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Sri Lanka's Economic crisis-An Eye Opener

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Mohammed Nazeeruddin at KVR GOVERNMENT DEGREE COLLEGE FOR WOMEN, KURNOOL- ANDHRA PRADESH
Mohammed Nazeeruddin
  • KVR GOVERNMENT DEGREE COLLEGE FOR WOMEN, KURNOOL- ANDHRA PRADESH
Mr M Jafarullah Baig at KVR GOVT COLLEGE FOR WOMEN, KURNOOL, INDIA
Mr M Jafarullah Baig
  • KVR GOVT COLLEGE FOR WOMEN, KURNOOL, INDIA
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Abstract

The Island country, Sri Lanka exports largely textiles, garments, rubber, tea, and coconut products and imports consumer goods, especially crude oil, coal and other petroleum products. For the first time in the history of Sri Lanka the worst economic crisis has been witnessed. The present government is grossly responsible for this kind of economic mess in Sri Lanka. People from all walks of life in Sri Lanka are struggling for want of sufficient money, fuel and food. This kind of misgovernance results in cascading effect which paralyses all the crucial and vital sectors of the economy.
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RESEARCH REVIEW International Journal of Multidisciplinary
e-ISSN: 2455-3085 | Vol.07 | No.04 | April 2022 | pp. 01-02
Double-Blind Peer Reviewed/Refereed Journal
https://www.rrjournals.com/ Page | 1
RESEARCH PAPER
Sri Lanka’s Economic crisis- An Eye Opener
*1Dr. M. Nazeeruddin and 2Mr.M.Jafarullah Baig
1Reader in Economics, KVR Govt. College for Women (A), Kurnool
2Selection Grade Lecturer, KVR Govt. College for Women (A), Kurnool
Abstract
The Island country, Sri Lanka exports largely textiles, garments, rubber, tea, and
coconut products and imports consumer goods, especially crude oil, coal and other
petroleum products. For the first time in the history of Sri Lanka the worst economic
crisis has been witnessed. The present government is grossly responsible for this kind of
economic mess in Sri Lanka. People from all walks of life in Sri Lanka are
struggling for want of sufficient money, fuel and food. This kind of misgovernance
results in cascading effect which paralyses all the crucial and vital sectors of the
economy.
Keywords: Sri Lanka, Economics Crisis and Flawed Policies
Article Publication
Published Online: 15-April-2022
*Author's Correspondence
Dr. M. Nazeeruddin
Reader in Economics, KVR Govt.
College for Women (A), Kurnool
mnazeeruddin90[at]gmail.com
10.31305/rrijm.2022.v07.i04.001
© 2022The Authors. Published by
RESEARCH REVIEW International
Journal of Multidisciplinary. This is an
open access article under the CC BY-
NC-ND license
(https://creativecommons.org/licenses/
by-nc-nd/4.0/)
Introduction
Sri Lanka is one of the most beautiful Islands in the world, previously known as Ceylon. It is a Democratic
Socialistic Republic of Sri Lanka, situated in the South Asia. The current population of Sri Lanka in 2022 is 2.15
crores. The Sri Lanka Rupees is the currency of Sri Lanka, issued by the Central Bank of Sri Lanka. The symbol of
Rupee is generally used currency code as LKR in Sri Lanka. The Island country, Sri Lanka exports largely textiles,
garments, rubber, tea, and coconut products and imports consumer goods, especially crude oil, coal and other
petroleum products.
For the first time in the history of Sri Lanka the worst economic crisis has been witnessed. The present
government is grossly responsible for this kind of economic mess in Sri Lanka. People from all walks of life in Sri
Lanka are struggling for want of sufficient money, fuel and food. Politicians across the world make tall promises
during the election campaign, but once they come to power, they are going to introduce popular schemes, which
is detrimental to the health of the economy. The very intention behind all these schemes is to remain in power for
a long time by appeasing all sections of the people by putting the economy in doldrums. The popular scheme
would certainly hurt the country’s economy. This kind of mis governance results in cascading effect which
paralyses all the crucial and vital sectors of the economy.
