanka with greater autonomy and resilience.

A hard headed assessment would recognise that India’s support is both genuine and interest driven. India has a clear stake in ensuring that Sri Lanka remains stable, prosperous, and aligned with its broader regional outlook. Sri Lanka needs to move forward with agreed projects such as the Trincomalee oil tanks, improve implementation capacity, and demonstrate reliability as a partner. This does not preclude it from actively seeking investment and cooperation from other partners in Asia and beyond. The path ahead is therefore one of balanced engagement. Sri Lanka can and should welcome India’s partnership while strengthening its own institutions, fulfilling its domestic responsibilities, and diversifying its external relations. This approach can transform a relationship shaped by asymmetry into one defined by mutual benefit and confidence.

by Jehan Perera

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The university student

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A file photo of a university students’ protest against private medical colleges

This Article is formed from listening to university students from across the country for two research initiatives, one on academic freedom and another on higher education policy. In speaking with students, the fears they carry could not be ignored. Students navigate university education, with anxieties about their future and fears that they and their university education are inadequate, all while managing their families’ daily struggles. I explore students’ anxieties and the extent to which we, the public, and higher education policies must take responsibility for their experiences.

The Neoliberal University

For decades, universities have been transforming. Neoliberal policies, promoted by the World Bank, have reduced public education expenditure and weakened the State’s commitment to public institutions. These policies frame individuals as responsible for their success and failure, minimising structural realities, such as poverty and precarity. They instrumentalise education, treat students as “products” for a “competitive’ job market, while education markets feed on students’ insecurities. Students are made to feel lacking in “soft skills”, or skills seemingly necessary to navigate classed-corporate structures, and lacking in technical skills, or those needed to operate technologies used within the private sector.

Student activists and, sometimes teachers, have challenged this worldview, demanding State commitment to free education. Governments sometimes yield but also fear the consequences of student politics and have long waged campaigns to discredit student activism. It is within this context that students pursue education.

Portrayal of students

A Peradeniya student told me student-organised events must meet “high standards”, because of the negative public perceptions of university students. I understood what she meant; I had heard of our ‘ungrateful’, ‘wasteful’, ‘unemployable’, and ‘entitled’ students. The media and decades of government propaganda have reinforced these depictions.

About 10 years ago, when government moves to privatise higher education were strong, a corporate executive, complaining about traffic caused by “yet another useless protest”, was unable to explain why they protested. News coverage, I realised, framed these protests as public inconveniences, rarely addressing students’ demands. A prominent advocate, of neoliberal educational policy, reinforced this narrative, saying “state university students make up just 10 percent of their cohorts”, gesturing dismissively as if to say their concerns were insignificant. Such language belittles student activists and youth, renders them voiceless and allows their concerns, such as classed worldviews, and access barriers to and privatisation of education, to be easily dismissed.

It is in this environment that the conception of the useless university student, fighting for no reason, has developed. Students must carry this misrepresentation, irrespective of their own involvement in activism.

Not being good enough

Attacks on free higher education and the absence of meaningful reforms designed to address students’ problems, now weigh on students’ minds. Students question whether their education is relevant and current, pointing to outdated equipment, software, and curricula. University administrators acknowledge these constraints, which reflect Sri Lanka’s ranking as one of the lowest in the world for the public funding of education and higher education.

Rarely has the World Bank, so influential in driving educational policy, highlighted the public funding crisis and, instead, emphasises technological deficiencies, the public sector’s “monopoly” of higher education and limited private sector involvement. It downplays the reality that few families can privately afford such funding arrangements.

Students are also bombarded with fee-levying programmes, promising skills and access to jobs, preying on students’ insecurities. Many, while struggling to make ends meet, enrol in off-campus pricy professional courses, such as in accountancy, marketing, or English.

The arts student

Some students worry their education is too theoretical and “Arts-focused.” A student from the University of Colombo described having to justify her decision to pursue an arts degree. The public, she said, saw this as a waste of her time and the country’s resources. She courageously wore this identity, yet questioned if she was, in fact, unemployable as she was being led to believe.

She does not, however, draw on the fact that arts education has long been the “cheap” option that governments have offered when pressured to expand higher education. While arts education may need fewer laboratories and equipment, they require adequate investments on teachers, strong on content and pedagogy, to closely engage with individual students; aspects of arts education which have systematically been disregarded.

As access broadens, particularly in the arts, more students from marginalised backgrounds have entered universities; students who may feel alien in systems aligned with corporate interests. Thus, students quite different from the classed conception of the “employable graduate,” whose education has systematically been under-funded, graduate from arts programmes frustrated, diffident, and ill-suited for jobs to which they are expected to aspire.

The dysfunctional university

Students voice criticisms of their teachers, as myopic, unworldly, and unfair. Their perspective reflects the universities’ culture of hierarchy and its intolerance of difference, on the one hand, and the weak institutional structures on the other. They are symptoms of years of neglect and attempts by governments to delegitimise universities, to shed themselves of the burden of funding higher education through anti-public sector rhetoric.

