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Govt warns of bringing back price controls amid sticky prices ahead of polls
ECONOMYNEXT –The government will be compelled to bring back price controls on some essential commodities as most traders have failed to slash their prices in line with the government’s cost reduction of fuel, energy, gas, and transport, Trade Minister Nalin Fernando said.
The plan is now considered days after the island nation slashed the electricity cost by an average of 22.5 percent while gradually reducing the prices of cooking gas and fuel in the last two consecutive months.
Despite the price reductions, the cost of essential foods has still been the same as when the prices of fuel, gas, electricity, and transport were at their peak, consumers say.
President Ranil Wickremesinghe’s government is in the process of reducing the prices of energy sources to slash overall cost of living.
The move comes ahead of a presidential poll possibly in early October which the island nation’s Election Commission is expected to declare next week.
The government in the past failed to maintain stable prices for essential goods through the state-owned Consumer Affairs Authority (CAA) despite imposing price controls. Such moves have led to hoarding of commodities and increased prices.
“The Consumer Affairs Authority lost the way on how to address these issues,” Trade Minister Fernando told reporters at a media briefing in Colombo on Friday (19).
“So now we are in the final stage of amending the Act and changing the laws. We should be able to table the amendments in the parliament in the next two weeks,” he said.
Fernando said the government is being questioned by consumers and media on why it cannot reduce the price of essential goods despite prices of diesel, electricity, gas, and transport being slashed.
“This week I have decided to take crucial decisions. I will be calling on all traders’ associations in the coming week,” he said.
“If they don’t reduce the prices in line with the relief they have got from the price reductions, we are compelled to bring back control prices on some commodities.”
Goods usually go off the shelf and black markets are created due to government price controls which prevent a market clearing price from being established.
The CAA had earlier made eggs, tinned fish, dhal, and wheat flour disappear from shelves with its price controls.
Classical economists describe this problem as unintended consequences of state interventions.
One state intervention to give a special privilege to one set of economic players may require two or more interventions to solve negative fallouts.
“I am not a minister to go ahead with controlled prices. But, if they don’t pass the relief the government has given them, we will definitely take a decision on this. With that, I believe we will be able to bring down the prices,” Fernando said.
Sri Lanka decided to abandon price controls in October 2021 after they created shortages and led to black markets.
Fernando said unfair market practices including not reducing the prices of essential goods, increasing the prices when raw material prices are increasing, and sellers earning exorbitant profits unethically still prevail.
Indian Prime Minister Shri Narendra Modi departed today (06) from Air Force Base Anuradhapura concluding his State visit to Sri Lanka. The Indian Premier embarked on a tour to Sri Lanka at the invitation from President Anura Kumara Disanayake.
This visit underscores the enduring relationship encapsulated by the theme “Friendship of Centuries, Commitment to a Prosperous Future,” further solidifying the bonds between India and Sri Lanka.
This marks Prime Minister Modi’s fourth visit to Sri Lanka, which has further enhanced the economic, cultural, and historical relations between the two nations, while also reinforcing their multifaceted partnership. This visit by the Indian Prime Minister reinforces Sri Lanka’s important role in India’s “Neighbourhood First Policy” and ‘MAHASAGAR’ vision concerning diplomatic relations.
This state visit is anticipated to yield significant results on various collaborative initiatives, fostering a path towards mutual growth and development. The citizens of Sri Lanka will soon be able to witness the fruitful outcomes of these partnerships, and Indian Prime Minister Shri Narendra Modi’s visit will mark a significant milestone in the government’s pursuit of sustainable development focused on the needs of the people.
Accompanying Indian Prime Minister Modi were Indian External Affairs Minister Dr. S. Jaishankar, National Security Advisor Ajit Doval, Foreign Secretary Vikram Misri and a delegation of senior officials from the Indian government.
[PMD]
Latest News
President Dissanayake and Indian PM Modi jointly commission upgraded Maho-Omanthai railway line & Maho-Anuradhapura railway signalling system
The upgraded Maho–Omanthai railway line and the newly installed Maho–Anuradhapura railway signalling system were officially commissioned by Indian Prime Minister Shri Narendra Modi and President Anura Kumara Disanayake today (06)
The Prime Minister of India is currently visiting Sri Lanka at the invitation of President Anura Kumara Disanayake, reinforcing the longstanding bond encapsulated in the theme “Friendship of Centuries Commitment to a Prosperous Future” between the two nations.
Highlighting one of the key aspects of this visit, the two leaders participated in these inaugural ceremonies. The President and the Prime Minister of India jointly unveiled the commemorative plaque and commissioned the railway line and signalling system.
The upgraded Maho-Omanthai Railway Line project was carried out with funding through the Indian Credit Line, totalling an investment of US$ 91.27 million. The Maho–Anuradhapura railway signalling system, established as a result of President Disanayake’s recent visit to India, was funded by the Indian Government at a cost of USD 14.89 million.
[PMD]
Latest News
Prime Minister Modi and President Dissanayake pay homage to the sacred Jaya Sri Maha Bodhi
Indian Prime Minister Shri Narendra Modi, currently on a State visit to Sri Lanka, along with President Anura Kumara Disanayake paid homage to the sacred Jaya Sri Maha Bodhi in Anuradhapura this morning (06) and received blessings.
Following his visit to the sacred site, Prime Minister Modi proceeded to the Udamaluwa, where he met with the Chief Incumbent of the Atamasthanadhipathi and Chief Sanghanayake of Nuwarakalaviya, Most Venerable Dr. Pallegama Hemarathana Nayaka Thera, for a cordial discussion.
During the meeting, the Prime Minister shared that relics of the Buddha were discovered in excavations conducted in his home state of Gujarat during the 1960s. He further stated that he would discuss with the President of Sri Lanka the possibility of exhibiting these sacred relics in Sri Lanka.
Responding to a request made by the Atamasthanadhipathi to develop Bodh Gaya as a spiritual city, Prime Minister Modi assured that he would take the necessary steps after discussions with President Disanayake and work towards making it a reality.
The Maha Sangha, led by the Atamasthanadhipathi, chanted Seth Pirith and invoked blessings on the Indian Prime Minister.
The Indian Prime Minister also left a commemorative note in the special guest book at the site. In addition, he formally declared open the newly constructed ‘Makara Thorana’ within the Jaya Sri Maha Bodhi premises.
The occasion was also attended by Chief Incumbent of the Ruwanweli Maha Seya Temple Ven. Ethalawetunawewe Gnanathilaka Thera and other Atamasthana Viharadhipathi Theras, Minister of Foreign Affairs, Foreign Employment and Tourism Vijitha Herath, Minister of Trade, Commerce, Food Security and Cooperative Development, Wasantha Samarasinghe, Minister of Health and Mass Media Dr. Nalinda Jayatissa, North Central Province Governor Wasantha Jinadasa, Indian High Commissioner Santosh Jha and others.
[PMD]
Indian Prime Minister Shri Narendra Modi concludes State Visit to Sri Lanka
President Dissanayake and Indian PM Modi jointly commission upgraded Maho-Omanthai railway line & Maho-Anuradhapura railway signalling system
Prime Minister Modi and President Dissanayake pay homage to the sacred Jaya Sri Maha Bodhi
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