by Venerable Narada Maha Thera
Kamma is the law of moral causation. The theory of kamma is a fundamental doctrine in Buddhism. This belief was prevalent in India before the advent of the Buddha. Nevertheless, it was the Buddha who explained and formulated this doctrine in the complete form in which we have it today.
What is the cause of inequality that exists among mankind?
Why should one person be brought up in the lap of luxury, endowed with fine mental, moral and physical qualities, and another in absolute poverty, steeped in misery?
Why should one person be a mental prodigy and another an idiot’?
Why should one person be born with saintly characteristics and another with criminal tendencies?
Why should some be linguistic, artistic, mathematically inclined, or musical from the very cradle.
Why should others be congenitally blind, deaf, or deformed? Why should some be blessed and others cursed from their births?
Either this inequality of mankind has a cause or it is purely accidental. No sensible person would think of attributing this unevenness, this inequality, and this diversity to blind chance or pure accident.
In this world nothing happens to a person that he does not for some reason or other deserve. Usually, men of ordinary intellect cannot comprehend the actual reason or reasons. The definite invisible cause or causes of the visible effect is not necessarily confined to the present life, they may be traced to a proximate or remote past birth.
According to Buddhism, this inequality is due not only to heredity, environment, “nature and nurture”, but also to kamma. In other words, it is the result of our own past actions and our own present doings. We ourselves are responsible for our own happiness and misery. We create our own Heaven. We create our own Hell. We are the architects of our own fate.
Perplexed by the seemingly inexplicable, apparent disparity that existed among humanity, a young truth-seeker approached the Buddha and questioned him regarding this intricate problem of inequality:
“What is the cause, what is the reason, 0 Lord,” questioned lie, “that we find amongst mankind the short-lived and long-lived, the healthy and the diseased, the ugly and beautiful, those lacking influence and the powerful, the poor and the rich, the low-born and the high-born, and the ignorant and the wise?”
The Buddha’s reply was:
“All living beings have actions (Kamma) as their own, their inheritance, their congenital cause, their kinsman, their refuge. It is kamma that differentiates beings into low and high states.”
The Buddha then explained the cause of such differences in accordance with the law of cause and effect.
Certainly we are born with hereditary characteristics. At the same time we possess certain innate abilities that science cannot adequately account for. To our parents we are indebted for the gross sperm and ovum that form the nucleus of this so-called being. They remain dormant within each parent until this potential germinal compound is vitalised by the karmic energy needed for the production of the foetus. kamma is therefore the indispensable conceptive cause of this being.
The accumulated karmic tendencies, inherited in the course of previous lives, at times play a far greater role than the hereditary parental cells and genes in the formation of both physical and mental characteristics.
The Buddha for instance, inherited, like every other person, the reproductive cells and genes from his parents. But physically, morally and intellectually there was none comparable to him in his long line of Royal ancestors. In the Buddha’s own words, he belonged not to the Royal lineage, but to that of the Aryan Buddhas. He was certainly a superman, an extraordinary creation of his own kamma.
According to the Lakkhana Sutta of Digha Nikaya, the Buddha inherited exceptional features, such as the 32 major marks, as the result of his past meritorious deeds. The ethical reason for acquiring each physical feature is clearly explained in the Sutta.
It is obvious from this unique case that karmic tendencies could not only influence our physical organism, but also nullify the potentiality of the parental cells and genes – hence the significance of the Buddha’s enigmatic statement, – “We are the heirs of our own actions.”
Dealing with this problem of variation, the Atthasalini, being a commentary on the Abhidharma, states:
“Depending on this difference in Karma appears the differences in the birth of beings, high and low, base and exalted, happy and miserable. Depending on the difference in karma appears the difference in the individual features of beings as beautiful and ugly, high-born or low born, well-built or deformed. Depending on the difference in karma appears the difference in worldly conditions of beings, such as gain and loss, and disgrace, blame and praise, happiness and misery. “
Thus, from a Buddhist point of view, our present mental, moral intellectual and temperamental differences are, for the most part, due to our own actions and tendencies, both past and present.
Although Buddhism attributes this variation to kamma as being the chief cause among a variety, it does not, however, assert that everything is due to kamma. The law of kamma, important as it is, is only one of the twenty-four conditions described in Buddhist Philosophy.
