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Ideal level of foreign reserves:

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A key to economic stability

“CBSL Governor Predicts USD 7 Billion Foreign Reserves by Year-End” was the headline featured on the front page of this newspaper last Wednesday, January 8, 2025. During a discussion on Derana TV, Governor Dr. Nandalal Weerasinghe highlighted that the country’s foreign reserves remained robust, noting, “If Sri Lanka could maintain USD 8 billion in reserves, it would create a strong buffer to meet foreign debt obligations effectively.”

Foreign reserves, comprising foreign currencies, gold, and other international assets held by a country’s central bank or monetary authority, play a critical role in ensuring macroeconomic stability. They serve as a buffer against external economic shocks, underpin currency stability, and instill confidence in a country’s financial system. However, the question of what constitutes the “ideal” level of foreign reserves is complex, involving trade-offs between economic efficiency, opportunity costs, and risk management.

The Importance of Foreign Reserves

Foreign reserves are used to stabilize the national currency by intervening in the foreign exchange market. By buying or selling foreign currencies, central banks can mitigate volatility and maintain exchange rate stability, which is crucial for trade and investment. Countries rely on reserves to meet external debt obligations and finance imports of essential goods, such as food, energy, and medicine. Inadequate reserves can lead to default or economic crises, as seen in countries like Sri Lanka during recent years. Reserves act as a financial safety net during periods of capital outflows or sudden economic shocks, such as a global financial crisis or geopolitical instability. A robust reserve position signals economic resilience, attracting foreign direct investment (FDI) and maintaining credit ratings.

Determining the Ideal Level of Foreign Reserves

The ideal level of foreign reserves depends on a country’s unique economic and financial context, but several frameworks and guidelines have been developed to assess adequacy:

Traditional Metrics:

A widely accepted benchmark suggests reserves should cover at least three months of imports. This ensures the country can sustain essential imports during periods of economic uncertainty. Also, reserves should be sufficient to cover short-term external debt obligations, as a precaution against liquidity crises.

Modern Approaches:

The IMF recommends a more nuanced approach, considering factors like export income, external liabilities, and capital flow volatility. This metric is especially relevant for emerging economies prone to speculative capital movements. In countries with floating exchange rates, reserves should cover potential outflows from speculative attacks on the currency.

Both approaches involve opportunity Cost:

Holding foreign reserves incurs costs, as these funds could be invested in higher-yielding domestic projects. Excessive reserves may lead to inefficiencies, suggesting a balance is necessary between precautionary savings and productive investment.

Case Studies: Successes and Failures

China:

China maintains one of the world’s largest foreign reserve portfolios, over $3 trillion. This ensures exchange rate stability, supports trade policies, and positions China as a global economic powerhouse.

Singapore:

Singapore, despite its limited natural resources, maintains high reserve levels through disciplined fiscal policies and an export-driven economy. Its sovereign wealth fund, Temasek, ensures effective reserve utilization.

Sri Lanka:

A stark contrast is Sri Lanka, which experienced a severe reserve depletion, leading to defaults on foreign debt and import shortages. This crisis underscores the importance of adequate reserves for import and debt coverage.

India:

India has gradually built its reserves, maintaining a position above $500 billion. These reserves have proven instrumental in shielding the economy from global shocks, such as the COVID-19 pandemic and rising oil prices.

Lessons for Sri Lanka

Sri Lanka’s economic challenges in recent years, particularly its foreign exchange crisis in 2022, have highlighted the critical role of foreign reserves in ensuring economic stability. Once considered a growing economy with promising tourism, remittances, and agricultural exports, Sri Lanka faced a severe financial and social crisis due to inadequate reserve management and structural vulnerabilities. Understanding the principles of ideal foreign reserve levels through the lens of Sri Lanka’s experiences reveals crucial lessons for both the country and other developing nations.

Sri Lanka’s Foreign Reserve Crisis: Context and Causes

Debt-Fueled Growth:

Sri Lanka borrowed extensively for infrastructure projects without adequately assessing their economic viability or long-term returns. These projects, including the Hambantota Port and Magam Ruhunupura International Convention Centre, Mattala International Airport, Mahinda Rajapaksa International Cricket Stadium (aka Sooriyawewa International Cricket Stadium), and Colombo Lotus Tower, have failed to generate sufficient revenue to service the associated debt.