Objectives of the study
1. To study Sri Lanka’s economic crisis
2. To study the surge of prices of essential commodities
RESEARCH REVIEW International Journal of Multidisciplinary Vol.07 | No.04 | April 2022
https://www.rrjournals.com/ Page | 2
3. To analyze the increase of crude oil prices in Sri Lanka
4. To examine the fall of exports and increase of imports
5. To identify the factors which are largely responsible for the crisis
Reasons for Sri Lanka’s Economic Meltdown:
The first and foremost reason was the huge barrowings at high interest rate with strong conditions from
international financial organizations. The second reason was the ban on chemical fertilizers all over the country.
The third one was the huge raise of the annual income threshold for waiver of personal income tax and reduction
of Value Added Tax rates that led to huge revenue loss to government. The fourth one was that the government
implementing the policy of organic farming all over the country which led to a great loss of yield. The fifth one
was the tourism industry is in deep troubles and the number of foreign visitors to the Island nation has been
gradually come down. The fact of the matter is that the tourism industry places a vital role in the economy and it
generates nearly 20% income to the national income. This sixth one was the two and half decade ago war compel
the policy makers to go for the deficit budgets that resulted slow economic growth. Further, there was a huge fall
in the exports led to the drain of foreign exchange reserves. The high fiscal deficit and ill-advised reforms in the
tax system has been adversely affect the health of the economy and pushed the country into economic meltdown.
Results of the study:
The findings of the article are that the misguided, mismanagement and flawed policies of the present government
is largely responsible for the economic crisis in Sri Lanka. we, observed that the ban on chemical fertilizer has
brought down yields more than 30% in paddy, tea and coconut, that resulted the surge in of prices of the essential
commodities and the inflation rose to 17%. Further, there is fall in the productivities of tea and rubber which
again led to lower export incomes. This obviously speaks volumes about the increasing of imports and the
shortage of foreign exchange reserves.
Methodology:
This article largely banks on the secondary sources, the related data and the information for the article has been
collected from various web sources, and daily newspapers. All the collected data and the information are
presented systematically, there by meaningful inferences have been drawn. Besides, the article highlights the
prevailing pathetic economic situation in Sri Lanka
Conclusion
Sri Lanka is one of the most beautiful Islands in the world, previously known as Ceylon. It is a Democratic
Socialistic Republic of Sri Lanka, situated in the South Asia. The current population of Sri Lanka in 2022 is 2.15
crores. The Sri Lanka Rupees is the currency of Sri Lanka, issued by the Central Bank of Sri Lanka. The symbol of
Rupee is generally used currency code as LKR in Sri Lanka. The misguided and the flawed policies are largely
responsible for the economic crisis in Sri Lanka. This article throws light on the economic mess in Sri Lanka, the
GDP growth rate has come down, investment and savings rate fell, increase of imports and decrease of exports,
public expenditure and debt has been enormously increased. Therefore, the mismanagement of the planners and
administrators are responsible for the deep crisis. In recent times, most of the policy makers all over the world
introducing popular schemes to remain in the power for a long time. Hence, such popular schemes would
certainly damage the economy and eaten away the fruits of the economic growth.
References
Sri Lanka Rage- published in “The Hindu” on April 02, 2022
Explaing the Sri Lanka's Economics Crisis – R. Ram Kumar published in 'The Hindu' on march 31st 2022
Sri Lanka growth rate 1950-2022 Macro trends
SLR – Sri Lanka Rupee (LKR) Coly Mitchell published on October 27th 2021
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... The reduction of tax rates caused a huge revenue loss to the government from 11.6% in 2019 to 8% of the total revenue in 2020 [13]. The reduced number of foreign arrivals from 2,521,000 in 2018 to 540,000 in 2020 crippled the tourism industry in Sri Lanka which generally generated 20% of its national income [13]. ...
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