Refuting the erroneous view that “whatsoever fortune or misfortune experienced is all due to some previous action”, the Buddha said:
“So, then, according to this view owing to previous actions men will become murderers, thieves, unchaste, liars, slanderers, covetous, malicious and perverts. Thus, for those who fall back on the former deeds as the essential reason, there is neither the desire to do, nor effort to do, nor necessity to do this deed, or abstain from this deed. “
It was this important text, which states the belief that all physical circumstances and mental attitudes spring solely from past kamma that Buddha contradicted. If the present life is totally conditioned or wholly controlled by our past actions, then certainly kamma is tantamount to fatalism or determinism or predestination. If this were true, free will would be an absurdity. Life would be purely mechanistic, not much different from a machine. Being created by an Almighty God who controls our destinies and predetermines our future, or being produced by an irresistible kamma that completely determines our fate and controls our life’s course, independent of any free action on our part, is essentially the same. The only difference lies in the two words God and kamma. One could easily be substituted for the other, because the j ultimate operation of both forces would be identical.
Such a fatalistic doctrine is not the Buddhist law of kamma, Five Processes for Kamma Niyama.
According to Buddhism, there are five orders or processes (niyama) which operate in the physical and mental realms.
1. Utu Niyama –
physical inorganic order, e.g. seasonal phenomena of winds and rains. The unerring order of seasons, characteristic seasonal changes and events, causes of winds and rains, nature of heat, etc., all belong to this group.
2. Beeja Niyama –
order of germs and seeds (physical organic order), e.g. rice produced from rice-seed, sugary taste from sugar-cane or honey, peculiar characteristics of certain fruits, etc. The scientific theory of cells and genes and the physical similarity of twins may be ascribed to this order.
3. Kamma Niyama –
order of act and result, e.g., desirable and undesirable acts produce corresponding good and bad results. As surely as water seeks its own level so does kamma, given opportunity, produce its inevitable result, not in the form of a reward or punishment but as an innate sequence. This sequence of deed and effect is as natural and necessary as the way of the sun and the moon.
4. Dhamma Niyama –
order of the norm, e.g. the natural phenomena occurring at the advent of a Bodhisattva in his last birth. Gravitation and other similar laws of nature. The natural reason for being good and so forth, many be included in this group.
5. Citta Niyama –
order or mind or psychic law, e.g., processes of consciousness, arising and perishing of consciousness, constituents of consciousness, power of mind, etc. including telepathy, telaesthesia, retro-cognition, premonition, clairvoyance, clairaudience, thought-reading and such other psychic phenomena which are inexplicable to modern science.
Every mental or physical phenomenon could be explained by these all-embracing five orders or processes which are laws in themselves. kamma as such is only one of these five orders. Like all other natural laws they demand no lawgiver.
Of these five, the physical inorganic order and the order of the norm are more or less mechanistic, though they can be controlled to some extent by human ingenuity and the power of mind. For example, fire normally burns, and extreme cold freezes, but man has walked scatheless over fire and meditated naked on Himalayan snows; horticulturists have worked marvels with flowers and fruits; Yogis have performed levitation. Psychic law is equally mechanistic, but Buddhist training aims at control of mind, which ispossible by right understanding and skilful volition. The kamma law operates quite automatically and, when the kamma is powerful, man cannot interfere with its inexorable result though he may desire to do so; but here also right understanding and skilful volition can accomplish much and mould the future. Good kamma, persisted in, can thwart the reaping of bad kamma, or as some Western scholars prefer to say ‘action influence’, is certainly an intricate law whose working is fully comprehended only by a Buddha. The Buddhist aims at the final destruction of all kamma.
WHAT IS KAMMA?
The Pali term kamma literally means action or doing. Any kind of intentional action whether mental, verbal, or physical, is regarded as kamma. It covers all that is included in the phrase “thought, word and deed”. Generally speaking, all good and bad action constitutes kamma. In its ultimate sense kamma means all moral and immoral volition. Involuntary, unintentional or unconscious actions, though technically deeds, do not constitute kamma, because volition, the most important factor in determining kamma, is absent.
The Buddha says :
“I declare, 0 Bhikkhus, that volition is kamma, having willed one acts by body, speech, and thought. ” (Anguttara Nikaya)
Every volitional action of individuals, save those of the Buddhas and Arahants, is called kamma. The exception made in their case is because they are delivered from both good and evil; they have eradicated ignorance and craving, the roots of kamma.
“Destroyed are their germinal seeds (Khina beeja); selfish desires no longer grow,” states the Ratans Sutta of the Sutta nipata.