Tax Cuts and Governance Issues:

Significant tax cuts in 2019 eroded government revenues, forcing reliance on foreign borrowing. Additionally, political instability and mismanagement eroded investor confidence.

Overvalued Exchange Rate:

The Central Bank of Sri Lanka intervened heavily to maintain an artificially strong Sri Lankan rupee, depleting reserves.

Global Shocks:

The COVID-19 pandemic decimated tourism revenue, which historically contributed around 12% of GDP. A subsequent decline in remittances and rising global fuel prices further strained reserves.

Theoretical Insights Applied to Sri Lanka:

The traditional three-month import cover benchmark is critical. At its crisis peak, Sri Lanka’s reserves were below this level, leading to acute shortages of fuel, medicine, and food. Sri Lanka’s foreign debt-to-reserve ratio reached alarming levels, far exceeding manageable thresholds. Reserves must be sufficient to cover short-term debt obligations to prevent default and maintain investor confidence. The IMF’s Reserve Adequacy Metric (RAM), which considers external liabilities and potential capital flight, offers a more tailored framework for Sri Lanka. While accumulating reserves incurs opportunity costs, Sri Lanka’s experience shows the higher cost of reserve inadequacy. Future policies should strike a balance by maintaining adequate reserves while channeling surplus funds into high-return investments, such as export-oriented industries or renewable energy.

Challenges in Managing Foreign Reserves

Exchange Rate Dilemma:

Excessive intervention to stabilize currency can deplete reserves or create artificial currency valuations.

Inflation and Sterilization Costs:

High reserves may necessitate sterilization measures to control inflation, leading to additional costs for central banks.

Global Economic Trends:

Rising interest rates in advanced economies can cause capital outflows from emerging markets, straining reserves.

Sri Lanka’s recent economic struggles underscore the critical importance of maintaining adequate foreign reserves as a foundation for economic stability. The ideal level of reserves for Sri Lanka—or any nation—is not a fixed number but a dynamic balance tailored to the country’s unique economic structure, external vulnerabilities, and policy priorities. For Sri Lanka, this balance must address its structural challenges, including import dependency, high external debt, and exposure to global shocks.

The ideal level of foreign reserves should be sufficient to cover essential external obligations, cushion the economy against unexpected shocks, and foster long-term stability. At the same time, maintaining reserves must not impose excessive opportunity costs, such as diverting resources from productive domestic investments. Balancing these needs requires a forward-looking, flexible approach to reserve management that integrates both traditional metrics, such as import coverage and debt servicing, and modern considerations like capital flow volatility and geopolitical risks.

For Sri Lanka, the path to achieving an optimal reserve level lies in addressing its structural vulnerabilities and adopting globally proven strategies. This involves building reserves sustainably through export diversification, prudent fiscal policies, and multilateral cooperation. Export-oriented industries, remittance flows, and foreign direct investment (FDI) must be strengthened to ensure stable foreign exchange inflows. Additionally, restructuring external debt, ensuring fiscal discipline, and enhancing transparency in reserve management will bolster confidence among international stakeholders.

By learning from its past mistakes and integrating traditional economic frameworks with modern realities, Sri Lanka can rebuild its reserves and lay the groundwork for economic recovery, as suggested by the Central Bank Governor. A robust reserve position will not only stabilize the economy but also create a foundation for sustainable growth and resilience in the face of future challenges.

(The writer, a senior Chartered Accountant and professional banker, is Professor at SLIIT University, Malabe. He is also the author of the “Doing Social Research and Publishing Results”, a Springer publication (Singapore), and “Samaja Gaveshakaya (in Sinhala). The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the official policy or position of the institution he works for. He can be contacted at saliya.a@slit.lk and www.researcher.com)



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Aligning graduate output with labour market needs:Why national policy intervention essential

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A protest by unemployed graduates, demanding jobs, in Colombo. (File photo)

The lack of a committed and competent workforce is no longer a routine managerial complaint in Sri Lanka; it has become a defining national problem. Recent widely reported malpractices, in leading public institutions, have exposed the depth of this challenge. From a macro-economic perspective, large and persistent gaps exist between the competencies required to perform jobs effectively and the competency profiles of the existing workforce. The consequences are visible across the economy; we witness the key economic drivers, such as agriculture, energy, tourism, finance, and education, continue to underperform. This chronic condition is not a result of insufficient and incapable human capital, but of its persistent misalignment and misutilisation.

