Our target, a single digit inflation ratio - Deputy Minister Neomal Perera

by special correspondent

Today, the consumer is compelled to dance to the tune of Opposition's selfish political views. They fabricate malicious comments on price hikes depriving the consumer of being aware of the ground realities, said Co-operatives and Internal Trade Deputy Minister Neomal Perera in an interview with the Sunday Observer.

The excerpts:

Q: Sri Lanka celebrated its first year anniversary of eradicating terrorism last month. With the termination of war, people expect a considerable reduction of prices of essential goods and other commodities. The consumer complains that the Government has not implemented any plans to reduce prices of goods after the end of war and when the election is over. Also, though the economic indicators disclose that CoL (Cost of Living) has been reduced sharply, why doesn't the consumer feel that.

A: The consumer does feel it. When consumers can purchase goods at a fair price, they do not complain. Yet when the prices hike they do complain and are dissatisfied. I cannot see any clamour as such in the country that consumers protest against hikes of prices of goods.

At the same time it does not mean that prices of all the goods and services are low. I, as the Deputy Minister of Co-operatives and Internal Trades would be delighted if the prices of goods can be brought down. Yet it is beyond practical sense. It cannot by be achieved within twenty four hours or three hundred and sixty five days. It takes time.

The main reason for the consumer not to be aware of the reduction of prices of goods is that the prices of goods have been politicized. The politicisation of CoL and prices of goods prevent the emerge of a 'logical consumer'. I would say there is hardly 'rational consumerism' in the country. Consumers' rationality has been mercilessly blunt by the opposition parties. Today, the consumer is compelled to dance to the tune of Opposition's selfish political views. They fabricate malicious comments on price hikes depriving the consumer of being aware of the ground realities.

"Consumer soverignity" is highly respected and observed in other countries. There are various movements to protect the consumer. In other countries, the consumer is treated as a king, whereas in Sri Lanka the consumer has been made a slave of opposition political views. Yet, the Government tries its best to protect the 'consumer sovereignty'.

Another reason for the consumer to feel the burden of price hikes in other words, the consumer not to feel the reduction of prices of some goods is his ignorance of seasonal goods. It should be noticed that the price of some goods fluctuate on seasonal basis. The price of vegetables such as carrot, beans, beetroot grown in particular areas during a particular period of the year is high. This happens annually and we call it the off season. Yet, vegetables grown in villages are sold at a comparatively lesser price as they are grown in the season.

The consumer is not aware that seasonal products can be purchased at a lesser price than off season products.

He purchases off season products at a higher price while neglecting seasonal products which are sold at a lesser price.

The change of 'consumer pattern' is highly needed.The need of a 'movement' which protects and educates the consumer on the real situation of the prices of goods in the country has arisen. The aim of such organisation is to protect the consumer from deceptive opposition political views and other various bogus market campaigns.And also we lack, the support of media. If they convey the real situation on prices, the consumer will be accurately informed on that. And also if the 'pattern of consumption' is changed, the increase in prices will not make a big impact on people's budget. Such as when the price of one product increases, the consumer can go for a substitute for example: When the price of meat increases he can consume substitutes like fish or egg. And when the price of bread increases, he can add rice to their meals.

I disagree with the opinion that the prices of goods have been increased. Prices are being controlled, monitored and maintained.

I can refute the allegations by showing past and present inflation ratios. Our target is to achieve a 'Single digit' - Average Annual Inflation Ratio. The reduction of prices of goods does not take place anywhere in the world.

Q: During past years, the Government reported high expenditure rate due to allocations made to the 'Defence Sector'. It is unarguable that the price of goods increased parallel to the increase of defence expenditure. Now, the Government is required to allocate less funds to the defence sector in comparison to previous years. Has the Government been able to maintain a reduced inflation ratio after the end of the war.

A: After Sri Lanka obtained freedom in 1948, the Rajapaksa Government encountered four crises and successfully overcome them. Those were global crises and Sri Lanka was no exception.One was the intensed terrorism. India, Pakistan too had to suffer from terrorism and terrorism is still a burning problem in many countries like Pakistan. Terrorism affected unfavourably, for the Government and had to allocate an increase share of resources for defence expenditure. The Sri Lankan Government allocated Rs. 47 billion in 2003 and Rs. 117 billion in 2009 for defence expenditure.

The second one is the fuel crisis. The price of a barrel of an unrefined oil suddenly increased from approximately, $ 20 to $ 147 in 2008, in the world market. Along with the hike of fuel prices, the price hike of other related products such as fertilisers, chemicals, pesticides and electricity is unavoidable. It also results in an energy crisis.Third was the food crisis. Agricultural countries such as China, India, Pakistan and Bangladesh stopped the supply of agricultural products such as rice, barn, dhal and wheat to the world which led to the global food shortage.

Fourth was the global economic recession in developed countries. According to ecomimists, economic downturn take place after every 30 years. The only Head of State who was encountered with those 'Four Global Crises' and successfully faced was President Mahinda Rajapaksa. It is true that there was a hike in price of goods during past couple of years. If you make a close comparison between prices of goods during past years and after the cease of war, you will clearly see the reduction of prices. There was an abnormal rise in inflation in year 2008 due to aforementioned four global crisises which extended beyond the theory of economics.