This does not mean that the Buddha and Arahantas are passive. They are tirelessly active in working for the real well being and happiness of all. Their deeds ordinarily accepted as good or moral, lack creative power as regards themselves, Understanding things as they truly are, they have finally shattered their cosmic fetters – the chain of cause and effect.
Kamma does not necessarily mean past actions. It embraces both past and present deeds. Hence in one sense, we are the result of what we were; we will be the result of what we are.
In another sense, it should be added, we are not totally the result of what we were; we will not absolutely be the result of what we arc. The present is no doubt the offspring of the past and is the present of the future, but the present is not always a true index of either the past or the future; so complex is the working of kamma.
It is this doctrine of kamma that the mother teaches her child when she says “Be good and you will be happy and we will love you; but if you are bad, you will be unhappy and we will not love you.” In short, kamma is the law of cause and effect in the ethical realm.
KAM MA AND VIPAKA
Kamma is action, and Vipaka, fruit or result, is its reaction.
Just as every object is accompanied by a shadow, even so every volitional activity is inevitably accompanied by its due effect.
kamma is like potential seed: Vipaka could be likened to the fruit arising from the tree – the effect or result. Anisamsa and Adinaya are the leaves, flowers and so forth that correspond to external differences such as health, sickness and poverty-these are inevitable consequences, which happen at the same time. Strictly speaking, both kamma and Vipaka pertain to the mind.
As kamma may be good or bad, so may Vipaka, – the fruit – is good or bad. As kamma is mental so Vipaka is mental (of the mind). It is experienced as happiness, bliss, unhappiness or misery, according to the nature of the kamma seed. Anisainsa are the concomitant advantages material things such as prosperity, health and longevity. When Vipaka’s concomitant material things are disadvantageous, they arc known as Adairaja, full of wretchedness, and appear as poverty, ugliness, disease, short life-span and so forth.
As we sow, we reap somewhere and sometime, in this life or in a future birth. What we reap today is what we have sown either in the present or in the past.
The Samyutta Nikaya states :
“According to the seed that’s sown, So is the fruit you reap there from, Doer of good will gather good,
Doer of evil, evil reaps,
Down is the seed and thou shalt taste The fruit there of”
Kamma is a law in itself, which operates in its own field without the intervention of any external, independent ruling agency.
Happiness and misery, which are the common lot of humanity, are the inevitable effects of causes. From a Buddhist point of view, they are not rewards and punishments, assigned by a supernatural, omniscient ruling power to a soul that has done good or evil. Theists, who attempt to explain everything in this and temporal life and in the eternal future life, ignoring a past, believe in a ‘postmortem’ justice, and may regard present happiness and misery as blessings and curses conferred on His creation by an omniscient and omnipotent Divine Ruler who sits in heaven above controlling the destinies of the human race. Buddhism, which emphatically denies such an Almighty, All merciful God-Creator and an arbitrarily created immortal soul, believes in natural law and justice which cannot be suspended by either an Almighty God or an All-compassionate Buddha. According to this natural law, acts bear their own rewards and punishments to the individual doer whether human justice finds out or not.
There are some who criticise thus: “So, you Buddhists, too, administer capitalistic opium to the people, saying: “You are born poor in this life on account of your past evil kamma. He is born rich on account of his good kamma. So, be satisfied with your humble lot; but do good to be rich in your next life. You are being oppressed now because of your past evil kamma. There is your destiny. Be humble and bear your sufferings patiently. Do good now. You can be certain of a better and happier life after death.”
The Buddhist doctrine of kamma does not expound such ridiculous fatalistic views. Nor does it vindicate a postmortem justice. The All-Merciful Buddha, who had no ulterior selfish motives, did not teach this law of kamma to protect the rich and comfort the poor by promising illusory happiness in an after-life.
While we are born to a state created by ourselves, yet by our own self-directed efforts there is every possibility for us to create new, favourable environments even here and now. Not only individually, but also, collectively, we are at liberty to create fresh kamma that leads either towards our progress or downfall in this very life.
According to the Buddhist doctrine of kamma, one is not always compelled by an ‘iron necessity’, for Kamma is neither fate, nor predestination imposed upon us by some mysterious unknown power to which we must helplessly submit ourselves. It is one’s own doing reacting on oneself, and so one has the possibility to divert the course of one’s kamma to some extent. How far one diverts it depends on oneself.