Economic development in any country is ultimately driven by the quality and relevance of human capital deployed within its key industries. In Sri Lanka, however, the education sector, particularly higher education, has been repeatedly criticised for its limited role in producing graduates, aligned with economic needs. This misalignment is often justified by higher education institutions on the grounds that their role is not to train graduates for specific jobs, but to produce broadly capable individuals who can perform in any work context. This position appears defensible in principle. Nevertheless, it remains problematic in practice, when economic sectors continue to underperform, and graduates struggle to find productive and relevant employment.

We were surprised to see a large number of university graduates appear at a recruitment interview for post of office labourer. Their intention was to secure a public sector job as a career path, nothing else. Alas, in another job placement interview, to select office clerks, several candidates presented degree qualifications, in statistics, and degree programmes, like archeology and geography, although a degree was not an entry requirement. When questioned, the common response was the difficulty of finding jobs, relevant to their degrees. Does this mean university degrees are worthless? Certainly not, if strategically channelled into relevant economic drivers, they could have contribute meaningfully to national development. For instance, an archeology degrees can be directed to tourism, heritage management, city planning, or spatial development. The tragedy is neither the policymakers, nor the university authorities bother about the time and money spent on graduates, which go in vein in an inappropriate job. No one bothers to assess the value of having such graduates directly channelled to relevant economic sectors. The graduates also may not be bothered to question the value they dilute in generic jobs.

Periodically, state university graduates, particularly those qualified through external degree programmes, flock to the streets, demanding government employment. In response, successive governments absorbed large numbers of graduates as school teachers and development officers. Whether such recruitment exercises were grounded in a systematic analysis of labour market demand, and sector-specific competency requirements, is dubious. The persistent deterioration in productivity and service quality, across key economic sectors, therefore, raises a fundamental question: Does strategic alignment between graduate output and labour market demand exist?

Systemic Weaknesses across Economic Sectors

We see deep structural weaknesses in nearly all segments of the Sri Lankan economy. Persistent deficiencies in public sector management; outdated agriculture management systems, relying on raw exports, weak preservation and production practices; structurally underdeveloped, unattractive tourism sector slow to adopt modern global approaches; an education system, from early childhood to higher education, showing more decline than progress; and digitalisation and e-governance initiatives repeatedly undermined by implementation failures, are some lapses to mention here.

However, during the colonial period, Sri Lanka was a prosperous country in terms of agro-economy and infrastructure development. During this period, conscious alignment between education and economic priorities was clearly visible. Schools taught subjects relevant to employment and livelihood opportunities, within the prevailing economic structure. Universities were primarily producing personnel to meet the clerical needs of the administration. University enrolment remained limited and targeted, ensuring graduate output remained broadly commensurate with labour market demand. The clarity of policies and orderly execution resulted in comparatively high employee–job fit, highly competent workforce, and better service and minimal graduate unemployment. Nevertheless, during the 76 years of post-independence, Sri Lanka has fallen from its economic stability and administrative orderliness, with rising problems in every sphere of economic, cultural, social, political and environmental segments.

Decoupling of Higher Education and Economic Needs

As we see with the expansion of higher education, graduate–job fit has gradually weakened. Both public and private higher education providers continue to offer academic programmes that are decoupled from economic development priorities. If I may bring an example, one of the most critical constraints to development in Sri Lanka is the persistent absence of timely and accurate data. Decisions, policies, and reforms frequently encounter implementation difficulties due to judgments based on outdated or inaccurate data. Organisations continue to operate in the absence of reliable information systems, admitting failures and presenting excuses. Notwithstanding the need, limited attention has been given to producing competent graduates, specialised in statistics, data analytics, and information management. National-level interventions to address this gap remain minimal, despite the urgent need for such expertise, within key government institutions, and the overall industry. A large number of agriculture degree holders pass out every year from state universities, but insufficient progress has been made in modernising agricultural products and value chains, although the agricultural sector is a key economic driver in the country. We often meet agricultural graduates holding general administrative positions, which are supposed to be handled by the management graduates. Agricultural specialised knowledge is underutilised, despite the potential to deploy this expertise in promoting agricultural development. It is noteworthy to consider that when graduates, trained in specific disciplines, enter irrelevant job markets, their competencies gradually erode, organisational performance declines, and additional costs are imposed on both organisations and the wider economy.