The situation recovered in 2009 and has shown a sudden decline of inflation ration. So, it's clear that the point to point inflation ration has been drastically reduced.

Q: What is the wisdom behind the Government increasing the price of flour?

A: The Government has taken steps to subsidize the paddy farmer to provide a fair market for the local paddy farmer.

There should be a minimum price for rice as well. In order to maintain that, the option is to increase the consumption of rice and rice flour based products.

If we reduce the price of wheat flour, it detrimentally affects the local paddy farmer. The advantage of reduction of wheat flour is reaped only by two private companies in Sri Lanka. As a result of reduction of wheat flour, the consumption of bread and other related products is increased and thus the local farmer is unable to get a good price for rice.Sri Lankans' staple food has been rice. It is healthy and no side effects whatsoever. No chemicals are used in removing outer layer of rice. Whereas the healthy parts of wheatgerms are removed while converting them to powder and in order to turn the yellow colour wheat flour to pure white, many harmful chemicals are used.

Q: People in urban areas and in estates, heavily depend on wheat floor based food, because they are economical and easily available?

A: It is not economical for them to consume bread or products made of flour. People in urban areas are comparatively affordable than the others. We should focus on the less affordable people. And it is advisable for estate people those who are excessively consuming wheat flour based foods to adopt to the consumption of rice.

Before the introduction of wheat flour to Sri Lanka, the nation was thrived by the staple food, rice. Sri Lanka was self-sufficient in producing rice. During ancient times Sri Lanka was known as the "Great Barn of Asia". As it did not take long time for Sri Lankan to change their dietary habit of consuming rice to food items made of wheat flour, we believe that the vice versa would also be possible. Flour is a 'luxury' item which was introduced by foreigners.

Q: What special measures the government has taken to protect the local farmer?

A: In order to protect the local farmer, government has imposed 'special commodity leavy' on some imported items. Therefore, when the local farmer can sell his products at a comparatively lower price than the imported ones, he is profited. And farmers are provided with infrastructure facilities so that they are benefitted throughout the process of cultivation to harvest. We have established economic centres at most parts of the country. Thus reducing the levels of intermediasy. Therefore, the farmer can sell their products at fair prices. As rehabilitation process have been prompted by the government, farmers in those areas have already started contributing to the GDP of the country. 'Mahinda Chinthana' has given a high emphasis on protecting local farmer and to build a self sufficient nation.

Q: What are your observations on "Economic Centres" as the newly appointed cooperatives and Internal Trade Deputy Minister?

A: Government has set up a network of Economic Centres Islandwide such as in Dambulla, Nuwara Eliya, Keppitipola, Embilipitiya, Welisara, Veyangoda, Norachcholai. Thambuththegama, Navalapitiya, Meegoda, Narahenpita and Ratmalana. And we hope to set up 'Economic Centres' in every district. These centres are open only at particular times. Because of that time schedules people are unaware of the opening hours.

For example, Meegoda Economic centre is open from 6 p.m. - 1 a.m., Veyangoda centre opens at 9 p.m., Welisara at 3 a.m., Ratmalana and Narahenpita centres from 4.30 p.m. - 11 30 p.m. The objective of opening these centres mostly at evening is to make it easy for people to shop on their way home.

And it has been made easy for busy people to go to market during night times. We have estimated that around 10,000 consumers arrive at one Economic Centre per day.

We have to campaign for raising people's awareness of Economic Centres. We need media support at this point as well. Consumers can pay a visit at Economic Centres and compare the prices. They can purchase fresh vegetables, fruits and other items at lower prices.

Q: What was the purpose of your recent visit to Kilinochchi?

A: The Government has taken prompt measures in resettling IDPs. At the same time government is looking into the development of war-torn areas and to convert them to highly residential areas. While resettling people, the infrastructure developments are also being carried out. So, the purpose of my visit to Kilinochchi was to open a 'Sathosa' branch for the benefit of the people who are resettled.

Q: "CEPA Accord" is a widely spoken topic today. You're going to play a major role in the team consist of MPs and Business Community appointed to analysis the pros and cons of CEPA Agreement.

A: If a certain sector is considered where we lack expertise knowledge, staff, labourers or personnel who are technically conversant of the particular industry, it is hard for Sri Lankans alone to carry out the task. Sri Lanka has now entered to the road to development. Therefore in the development process. We should not be narrow minded and delay what should be done at the correct time. When Indian investors start their industry here, if they lack expertise and knowledgable people, it's no doubt hard for them to continue. At that point they are allowed to bring down Indian workers to Sri Lanka. Yet on an agreement that they have to annually take out 20% of workers they brought from India and fill the blank with Sri Lankans.

Thus within four to five years except the administrative staff of 5%, 95% of the industry will consist of Sri Lankans.If we are not opened to this type of agreement, investors will not be interested in investing in Sri Lanka.