Is one bound to reap all that one has sown in just proportion?
The Buddha provides an answer:
“if anyone says that a man or woman must reap in this life according to his present deeds, in that case there is no religious life, nor is an opportunity, afforded for the entire extinction of sorrow But if anyone says that what a man or woman reaps in this and future lives accords with his or her deeds present and past, in that case there is a religious life, and an opportunity is afforded for the entire extinction of ‘a sorrow” (Anguttara Nikaya)
Although it is stated in the Dhammapada that “not in the sky, nor in mid-ocean, or entering a mountain cave is found that place on earth where one may escape from (the consequences of) an evil deed”, yet one is not bound to pay all the past arrears of one’s kamma. If such were the case emancipation would be impossibility. Eternal recurrence would be the unfortunate result.
ROYAL COLLEGE CADET PLATOON 1980
An extract from the book
“G R A T I T U D E”
By Admiral Ravindra C Wijegunaratne
(Retired from Sri Lanka Navy) Former Chief of Defence Staff
The School Cadet Organization of Sri Lanka (formerly known as Ceylon) was established in 1881 by Mr. John B Cull, the Principal of Royal College, Colombo 7. The idea of introducing Cadetting to Royal was to train the students on drill to make them disciplined and responsible. Mr. Cull believed that well trained and disciplined youth at school will later become more responsible citizens with leadership skills and eventually will be better prepared for success in life.
History says that about 320 Ceylon school cadets at the ages of 16 to 20 years had volunteered to fight alongside the Allied Forces in the Great War from 1914 to 1918. Royal, St Thomes, Trinity and Kingswood sent their cadets to war. The contingent was consist of Royalists – 88, Thomians – 86, Trinitians – 74 and Kingswoodians – 72.
Even though very limited records on Royal College Cadets available on participation in Great War, first Ceylonese Cadet to paid supreme sacrifice was young Royalist W E Speldewinde who was drowned when troop ship “Villa Dela Ciotat” was torpedoed by Germans and sank in Mediterranean Sea.
First Ceylonese cadet to win a military decoration for bravery and valour was Captain O J Robertson, who was awarded with Military Cross. Other Royalist recipients of Military Cross in World War I were Second Lt H E Speldewinde de Boer, Lt C W Nicholas and Second Lt J Robertson.
Almost 30 per cent of them had paid the supreme sacrifice for the British Crown and many had been severely wounded in action. In 1917, a District Judge in Badulla, Mr. Herman Loos had presented a Challenge trophy to be awarded to the best school cadet platoon in the Island. This was the beginning of the Herman Loos trophy competition for Cadetting in Sri Lanka, and it was first won by the Kingswood College, Kandy.
When we joined the Royal College Cadetting in the late 1970s, the Cadetting legacy of Royal College was reaching its 100th anniversary. I was a member of the 1980 Royal College Cadet platoon. Our Sergeant was Naeem Mahamoor. Lance Sergeant of our Platoon was Arosha Jayawickrama who was an outstanding cadet and the best Commander of junior Cadetting. Supun Hennayaka, C K Rajapaksa and I were the three senior Corporals. Later in our lives, Naeem went on to Airline Management and held high positions in Saudi Arabia and Dubai. Arosha migrated to the USA soon after leaving the College. Supun became a well-known specialist medical Doctor in the country. CK and I joined the Armed Forces.
We were very fortunate that Lieutenant (NCC) H M Dharmaratne, came to Royal College in 1979 on a transfer from the Ananda Shastralaya, Kotte. He was a young and energetic Cadet Master who had brought several cadetting achievements to Ananda Shastralaya. Royal College finally had a very good Cadet Master. We began planning for our “Operation Herman Loos” at our Cadet room known as the ‘Armoury.’ Our ultimate goal was to win the prestigious Herman Loos trophy for the Best Cadet Platoon in Sri Lanka. We had our plan carefully reviewed and crafted by our Sergeant and Master in Charge. We knew that both the Commandant’s Test (which tested the First Aid knowledge and the Field craft & Map-reading test) offered 300 marks. All the other competitions namely ‘Hut Inspections’, ‘Squad Drill’, ‘Physical Training (PT)’, ‘Athletics’, and ‘Drama’ offered either 100 or 50 marks each. We also knew with past experiences that most of the other schools concentrate and spend much time in practicing and training of the Squad Drill and PT.
