Revitalising a war-battered economy

The Sri Lankan government will implement a new programme for the development of the Northern Province, President Maithripala Sirisena announced last week. From the time the island’s civil war ended in May 2009, claiming over 1,00,000 lives, there has been considerable talk about developing the war-battered north, home for over 10 lakh people, about 90% of them Tamils.

Former President Mahinda Rajapaksa invested considerably in roads and electricity, gradually changing the landscape of the region that was razed during the conflict. The carpeted roads and infrastructure overhaul were crucial to restoring connectivity between the country’s south and the north, which was cut off through the war years, but did little to revitalise the once-thriving economy of the Northern Province. With incomes dropping in the country, the northern economy showed few signs of revival. In Mullaitivu district, most affected in the last phase of the war, the median per capita income was LKR 4,683 (₹2,065) per month, according to the Household Income and Expenditure Survey of 2012-13. Little has changed since then.

It is important that the state focusses on stable capital investment rather than merely handing out loans to individuals, says Jaffna-based political economist Ahilan Kadirgamar. The capital investment, he says, should target an increase in production and create more jobs. “The government must help rebuild links with the market in a way that disallows exploitation by traders and middlemen.” For most families in the rural north and east, bank loans, micro-credit and hire-purchase present an enormous post-war challenge. Almost every home has an outstanding loan that the families have no way of repaying. Terming microcredit the “single biggest problem”, women activists in Batticaloa told The Hindu in January that the growing indebtedness was a major hurdle to rebuilding communities. There is also a long-pending demand among people of the north for factories to be set up.

Restarting factories

Sri Lanka’s Minister of Industry and Commerce Rishad Bathiudeen recently spoke of restarting the cement factory in Kankesanthurai, the chemical factory in Paranthan and the tile factory in Oddusuddan. They employed thousands in the Northern Province before the war dismantled them. A few garment factories came up in the northern towns of Vavuniya, Kilinochchi and Puthukkudiyiruppu in the post-war years, recruiting hundreds of young women. However, pointing to the garments industry, the tea estate sector and outward migration as key earners of foreign exchange, Mr. Kadirgamar cautions: “We must also remember that these have been the most exploitative sectors in our country. Still, the young women work in the garment factories because they are desperate for a regular salary.”

The focus then shifts to agriculture and fisheries, which are not only the two main sectors driving the northern economy, but also have a long tradition of cooperatives. Jaffna currently has 1,100 registered cooperatives that survived the war. “The President has spoken of a new programme now. Any such initiative has to build on resources we already have in order to be effective,” says Vedavalli Selvarathinam, secretary of the Jaffna District Cooperative Council. Palmyrah trees, for example, are a rich resource waiting to be tapped. “We have the resources and the labour force, but we need support to process our products and make them suitable for export. How can we have sustainable development if local resources are not given importance?” asks Ms. Selvarathinam. (The Hindu)

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