Misalignment of human capital constitutes a significant negative externality to national development. The government invests substantial public funds, generated through taxation, to provide free education with the expectation that graduates will contribute meaningfully to economic and social development. When graduates are misaligned in the job market, the resulting costs are borne by the economy and society at large. Consequently, the economy suffers from an absence of appropriate competencies, skills, and work attitudes. Poor judgments arising from capacity deficiencies, performance inefficiencies, and a lack of specialised human capital, generate externalities.

Why Strategic Alignment Matters

A clear and coherent national human capital development policy is required, to ensure strategic alignment with national economic drivers. Such a policy should be formulated by the government, through structured consultation with government institutions, public and private higher education providers, industry representatives across key economic sectors, as well as stakeholders from social groups, and environmental authorities. Universities should ensure that degree programmes are explicitly linked to sector-specific labour market demand, based on objective and systematic analysis rather than ad hoc decision-making. National competency frameworks, for major job categories, should be developed to guide curriculum design and enrolment planning. Of course, there are competency frameworks developed as initiatives of the governments time to time, but the issue is although policies were made, they were displaced, and still to search for.

Countries that have achieved rapid economic development consistently demonstrate strong strategic alignment between human capital development and policy initiatives, underscoring the importance of coordinated planning between education systems and national economic objectives. Singapore, for example, closely aligns higher education planning with labour market demand through initiatives, such as graduate employment surveys and industry-focused programmes. Universities, like the National University of Singapore and Nanyang Technological University, play a vital role in such initiatives.

It is important for us to explore the strategies of the other countries and benchmark best practices, adopting to the local context. If we, at least, take this need seriously, and plan, in the long term, strategic alignment between graduate output and labour market demand could fundamentally change Sri Lanka’s development outcomes. Where alignment exists, productivity improves, service delivery strengthens, and institutional accountability becomes unavoidable. Effective utilisation of discipline-specific graduates would curb skill erosion and reduce the recurring fiscal cost of graduate underemployment, misallocation and ad hoc public sector recruitment.

The Role of the Government and Policymakers

Policymakers must treat human capital development as a strategic mechanism, maintaining explicit alignment between higher education planning, economic development priorities, and labour market absorption capacity. Fragmented policy stewardship across ministries and agencies should be reduced through coordinated human capital governance mechanisms. Public administration, including sector-level managers, must actively articulate medium and long-term competency requirements of key economic drivers, and feed these requirements into higher education policy processes. Governments should shift from ad hoc graduate absorption practices towards planned workforce deployment strategies, ensuring that graduate output is absorbed into sectors where national productivity, innovation, and service delivery gains are most needed. In this effort, continuous policy dialogue, between education authorities, economic planners, and industry stakeholders, is essential to prevent symbolic alignment of graduate outputs while functional mismatches persist, if we aim for a prosperous nation.

Dr. Chani Imbulgoda (PhD) is a Senior Education Administrator, author, researcher, and lecturer with extensive experience in higher education governance and quality

assurance. She can be reached at cv5imbulgoda@gmail.com.

By Dr. Chani Imbulgoda

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The hidden world of wild elephants

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A tender moment as a baby elephant feeds safely beside its mother in the heart of the forest.

… Young photographer captures rare moments of love, survival and intelligence in Udawalawe National Park’s Wilderness

In the silent heart of the Udawalawe National Park’s wilderness, where dust rises gently beneath giant footsteps, and the afternoon sun burns across dry landscapes, young wildlife photographer Hashan Navodya waits patiently behind his camera lens.

For the 25-year-old final-year undergraduate student at the University of Jaffna, wildlife photography is not merely a hobby. It is a lifelong passion, a spiritual connection with nature, and a journey into the hidden emotional world of wild animals — especially elephants.

Originally from Gampaha District, Hashan’s fascination with wildlife began during childhood. While many children admired animals from afar, he spent countless hours observing them closely, studying their movements, behaviour and relationships.