Instead of focusing a lot on training for the squad drill and PT, we spent more time in learning first aid, fieldcraft theories, and map reading. I, being a President’s Scout at the time was tasked with teaching first aid to the platoon.
Captain (then) Parakrama Pannipitiya, a distinguished old Royalist (who later rose to the rank of Major General) from Sri Lanka Army’s Sinha Regiment agreed to teach us field craft and map-reading during evenings and weekends. He was working at the Army Headquarters at the time. With these arrangements, we knew our knowledge on first aid, and field craft & map reading subjects would be much superior to other cadet platoons.
We boarded the train from Colombo Fort Railway station to travel to the Army camp at Boosa for our annual cadet camp and Herman Loos competition. Under the able leadership of our Sergeant Naeem Mahamoor, we were determined and confident that we could change cadetting at Royal that year. In the 99-year history of Herman Loos trophy, Royal College had won it just twice. That was in 1963 under Sergeant Weerakumar, and later in 1970 under Sergeant MR Moosa.
As expected, we won the Commandant’s test with a very high margin. Sri Lanka Army examiners were surprised by our performance and were very happy with our excellent knowledge. We also won the Hut Inspection and became second in place in the PT test. Those accomplishments helped us win the coveted Herman Loos trophy for the best Cadet Platoon in the country. Royal College won it after ten years and for the third time in 99 years.
The rest was history. Royal won the Herman Loos trophy again in 1981 under Sergeant Pradeep Edirisinghe (that was the centenary year of Cadetting at Royal), and again in 1982 under Sergeant H D Jayasinghe. Present Navy Commander Vice Admiral Nishantha Ulugetenna was Member of College 1981 and 1982 Herman Loos Trophy winning platoons. Later he rose to the rank of regimental quartermaster Sergeant – (RQMS) of 3rd Battalion of NCC.
Mr. Dharmaratne was the Royal College Cadet Platoon Master in charge for all three years. Later he was promoted to the rank of Captain in the National Cadet Corps (NCC). Thank you, Sir, for your guidance and advice as the Master in Charge of Royal College Cadetting for a very long time.
When we look back and see what we achieved 40 years ago with a clear plan and well-executed strategy, and have a sense of pride and accomplishment. What Mr. Cull, the Principal of Royal College wanted to achieve by introducing Cadetting to Royal in 1881 has materialized.
“Long live Cadetting at Royal College!”
Budget 2021 likely to worsen macroeconomic instability amidst COVID-19 pandemic
By Prof. Sirimevan Colombage
The Budget Speech 2021 was presented at a time when the country is being severely hit by the COVID-19 pandemic. GDP growth is projected to be down to negative 2 percent this year. Despite this economic setback, the government envisages to maintain an inclusive GDP growth rate of 6 percent per annum over the medium-term while containing inflation to around 5 percent, according to its macroeconomic programme, ‘Vistas of Prosperity and Splendour’.
Less emphasis on COVID-19
Given such optimistic targets, it is somewhat puzzling that the Budget Speech does not pay much attention to Covid-19 pandemic which has paralyzed virtually all economic activities by now. Reflecting mixed-up priorities, the Budget has given undue resource allocations at this difficult juncture to some arbitrarily selected projects such as urban townships, sports, road construction and walking paths, which have no direct relevance to revive the pandemic-hit economy, though they may have their own merits during normal times.
A coherent economic recovery strategy, apart from the fiscal and monetary stimulus already granted, is the need of the hour to revive the economy from the fallout. The pandemic has severe consequences on the Sri Lankan economy, which had already encountered multiple economic setbacks including low economic growth, fiscal disarrays, balance of payments deficits and foreign debt burden even prior to the health crisis. The pandemic has adversely affected the export sector, domestic production, inward remittances and distribution network. Poor households who are mostly working in the informal sector with irregular income sources have become extremely vulnerable in the present crisis situation.
Escalating fiscal imbalance
The budget deficit is projected to rise by 24 percent from Rs. 1,266 bn. (7.9 percent of GDP) in 2020 to Rs. 1,565 bn. (8.9 percent of GDP) in 2021, reflecting a severe deterioration of the fiscal position (Figure 1). It is expected that the total revenue would rise by 28 percent in 2021 as against 26 percent increase in total expenditure. Such exorbitant revenue growth cannot be expected for a single year even during normal times. The projected increase in revenue is said to be based on the assumption of 5 percent growth in GDP in 2021. This assumption seems to be over-optimistic considering the negative impact of COVID-19 in years to come, and the country’s limited growth potential experienced even before the outbreak of the pandemic. Slower GDP growth in 2021 means low level of government revenue, and consequent expansion of the budget deficit much higher than what is expected. Thus, the budget deficit is likely to be 10 percent of GDP or more in 2021.
