Cabinet squabbles over rice ration cut, PM threatens to resign

(Excerpted from the Memoirs of a Cabinet Secretary by BP Peiris)

Within a couple of days, another emergency meeting of the Cabinet was summoned, again at the instance of four Ministers, to consider the question of restoring the cut of half a measure imposed on the rice ration. The suggestion was made that if the rice coupons were taken away from those who had paddy, there would be a saving of Rs 20 million and, if certain other Votes were cut, the budget could be balanced. Felix stood his ground. He said he was not convinced that depriving paddy owners of their rice coupons was a satisfactory alternative proposal. If any satisfactory proposal was made, he was prepared to restore the half measure; but Ministers had no alternative proposal.

Regarding the proposed cut on the Votes, he asked whether the Minister of Education was prepared to forego his teachers, the Minister of Health his new hospitals, and the Minister of Irrigation his new and continuing works on his schemes. The Ministers were not prepared to reduce their Votes. With this deadlock the Cabinet had no option but to let the reduced ration stand. Ministerial feelings were strained and the Cabinet atmosphere appeared to be fully charged for an explosion.

Two days later (August 6, 1962) another Cabinet meeting was summoned for 7 p.m. to consider the same question. This meeting went on for two hours. The Prime Minister arrived with a very long face and I sensed trouble. She asked the Ministers bluntly what they were going to do about the rice ration. One Minister raised the old argument about taking the coupons off paddy owners. This was taken up by other Ministers. It was argued contra that the people of the Southern province would be badly affected if the cut was enforced because the people along the coast existed on rice and had no money to buy flour.

Others argued that peasants existed on breadfruit, jak, manioc etc. and had no use for flour. Felix Dias was silent, so was the Prime Minister. A suggestion was made that the whole position be considered six months later. Felix stood his ground again and retorted that he had presented a budget for 12 months and not for six months. There was wrangling in the Cabinet and the Prime Minister was obviously very angry. It was also said that many backbenchers of the Parliamentary Group were against the move to cut the rice ration and would vote against the Government or abstain from voting. Four votes were sufficient to defeat the Government but the Minister of Labour informed the Cabinet that they had twelve votes against them.

The Prime Minister pushed her chair back in an angry mood. She said she would resign and asked the Ministers to choose her successor. I had, at this stage, to remind the Prime Minister that her resignation implied the resignation of her entire Cabinet and that the question of her successor had to be left to the Governor-General. I can well imagine the extreme limit of endurance and patience to which she must have been driven by the petty-fogging and almost schoolboyish conduct on the part of her Ministers. She left the meeting abruptly. I did so myself without speaking to the other Ministers. At that moment, I felt very sorry for her.

Members of the Government Parliamentary Group anticipated defeat and were nervous that if they voted against the restoration of the rice ration cut and if the Prime Minister resigned and asked for a dissolution and a general election, they would not be able to show their faces in their electorates. It was therefore said that, at the last moment, a large number of party members might jump the stile so that they might win their seats. We had to wait and see. This was August 7, 1962 and a vote on the second reading of the budget was not due to be taken till the 20th.

Felix Dias had a proposal. He suggested that as a poor man’s family of husband, wife and, say, six children did not use their entire race ration but sold the ration books to boutiques and co-operative societies, the Government should offer them Rs 24 for each book surrendered. As there was a racket in the Guaranteed Price Scheme where the same quantity of paddy was known to go through the mills three or four times and where the cultivator, hard pressed for money, was paid Rs 7 or Rs 8 when the Government Price was Rs 12 per bushel, Felix proposed that the government should buy the paddy direct from the cultivator at Rs 12.

He said this would eliminate the racket in rice coupons. It was again proposed to give a ration of paddy to cultivators and cut the relevant number of coupons off their books. Which was to be decided was not agreed upon, but Madam Prime Minister asked that the matter be kept secret as this was part of the budget, the debate on which was to commence on August 16. A Cabinet meeting had been summoned for August 15 and someone disclosed the proposals which were awaiting discussion to the ‘Daily News’, embarrassing Felix Dias and the entire Cabinet.

The Prime Minister canceled the meeting and summoned the Ministers to meet unofficially to discuss the situation arising from this publication. I was not aware of what happened at this meeting but it was clear that that feeling of a collectively responsible Cabinet was fast disappearing.