“From a young age, I loved watching animals and understanding how they behave,” Hashan said. “At first, I visited zoos because that was the only way I could see wildlife. But later I realised that animals are most beautiful when they are free in their natural habitats.”

That realisation transformed his life.

His photography journey officially began in 2019, while studying at Bandaranayake College Gampaha, where he served as a photographer for the school media unit. Initially, he covered school functions and events before gradually moving into engagement shoots and event photography to improve his technical skills and earn money.

“Wildlife photography equipment is extremely expensive,” he explained. “I worked hard to save money for camera bodies and lenses because I knew this was what I truly wanted to do.”

Armed with determination and patience, Hashan eventually turned fully toward wildlife and nature photography.

His journey has since taken him deep into some of Sri Lanka’s most celebrated natural sanctuaries, including Yala National Park, Wilpattu National Park, Bundala National Park, Udawalawe National Park and Horton Plains National Park.

Among the countless wildlife encounters he has documented, elephants remain closest to his heart.

One of the most remarkable moments he captured unfolded during a harsh dry spell inside the wilderness.

A mother elephant, sensing water hidden beneath the cracked earth, carefully dug into the ground using her powerful trunk. Slowly, fresh underground water, rich in minerals and nutrients, emerged from beneath the dry soil.

Nearby stood her calf, patiently waiting.

“As the water appeared, the baby elephant quietly moved closer and drank beside its mother,” Hashan recalled.

Hashan Navodya

“It was such a powerful moment. It showed survival, intelligence, trust and the deep bond between them.”

The scene revealed more than instinct. It reflected generations of inherited knowledge passed from mother to calf — wisdom essential for survival in difficult conditions.

“These mineral-rich water sources are very important for young elephants, especially during dry periods,” he said. “Watching the mother carefully search and dig for water showed how intelligent elephants truly are.”

Another unforgettable moment, captured through his lens, revealed the softer, deeply emotional side of elephant life.

In a quiet corner of the forest, a baby elephant stood beneath its mother, gently drinking milk, while remaining sheltered under her protective body. The tenderness of the scene reflected unconditional care and the inseparable bond between mother and child.

“You can truly feel the love and protection in moments like that,” Hashan said. “In the wild, survival depends on the herd and, especially, on the mother’s care.”

His photographs also highlight the playful and emotional behaviour of elephants, particularly around water.

Inside the cooling waters of the Udawalawe National Park, Hashan observed a herd gathering together beneath the tropical heat. Young elephants splashed water joyfully over their bodies, using their trunks, while others sprayed water behind their ears to cool themselves.

“One young elephant was playing happily in the water while another carefully sprayed water around its ears as if enjoying a relaxing bath,” he said with a smile. “You can clearly see that elephants experience joy, comfort and emotion.”

The scenes reflected the social nature of elephants and their strong family bonds. Water is not simply essential for survival; it also becomes a place for interaction, play, relaxation and emotional connection within the herd.

For Hashan, wildlife photography offers far more than beautiful images.

“Wildlife gives me peace and happiness,” he said. “It reminds me that humans are also part of nature. Animals deserve freedom, respect and protection.”

His love for animals has even shaped his lifestyle choices.

“Because of my respect for wildlife, I avoid eating meat and fish,” he explained. “I want to live in a way that causes less harm to animals.”

Through every photograph, Hashan hopes to inspire others to appreciate Sri Lanka’s rich biodiversity and understand the importance of conservation.

“Wildlife is one of nature’s greatest treasures,” he said.

“Every animal plays an important role in maintaining the balance of nature. We must protect them and their habitats for future generations.”

His words carry the quiet conviction of someone who has spent long hours observing the rhythms of the wild — moments of struggle, affection, intelligence and harmony often unseen by the outside world.

As the golden light fades across Sri Lanka’s forests and grasslands, Hashan continues his search for nature’s untold stories, waiting patiently for another fleeting moment that reveals the extraordinary lives hidden within the wild.

“Nature still holds many beautiful stories waiting to be discovered,” he reflected. “Stories of survival, love, strength and harmony. Through my photographs, I hope people will understand why wildlife conservation matters so much.”