Some students, marginalised for being anti-rag, women, or ethnic minorities, feel an added layer of burdens. Anti-rag students, or more often, students who do not submit to university hierarchies, whether enforced by students or staff, are ostracised, demeaned and sometimes subjected to violence. Students unable to speak the institution’s dominant language face inadequate institutional support. Women describe being ignored and silenced in student union activities and left out of student leadership positions.

Furthermore, quality assurance processes rarely prioritise academic freedom or students’ right to exist as they wish, except when they complement the process of creating a desirable graduate for the job market. These processes focus on moulding professionals and technicians, as one would form clay, disregarding students’ anxieties from being alienated from themselves by such efforts.

Problems at home

Beyond the campus, parents face debt, illness, and precarious work. Students are acutely aware of these struggles. Some describe parents collapsing from the strain and sometimes leaving them to carry the family’s difficulties. A student described feeling guilty for being at the University while his family struggled to survive. To ease the burden on their families, students earn incomes by providing tuition, delivering food, and carrying out microbusinesses.

Tied to their concerns over having to depend on their families, is their fear of being “unemployable”, a term that places the blame of unemployment on students’ skill deficiencies. Little in this discourse connects the lack of decent work and jobs for them and their parents to the weak economy and job markets into which successive batches of graduates must transition. Much of the available jobs in the country are those that require little in the form of education, and those, too do little to provide a living wage. Students must, therefore, compete for a limited number and breadth of frankly not very desirable work. Yet, it is they who must feel the weight of unemployability.

Committing to students

Universities frequently fail to recognise students’ worries. Instead, we, coopt neoliberal discourses, telling students to become more marketable and competitive, do and learn more, be confident, improve English, learn to inhabit those classed spaces with ease; often without the support that should accompany these messages.

We expect these students, insecure and anxious, to think critically, and demonstrate curiosity and higher-order analyses. When they collapse under the pressure, universities respond by providing mental health services. While such services are needed, they risk individualising and pathologising systemic problems. They represent yet again the inherent flaws with solutions that emerge from neoliberal ideological positions that treat individuals as the source of all success and failure. Such perspectives are likely to reinforce students’ anxieties, rather than address them.

As Sri Lanka revisits education policy reforms, there is an opportunity to change our framings of education and to recognise these concerns of students as central to any policy. The state must renew its commitment to free education and move from the neoliberal logic that has guided successive reform efforts; we, as the public, must restore our hope and expectations from free education. Education across disciplines, the arts, as well as STEM (science, technology, engineering and mathematics), must be strengthened. Students’ freedom to inhabit university spaces as they wish, must be respected and protected by institutions. Education policies must be tied to broader economic and labour reforms that ensure families can safely earn a living wage and graduates can access a rich range of decent meaningful work.

(Shamala Kumar teaches at the University of Peradeniya)

Kuppi is a politics and pedagogy happening on the margins of the lecture hall that parodies, subverts, and simultaneously reaffirms social hierarchies.

by Shamala Kumar

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On the right track … as a solo artiste

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Mihiri: Worked with several top local band

Mihiri Chethana Gunawardena is certainly on the right track, in the music scene.

The plus factor, where Mihiri is concerned, is that she has music deeply rooted in her upbringing, and is now doing her thing in the Maldives.

Her father, Clifton Gunawardena, was a student of the legendary Premasiri Kemadasa and former rhythm guitarist of the Super 7 band.

Mihiri took to music, after her higher studies, and her first performance was with her father, while employed.

Mihiri Chethana Gunawardena

After eight years of balancing both worlds – working and music – she chose to follow her true calling and embraced music as her full-time profession.

Over the years, Mihiri has worked with some of the top bands in the local scene, including D Major, C Plus from Negombo, Heat with Aubrey, Mirage, D Zone Warehouse Project and Freeze.

In fact, she even put together her own band, Faith, in 2017, performing at numerous events, and weddings, before the Covid pandemic paused their journey.

What’s more, her singing career has taken her across borders –performing twice in Dhaka, Bangladesh, with the late Anil Bharathi and the late Roney Leitch, and multiple times in the Maldives, including a special New Year’s Eve performance with D Major.

In the Maldives, on a one-month contract

Last year, Mihiri was in Dubai, along with the group Knights, for the Ananda UAE 2025 dance.

She continues to grow as a solo artiste, now working closely with the renowned Wildfire guitarist Derek Wikramanayake, and performing, as a freelance musician, travelling around the world.

Right now, she is in the Maldives, on a one-month contract, marking a new chapter in her evolution as a solo vocalist.

On her return, she says, she hopes to create fresh cover songs and original music for her fans.

Mihiri believes in spreading joy and positivity through her singing, and peace and happiness for everyone around her, and for the world, through music.

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