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Curbing the price spiral

As dangerous and harmful as the fast-spreading dengue fever in the country is the "economic dengue" let loose by years of economic stagnation and mismanagement. This was, essentially, what Prime Minister Ranil Wickremesinghe had to say about our economic woes when he addressed the Government Parliamentary Group recently. The dengue image to refer to the soaring cost of living and other economic hardships is most appropriate because rising prices and connected pressures are, indeed, a deadly flight that few could hold out against.

The Ceylon Petroleum Corporation and the Ceylon Electricity Board which were singled out for mention at the Government Parliamentary Group meeting had incurred astounding losses over the years and today the average consumer is being called upon to cough out payments on an ascending scale to keep these sectors in sound financial health. Needless to say, rising fuel and electricity costs have a snowballing impact on the prices of other consumables, making the cost of living a prime grievance of the people.

There is some justification for calls by the Government to the consumers to bear with it for a while because it was in the unenviable position of inheriting an economy with a zero growth rate - the worst readings on the economy since the early Seventies when our economic performance hit rock bottom. However, the people are generally not prone to bear the "agonies of the stomach" with exemplary forbearance and it is up to the State to do everything possible to depress living costs.

A few days back, the country was given an idea of the virtues of VAT in comparison to GST by Finance Minister K.N. Choksy. The public was given to understand that they could expect a nine percent reduction in the prices of essential consumables following the introduction of VAT. The hope of the people is that this would really be so. For, recent governments have failed to provide economic relief uniformly and consistently. Imperfect economic liberalization, has brought its own ills.

Stringent economic regulation by the State is no answer to our woes but we believe the State needs to play a more active role in ensuring that the have-nots are provided the essentials at purse easy prices. While market forces need to operate vibrantly in view of the efficiencies they generate, the State is obliged to put in place the institutional mechanisms which would deliver essential goods and services, at reasonable prices. The CWE now being rejuvenated, could play a positive role in this context.

It goes without saying that the State and its agencies need to play a positive role in ensuring the supply of essentials at stipulated prices, to guard against the ravages of inflation. A concerted battle also needs to be fought against corruption, bureaucratic bungling and red tape which tend to compound the economic woes of the people.

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