By Ifham Nizam

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Citizenship, Devolution, Land and Language: The Vicarious Legacies of SJV Chelvanayakam

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From left GG Ponnambalam, SJV Chelvanayakam and M. Tiruchelvam

SJV Chelvanayakam, the founder leader of the Ilankai Thamil Arasu Kadchi, aka Ceylon Tamil Federal Party, passed away 49 years ago on 26 April 1977. There were events in Sri Lanka and other parts of the world where Tamils live, to commemorate his memory and his contributions to Tamil society and politics. His legacy is most remembered for his espousal of the cause of federalism and his commitment to pursuing it solely through non-violent politics. Chelvanayakam’s political life spanned a full 30 years from his first election as MP for Kankesanthurai in 1947 until his death in 1977.

Under the rubric of federalism, Chelvanayakam formulated what he called the four basic demands of the Tamil speaking people, a political appellation he coined to encompass – the Sri Lankan Tamils, Sri Lankan Muslims and the hill country Tamils (Malaiyaka Tamils). The four demands included the restoration of the citizenship rights of the hill country Tamils; cessation of state sponsored land colonisation in the North and East; parity of status for the Sinhala and Tamil languages; and a system of regional autonomy to devolve power to the northern and eastern provinces.

High-minded Politics

Although the four basic demands that Chelvanayakam articulated were not directly delivered upon during his lifetime, they became part of the country’s political discourse and dynamic to such an extent that they had to be dealt with, one way or another, even after his death. So, we can call these posthumous developments as Chelvanayakam’s vicarious legacies. There is more to his legacy. He belonged to a category of Sri Lankans, Sinhalese, Tamils and Muslims, who took to politics, public life, public service, and even private business with a measure of high-mindedness that was almost temperamental and not at all contrived. Chelvanayakam personified high-minded politics. But he was not the only one. There were quite a few others in the 20th century. There have not been many since.

Born on 31 March 1898, Chelvanayakam was 49 years old when he entered parliament. He was not an upstart school dropout dashing into politics or coming straight out of the university, or even a hereditary claimant, but a self-made man, an accomplished lawyer, a King’s Counsel, later Queen’s Counsel, and was widely regarded as one of the finest civil lawyers of his generation. He was a serious man who took to politics seriously. Howard Wriggins, in his classic 1960 book, “Ceylon: Dilemmas of a New Nation”, called Chelvanayakam “the earnest Christian lawyer.”

Chelvanayakam’s professional standing, calm demeanour, his personal qualities of sincerity and honesty, and his friendships with men of the calibre of Sir Edward Jayatilleke KC (Chief Justice, 1950-52), H.V. Perera QC, P. Navaratnarajah, QC, and K.C. Thangarajah, were integral to his politics. The four of them were also mutual friends of Prime Minister SWRD Bandaranaike and they played a part in the celebrated consociational achievement in 1957, called the B-C Pact.

Chelvanayakam effortlessly combined elite consociationalism with grass roots politics and mass movements. He led the Federal Party both as a democratic organization and an open movement. Chelvanayakam and the Federal Party used parliament as their forum to present their case, the courts to fight for their rights, and took to organizing non-violent protests, political pilgrimages and satyagraha campaigns. He was imprisoned in Batticaloa, detained in Panagoda, and was placed under house arrest several times. His Alfred House Gardens neighbours in Colombo used to wonder why the government and the police were after him, of all people, and why wouldn’t they do something about his four boisterous, but studious, sons!

He was a rare politician who filed his own election petition when he was defeated in the 1952 election, his first as the leader of the Federal Party, and was rewarded with punitive damages by an exacting judge. He had to borrow money from Sir Edward Jayatilleke to pay damages. The common practice for losing candidates was to file vexatious petitions in the name of one of their supporters with no asset to pay legal costs. Chelvanayakam was too much of a principled man for that. As a matter of a different principle, the two old Left parties never challenged election losses in court, but Dr. Colvin R de Silva singled out Chelvanayakam’s uniqueness for praise in parliament, in the course of a debate on amendments to the country’s election laws in 1968.