Monetary implications of fiscal imbalance
With the rise in the budget deficit, the government is compelled to rely increasingly on the banking system to finance the deficit. Net bank credit to the government rose by 46 percent from Rs. 2,732 bn. in September 2019 to Rs.3.980 bn. in September 2020. The Central Bank has accommodated government finance requirements by directly purchasing Treasury Bills at primary auctions. The Central Bank’s net credit to the government rose by 50.8 percent from Rs. 383.2 bn. in September 2019 to Rs. 577.7 bn. in September 2020.
The monetary easing policy adopted by the Central Bank to relieve the households and businesses adversely affected by Covid-19 too accelerated the annual money growth from 7.4 percent in September 2019 to 19.2 percent in September 2020 (Figure 2). The monetary easing measures included sequential reductions of the policy interest rates and Statutory Reserve Ratio (SRR), which led to inject substantial liquidity into the market, and to reduce borrowing costs significantly. Concessional credit schemes were also introduced to facilitate the activities of Small and Medium-scale Enterprises (SMEs), alongside debt moratoria granted for businesses and individuals distressed by the pandemic.
Nevertheless, the annual growth of commercial bank credit to the private sector has remained stagnant around 5 percent reflecting the slow pick up of economic activities. In contrast, net commercial bank credit to the government rose by 44.9 percent in the 12-month period ending September 2020. In this background, the excessive money supply growth is bound to create demand pressures augmenting inflation and imports in the coming months.
Inflation-targeting monetary policy missing
Surprisingly, the Budget Speech does not make any reference to monetary policy which is vital in achieving macroeconomic stability, and sustaining economic growth. The Central Bank made concerted efforts about two years ago to launch the inflation-targeting monetary policy framework with the expectation of close coordination with fiscal authorities while regaining its independence. I categorically warned in these columns that such efforts would be suicidal for the Central Bank, unless the fiscal sector is aligned with such process committing to low budget deficits.
It is evident by now that inflation-targeting monetary policy is a remote possibility, as such policy is completely neglected not only by the fiscal authorities in the latest Budget Speech, but also by its architect, the Central Bank. Inflation-targeting monetary policy framework is not focused in the Central Bank’s publication, ‘Recent Economic Developments – Highlights of 2020 and Prospects for 2021’.
Understandably, it is not feasible to implement such rule-based policy amidst the current economic crisis, but the Central Bank should have displayed its long-term commitment to run the inflation-targeting monetary policy framework, which was declared with much grandeur not so long ago. That would strengthen the Central Bank’s independence, which is vital to operate monetary policy without undue political interference.
Demand pressures mounting
The easy monetary policy implemented by the Central Bank under the Presidential directive following the pandemic is unlikely to boost production activities significantly as expected, given the inherent weaknesses of enterprises, uncertain macroeconomic environment and imperative health-related precautionary measures imposed by the government including curfews, lockdowns and travel restrictions.
The global economic downturn resulting from the pandemic has dampening effects on the export sector. Further, business decisions in the private sector are mostly based on comparisons of the expected rate of return on investment vis-à-vis opportunity cost of investment. Interest rates represent the opportunity cost while expectations are influenced by many factors including macroeconomic economic environment, technological changes, exchange rate volatility, capacity utilization, export competitiveness, aggregate demand, fiscal stability, inflation, political stability, business confidence, and cost of production.
The present low interest rate environment encourages consumption, as savings yield low returns. Thus, low interest rates have negative effects on domestic savings. This is reflected in the downfall of domestic savings rate from 24.8 percent of GDP in the first half of 2019 to 20.8 percent in the corresponding period of 2020. Meanwhile, private consumption rose from 66.7 percent of GDP in the first half on 2019 to 70.5 percent in the same period of 2020. Given the low returns on savings, the surplus-fund holders tend to move to alternative assets such as commodities, real estate and risky financial instruments. Such fund diversions lead to distort investment decisions, and to create asset bubbles harming financial stability.
