The economic crisis in Sri Lanka did not appear suddenly but has been in the making for some time. Covid-led destruction devastated the tourist industry and government policies have further accelerated the crisis. The recent reduction in Value Added Tax and President Gotabaya’s mismanagement is not the sole causes of the current crisis, as the right-wing opposition claims. The economy was in danger well before that, and the crisis was looming even during the so-called ‘fastest growth” period. Sri Lanka was not ‘exempt’ from the world economic crisis nor is it unique in any way. Like many other neo-colonial countries, Sri Lanka has been a debt-driven economy for a long time. If anything, the current crisis can be linked to outright neo-liberal policies that started in the late 1970s. Though the origin of the crisis can be traced back to then, it is wrong to compare the conditions that existed for the masses then and now, as is often done by many right-wing and liberal commentators. Except for the bread queues, no real comparison can be made. It is worth reminding ourselves how Sri Lanka’s economy evolved over the years and the key turning point that took place in the late 70s.
Under British rule, economic activity was dominated by tea plantations. Over 90% of exports were plantation products, and these remained vital even after the end of colonial rule. However, the newly formed right-wing government’s first act following so-called independence in 1948 was to attack the rights of plantation workers as they provided a base for the emerging strong left force, the Lanka Sama Samaja Party (LSSP), which was the official opposition in the first parliament elected in 1947. However, the government could not get its way and was forced to implement many welfare measures. Having excluded most of the plantation workers from citizenship and thereby the right to vote, the United National Party (UNP) secured a landslide win in the 1952 parliamentary election. However, this election did not give the weak capitalist class full power. During this first term, they were forced to spend over 50% of government money on welfare and services. Government subsidies alone stood at 22% of the budget. Every attempt to ‘liberalise’ the economy by then finance minister JR Jayewardene (JRJ) was fought back and defeated.