Disenfranchisement & Disintegration

Although he became an MP in 1947, Chelvanayakam had been associated with GG Ponnambalam and the Tamil Congress Party for a number of years. GG was the flamboyant frontliner, SJV the quiet mainstay behind. Tamil politics at that time was all about representation. In fact, all politics in Sri Lanka has been all about representation all the time. It started when British colonial rulers began nominating local (Sinhala, Tamil, Muslim) representatives to quasi legislative bodies, and it became a contentious political matter after the introduction of universal franchise in 1931.

Communal representation was conveniently made to look ugly by those who themselves were politically communal. Indeed, under colonial rule, if not later too, Sri Lankans were a schizophrenic society where most Sinhalese, Tamils and Muslims were socially friendly, but politically communal. The underlying premise to the fight over representation was that British colonialists were not leaving in a hurry and they were there to stay and rule for a long time. Hence the jostling for positions under a foreign master. It was in this context that Ponnambalam made his celebrated 50-50 pitch for balanced representation between the Sinhalese, on the one hand, and all the others – Tamils, Muslims, Indian Tamils – combined on the other. It was a perfectly rational proposition, but it was also perfectly poor politics.

But independence came far sooner than expected. The Soulbury Constitution was set up not for a continuing colonial state, but as the constitution for an independent new Ceylon. So, the argument for balanced representation became irrelevant in the new circumstances. The new Soulbury Constitution was enacted in 1945, general elections were held in 1947, a new parliament was elected, and Ceylon became independent in 1948. SJV Chelvanayakam was among the seven Tamil Congress MPs elected to the first parliament led by GG Ponnambalam.

The Tamil Congress campaigned in the 1947 election against accepting the Soulbury Constitution and for a vaguely formulated mandate “to cooperate with any progressive Sinhalese party which would grant the Tamil their due rights.” But what these rights are was not specified. In a Feb. 5, 1946 speech in Jaffna, Ponnambalam specifically proposed “responsive cooperation between the communities” – not parties – and advocated “a social welfare policy” to benefit not only the poor masses of Tamils but also the large masses of the Sinhalese.

So, when Ponnambalam and four of the seven Tamil Congress MPs decided to join the government of DS Senanayake with Ponnambalam accepting the portfolio of the Minister of Industries, Industrial Research and Fisheries, they were opposed by Chelvanayakam and two other Tamil Congress MPs. The immediate context for this split was the Citizenship question that arose soon after independence when DS Senanayake’s UNP government introduced the Ceylon Citizenship Bill in parliament. The purpose and effect of the bill was to deprive the estate Tamils of Indian origin (then numbering about 780,000) of their citizenship. Previously the government had got parliament to enact the Elections Act to stipulate that only citizens can vote in national elections. In one stroke, the whole working population of the plantations was disenfranchised.

GG Ponnambalam and all seven Tamil Congress MPs voted against the two bills. Joining them in opposition were the six MPs from the Ceylon Indian Congress representing the Malaiyaka Tamils and 18 Sinhalese MPs from the Left Parties. The Citizenship Bill was passed in Parliament on 20 August 1948. Ponnambalam called it a dark day for Ceylon and accused Senanayake of racism. But less than a month later, on September 3, 1948, he joined the Senanayake cabinet as a prominent minister and the government’s principal defender in parliamentary debates. Dr. NM Perera once called Ponnambalam “the devil’s advocate from Jaffna.”

Chelvanayakam remained in the opposition with two of his Congress colleagues. A little over an year later, on December 18, 1949, Chelvanayakam founded the Ilankai Tamil Arasu Kadchi, Federal Party in English. Not long after, joining Chelvanayakam in the opposition was SWRD Bandaranaike, who broke away from the UNP government over succession differences and went on to form another new political party, the Sri Lanka Freedom Party. As was his wont as a Marxist to see trends and patterns in politics, Hector Abhayavardhana saw the breakaways of Chelvanayakam and Bandaranaike, as well as the emergence of Thondaman as the leader of the disenfranchised hill country Tamils, as symptoms of a disintegrating society as it was transitioning from colonial rule to independence.

Abhayavardhana saw the Citizenship Act as the political trigger of this disintegration in the course of which “what was set up for the purpose of a future nation ended in caricature as a Sinhalese state.” Chelvanayakam may have agreed with this assessment even though he was located at the right end of the ideological continuum. “Ideologically, SJV is to the right of JR,” was part of political gossip in the old days. He saw “seeds of communism” in Philip Gunawardena’s Paddy Lands Act. For all their differences, Chelvanayakam and Ponnambalam were united in one respect – as unrepentant opponents of Marxism.