The rising consumption demand has spill-over effects on domestic production and imports exerting pressures on inflation and balance of payments deficits. Inflation, in addition to cheap credit, makes imports attractive and exports unprofitable, causing further deterioration of the trade balance. Unless the exchange rate is allowed to depreciate freely to achieve external equilibrium, import restrictions become imperative to avoid deterioration of the trade deficit. This type of inward-looking foreign trade policy seems to be the government’s policy choice at present, as can be evident from several import controls imposed in recent times. Although such measures are inevitable amidst the pandemic, it must be noted that they have adverse consequences on competitiveness, productivity and export-led growth in the long run. Hence, it is important to phase out import restrictions and to allow free trade.
Given Sri Lanka’s long track record of low economic growth and macroeconomic imbalances, it is a major policy challenge to mitigate the economic fallout from COVID-19. Budget 2021 does not contain any coherent policy strategy to overcome the crisis. The budget deficit in 2021 is likely to be much higher than what is given in the official projections due to inevitable revenue shortfalls and expenditure overruns amidst the pandemic. In financing the widening budget deficit, increased reliance on bank borrowings results in liquidity injections, and consequent pressures on the money supply, inflation and balance of payments. The import restrictions imposed recently to arrest the balance of payments deficit might give wrong signals to the market depressing outward-oriented growth. Meanwhile, recourse to foreign borrowings escalates the already heavy external debt burden.
The response of the private sector to monetary easing seems rather weak due to structural factors while cheap credit has tended to encourage extravagant consumption, speculative asset holdings and risky financial dealings. The neglect of inflation-targeting monetary policy launched by the Central Bank about two years ago is a matter of concern from the viewpoint of optimal monetary-fiscal policy mix. A systematic growth strategy, backed by a realistic macroeconomic framework, is essential to recover the economy.
(The author is Emeritus Professor in Economics at the Open University of Sri Lanka)
Good news about vaccine
Cassandra, like so many others of her ilk, has locked herself down and voluntarily shut herself in the confines of her home. Being of mature age, she does not fret at self-imposed stay-at-home-ness and actually finds plenty to do to occupy the alone-hours. Such persons also know they are abiding faithfully by medical guidelines. Most sally forth on walks, masked and all, and keep in contact with friends and relatives via electronic wonders and that old faithful – the telephone. It needs effort to stave off fears and bouts of sinking spirits, and at night a further boost is needed. But being essentially optimistic, such persons give praise to the Task Force that is battling COVID-19 night and day. Also greatly appreciated are many helpers who are available to shop and run errands for them. Those who had no time to chant pirit or be prayerful do so now, with benefit, for it sure ensures a nightmare free night’s sleep.
We refrain from political talk as we have heard it is dangerous. Hence too Cass’s disinfected Friday articles. We spoke free and criticized where criticism was due during the yahapalanaya regime. The then Prime Minister, Ranil W, took criticism, even barbs and insults in his stride so we felt free to write about government and matters thereof. But no longer.
Return of the respected and trusted voice, though no longer heard
One radiant shaft of sunlight however, shone through recently. Newspapers announced Dr Anil Jasinha was back in the COVID-19 Presidential Task Force, at meetings at least, though sadly not visible on TV. We do miss him as when he spoke to the public we listened with full confidence in him, and were inspired. This is not meant to insult or demean others who took his place, and advise us on TV, all dedicated medical men, but personality and that earnest sincerity that came through when Dr J spoke was missing. It is not only what is said, but how it is said and received that make for effective communication. We were very suspicious of the ‘kick up’ he was given to move from the Health Ministry to Environment. Welcome back, respected Dr Jasinha and we hope we will see you again making announcements over TV. You called a spade a spade and that we appreciate. We are sick of being fed euphemistic news; good tidings all round and reams about the good our government is doing for the ordinary men and women of this fair isle. Spoons of salt are inbibed! Enough of treating us like fools! That really is how many politicians treat us, while in most cases, the boot is on the other foot.
We who have family overseas have resigned ourselves to leaving this life without seeing them. Terribly tragic but true and realistic. We are thus doubly interested in the manufacture of vaccines – for their sakes more than ours; those vaccines that have been tested and proved effective. Not those released before full testing is completed. Skyping a person in the US, I commented the Pfizer vaccine would cost much. He said the government over there has promised free distribution. Sure that’s a promise of Biden and not the barnacle clinging onto his residence in the White House and swinging more and more his golf club. He should swing himself out; that way of exit of orangutans seems suitable.