Felix R. Dias Bandaranaike

Without any Cabinet decision of which I was aware, Ilangaratna announced in the House that the cut in the rice ration would take effect on October 22. Ministers were acting independently of one another. There was no team spirit. There was wrangling and maneuvering within the Cabinet and Felix Dias was forced as Finance Minister, at an emergency meeting on August 23, to withdraw the cut of half a measure in the rice ration. The Minister had no option but to resign. The Prime Minister now had nobody in the Cabinet on whom she could rely. ‘The Times of Ceylon’ commented on what happened as follows:

“That the wrangle within the Cabinet has developed into a crisis of sorts has been evident for some time now, but it is necessary to remind the Government that the country is faced with an even bigger crisis, the grave economic crisis which Ministerial pooh-poohing can no longer conjure away. It is the latter crisis which should take precedence in the Cabinet room, so that some serious and concerted efforts may be made to devise short term and long term remedies. Instead, the public interest is made a sort of football to be kicked from one end of the Cabinet room to the other.

“We refer specifically to the unseemly dispute about the rice ration, a dispute which has been reflected in successive announcements, one canceling out the other. Whether it was difficulty in obtaining supplies or (as we believe) the critical state of our foreign assets that prompted the budget proposal to cut the ration, this was obviously a matter for the most anxious consideration of the Cabinet as a whole before a firm decision was reached and announced. But no sooner was the cut announced that there were second, third and fourth thoughts, not among members of the opposition but in the Cabinet itself with the vagaries of the ministerial wrangle reflected in successive conflicting public announcements.

“When he broke the fateful news of the cut in the budget speech on July 26th, the Finance Minister said it would be effective “as far as possible from next week”. Five days later a commnique was issued saying that the cut would be made from August 13th. On August 2nd, however, the Government made the cryptic announcement that the implementation would be “on a date to be fixed by the Cabinet”. On August 3rd, after an emergency meeting of the Cabinet, it was stoutly denied that the cut would be operative from August 27th.

“Blame was heaped on ‘the newspapers’ which, it was announced, ‘had sought to infer that the Government had revised two major policy decisions contained in the budget speech regarding the sales tax and the reduction of the rice ration. The Government has not deviated in policy on either’. On August 15th the Minister of Agriculture’s proposed alternative to the rice ration cut was given publicity in the Press. Next day, August 16th, the Finance Minister told Parliament, ‘I would like to state quite clearly that the proposal before the House, and on which I have any information to give the House, still remain exactly where they were. There are no changes whatsoever.’ And now, this week, the Food Minister intervenes to tell Parliament that there may be no ration cut at all.

“The public have surely had enough of this farce. It would he pure comedy were the economic plight of the country not so tragic. There is indeed a crisis facing the nation, not merely an unseemly Cabinet wrangle but an economic crisis which may reduce the country to bankruptcy. In that context the squabbles within the Cabinet are an affront to the population. We reported on Monday that negotiation for foreign aid is to be given top priority by the Government. To beg abroad is no solution to our home-made economic difficulties. We hope the Cabinet will, at least in the grave pass to which the government had pushed the country, show a greater sense of decorum and responsibility than has been evident in recent weeks.”

Felix Dias was succeeded as Minister of Finance by C. P. de Silva who took the portfolio in addition to his other duties, an impossible task for any one man. In the meantime, Felix went round the country attacking C. P.’s finance policy from public platforms. C. P. handed back his portfolio and was succeeded by Kalugalla. Felix started the old game again and attacked Kalugalla in public. It amazed me that a Cabinet composed of men like this could ever have taken charge of the country’s affairs and, having taken charge, could have continued as a body for so long.

Kalugalla now tried his hand at finding ways and means of bridging the budget deficit. His proposals, which were not prepared in the Treasury but by a friend of his in the Central Bank, were approved. He asked Cabinet approval to increase the maximum statutory limit of Treasury Bills from Rs 1,000 million by a further Rs 150 million. Felix Dias asked why this was at all necessary. The Minister had made his proposals for bridging the budget deficit – then why more Treasury Bills?

Ultimately the increase was approved. At a subsequent meeting, Kalugalla stated that the deficit would be Rs 217 million, that his calculations had been wrong and that by his proposals only Rs 60 million could be raised. He therefore proposed to impose further taxation on a public which was already taxed to the utmost. He was asked to bring his tax proposals before the Cabinet.

Up to May 1963, Kalugalla had no proposals to make. On May 6, Parliament was prorogued till July 17, amid strong protests by all parties of the Opposition. As a result, over one hundred items on the Order Paper lapsed. The real reason for the unusually long prorogation was that, if the six appointed members were ignored, the Government had only a slender majority of two.