The Four Demands

Chelvanayakam had his work cut out as the leader of a new political party and pitting himself against a formidable political foe like Ponnambalam with all the ministerial resources at his disposal. Chelvanayakam may not have quite seen it that way. Rather, he saw his role as a matter of moral duty to fill the vacuum created by what he believed to be Ponnambalam’s betrayal, and to provide new leadership to a people who were at the crossroads of uncertainty after the unexpectedly early arrival of independence.

He set about his work by expanding his political constituency to include not only the island’s indigenous Tamils, but also the Muslims and the Tamil plantation workers from South India – as the island’s Tamil speaking people. It was he who vigorously introduced the disenfranchised Indian Tamils as hill country Tamils. In the aftermath of the Citizenship Act and disenfranchisement, restoring their citizenship rights became an obvious first demand for the new Party.

Having learnt the lesson from Ponnambalam’s failed 50-50 demand, Chelvanayakam territorialized the representation question by identifying the northern and eastern provinces as “traditional Tamil homelands,” and adding a measure regional autonomy to make up for the shortfall in representation at the national level in Colombo. To territorialization and autonomy, he added the cessation of state sponsored land colonization especially in the eastern province. Chelvanayakam and the Federal Party painstakingly explained that they were by no means opposed to Sinhalese voluntarily living in Tamil areas, either as a matter of choice, pursuing business or as government and private sector employees, but the nuancing was quite easily lost in the political shouting match.

The fourth demand, after citizenship, regional autonomy, and land, was about language. Language was not an issue when Chelvanayakam started the Federal Party. But he pessimistically predicted that sooner or later the then prevailing consensus, based on a State Council resolution, over equality between the two languages would be broken. He was proved right, sooner than later, and language became the explosive question in the 1956 election. As it turned out, the UNP government was thrown out, SWRD Bandaranaike led a coalition of parties to victory and government in the south, while SJV Chelvanayakam won a majority of the seats in the North and East, including two Muslims from Kalmunai and Pottuvil.

After the passage of the Sinhala Only Act on June 5, 1956, the Federal Party launched a political pilgrimage and mobilized a convention that was held in Trincomalee in the month of August. The four basic demands were concretized at the convention, viz., citizenship restoration for the hill country Tamils, parity of status for the Sinhala and Tamil languages, the cessation of state sponsored land colonization, and a system of regional autonomy in the Northern and Eastern Provinces.

The four demands became the basis for the Bandaranaike-Chelvanayakam agreement – the B-C Pact of 1957, and again the agreement between SJV Chelvanayakam and Dudley Senanayake in 1965. The former was abrogated by Prime Minister Bandaranaike under political duress but was not abandoned by him. The latter has been implemented in fits and starts.

The two agreements which should have been constitutionally enshrined, were severely ignored in the making of the 1972 Constitution and the 1978 Constitution – with the latter learning nothing and forgetting everything that its predecessor had inadvertently precipitated. The political precipitation was the rise of Tamil separatism and its companion, Tamil political violence. Ironically, Tamil separatism and violence created the incentive to resolve what Chelvanayakam had formulated and non-violently pursued as the four basic demands of the Tamils.

After his death in 1977, the citizenship question has finally been resolved. The 13th Amendment to the 1978 Constitution that was enacted in 1987 resolved the language question both in law and to an appreciable measure in practice. The same amendment also brought about the system of provincial councils, substantially fulfilling the regional autonomy demand of SJV Chelvanayakam. The land question, however, has taken a different turn with state sponsored land colonisation in the east giving way to government security forces sequestering private residential properties of Tamil families in the north, especially in the Jaffna Peninsula.

Further, the future of the Provincial Council system has become uncertain with the extended postponement of provincial elections by four Presidents and their governments, including the current incumbents. The provinces are now being administered by the President through handpicked governors without the elected provincial councils as mandated by the constitution. Imagine a Sri Lanka where there is only an Executive President and no parliament – not even a nameboard one. “What horror!”, you would say. But that is the microcosmic reality today in the country’s nine provinces.

by Rajan Philips

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