The Oxford vaccine
I had intended writing about half Sri Lankan, half Indian Dr. Maheshi Ramasamy who, having started her education in Sri Lanka, completed her medical degrees in the United Kingdom, and is now world-renowned as a member of the pioneering team of the most widely accepted vaccine against the global outbreak of Covid-19: the Oxford University vaccine. However, we have read about her great contribution in local newspapers this last Sunday, so I mean to quote from an article in the UK Guardian sent me, about the leaders of that team.
“At the heart of Oxford’s effort to produce a Covid vaccine are half a dozen scientists who between them brought decades of experience to the challenge of designing, developing, manufacturing and trialling a safe vaccine at breakneck speed.
“Prof Sarah Gilbert, the Kettering-born (in Northamptonshire, England) project leader, arrived at Oxford in 1994 to work with Prof Adrian Hill, a senior member of the team, on the malaria parasite, plasmodium. She soon fell into work on experimental vaccines, starting with one that roused white blood cells to fight malaria, followed by a ‘universal’ flu vaccine. As a researcher at Oxford, she gained a no-nonsense reputation, which some attribute in part to her raising triplets, though her husband gave up work to parent them.
“Hill, an Irish vaccinologist described by the Lancet as having ‘silent steeliness’, was first into clinical trials with an Ebola vaccine based on the chimp virus during the 2014 outbreak in West Africa. He and Gilbert patented the technology and in 2016 co-founded Vaccitech, an Oxford spin-off, to capitalise on the research.
“Oxford’s coronavirus work is built on research pioneered by Hill and Gilbert on vaccines based on a virus that causes common colds in chimpanzees. The adenovirus could be rendered harmless and then modified to smuggle genetic material into human cells. The trick was to make that material the gene for a protein on the surface of a nasty virus, one the immune system could lock on to.” The operative word here is ‘raced’ since these admirable pioneers have produced a vaccine and tested it to 70% effectiveness, to undergo one other test ensuring 90%, within a year, while the development of vaccines and full testing usually takes over at least two years. Work on the Oxford vaccine started as early as February this year. So even we oldies of Free Sri Lanka have hopes of being vaccinated as the Oxford vaccine is so much cheaper and can be transported easily. Praise be and grateful thanks to pioneers who sure would have worked against the clock.
Interesting to know about these pioneers. Adrian Vivian Sinton Hill, Irish vaccinologist, aged 62, studied in Trinity College Dublin and then at Oxford, He is director of the Jenner Institute, Professor of Human Genetics at the University of Oxford, Consultant Physician and Fellow of Magdalen College, Oxford. More interestingly: married to Dr Sunetra Gupta.
And thus, thanks to these selfless pioneers, even we Third Worlders may have a vaccine against Covid 19 fairly soon. WHO will assist of course, as Bill Gates is doing in African States.
Slowly giving way but as yet mulish
Yes, that is the defeated Prez of the US, still ensconced in the White House while whiling his time on golf links and sacking VIPs of his government and insulting his successor. Trump has directed that the hand-over of the presidency be facilitated but keeps reiterating that he has not been defeated and will not concede defeat. Absolutely unbelievably, masses are still behind him, flag waving and vociferous with a few Republicans on his side, while many have agreed it is time he goes. I suppose he depended on the ‘Bad Boys’ or whoever who banded themselves just prior to the 2016 presidential election. They seem to have had their fangs shortened,
We are far removed from the US but it was heartening to watch as Biden named his team, most having served under President Obama, with a number of women included. Quite a few are second generation immigrants with one having a step father killed during the Hotocuast. One contrast between his team and Trumps, the latter disintegrating, is that all Biden’s team are slim and trim while Trump had many fat cats behind him. Appearances are also very important.
Mum’s the word with sealed lips on matters Sri Lankan, if they are political! One comment, however, has to be made. We saw on TV Arjuna Ranatunge and some other UNPers wanting Ranil W as the sole nominated UNP member in Parliament. Well and good, since Ranil W is an experienced, highly knowledgeable, cleverly debating, able Parliamentarian. What Cass wishes to comment on is how ole John Amaratunge presented himself to the TV camera on Monday 23, claiming he should be the nominated MP. He is an octogenarian – just made it being born in 1940 – but seems advanced in his three score and ten plus plus. He must be having a vitamin he takes for eternal springy (imagined/induced) vitality and verve! Never say die seems to be his motto after being once accused of sitting on the fence – UNPer given gift trip to the Vatican by the then SLFP government, accompanying Prez Mahinda R, no less!
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