What can India learn from Sri Lanka’s stunning collapse under the Rajapaksas?

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On Wednesday, the President of Sri Lanka, Gotabaya Rajapaksa, fled his country for the island-nation of the Maldives. But as protests erupted in the Maldives against his presence, he headed out again, this time to Singapore. It is unclear how long he will be allowed to stay there. News reports indicate that the city-state is unlikely to grant him asylum. Gotabaya Rajapaksa is rumoured to have asked India to afford him refuge, but New Delhi scotched this speculation, wary of being seen as working against the wishes of the Sri Lankan people.

Rajapaksa’s Asia tour was prompted by dramatic events at home. Starting from March, massive protests broke out in Sri Lanka, a reaction to the country’s crippling economic crisis. On July 9, the protests gathered so much momentum, participants stormed the presidential palace, posting remarkable photos of ordinary citizens taking dives into Rajapaksa’s swimming pool and posing with his luxury cars.

A troubled politics

How did Gotabaya Rajapaksa, a member of the powerful Rajapaksa clan that had dominated Lankan politics for the better part of the new millennium, lose power so quickly? The answer: the island’s unprecedented economic crisis that started in 2019, leading to record levels of inflation and a shortage of basic commodities such as medicines and fuel. By April 2022, Sri Lanka was staring at a sovereign default – the rare phenomenon of a government being unable to pay its debts.

The roots of this crisis are complex but are mainly the consequence of two proximate events – the 2019 Easter Bombings in churches and luxury hotels and the Covid-19 pandemic, both of which squeezed the islands’s tourism revenues. The pandemic had the added effect of lowering the remittances from overseas residents that are crucial to the country’s economy.

However, that fact that Sri Lanka was so intensely affected by these two events owes itself to a deeper problem: its majoritarian politics, where the Rajapaksas held power as populist demagogues, embodying the interests of the island’s dominant Sinhala ethnic group.

Sinhala majoritarianism freed the Rajapaksas from the checks and balances that a more developed democracy would have placed on them. Even as the protests raged, for example, Mahinda Rajapaksa, prime minister and brother of the President, claimed that they had been chosen by “the people”, a reference to his family’s big 2019 election win, while the protestors “did not represent the entire population”.

Sri Lankas visit the president's palace on the day after demonstrators entered the building. Credit: Dinuka Liyanawatte/Reuters

Policy disasters

This authoritarian populism allowed the Rajapaksas to get away with a stunning set of poor decisions, which directly led to their country’s economic collapse.

One of the worst was the country’s sudden turn to organic farming. Much of modern agriculture relies on the use of chemical fertilisers and pesticides to push up yields to the level necessary to feed current populations. In April, 2021, however, Rajapaksa’s government banned chemical fertilisers and pesticides. The switch to organic farming was catastrophic – as would have been obvious if experts had been consulted. Rajapaksa’s brash policy decision resulted in a crash in the production of rice, the staple food grain of Sri Lankans, and tea, the country’s primary export, as the island saw widespread crop failure.

Similarly inexplicable methods were applied to fiscal policy. In 2019, the Rajapaksa government drastically reduced the tax burden on its citizens, even slashing by half the rate of its value-added tax (which is similar to India’s goods and services tax). In order to make up the lost revenue, the Rajapaksas decided to ignore economists and simply print more currency notes. As with agriculture, the result was an obvious disaster, as inflation spiralled out of control.

India and Sri Lanka are very different countries and it is not easy to draw parallels between them. However, on the matter of authoritarian populism leading to poor policy-making, there are remarkable similarities between the Rajapaksa regime and India’s Modi-led government.

Drastic decision-making

Like the Sri Lankan government since 2019, the Bharatiya Janata Party-led government in India since 2014 has taken some drastic policy decisions with little effort to consider how they could impact the lives of citizens. These measures have been implemented with few experts being consulted and without soliciting feedback from other politicians.

The top example is undoubtedly the decision in 2016 to demonetise high-value currency notes. The move sucked the liquidity out of India’s system, crippling its cash-heavy economy. The stated aim of the exercise, of ending so-called black money, was based on a lurid idea of illegal, untaxed earnings being held in large piles of cash – which would overnight become illegal tender. Of course, even as the economy took a severe body blow, nothing of the sort happened.

A similar disaster followed in 2020 as the Modi government suddenly, and without consulting the states, parliament or leading public-health experts, declared a draconian lockdown against the Covid-19 pandemic. India’s lockdown was among the harshest Covid-19 measures taken by any country. The impact was catastrophic, with millions of migrant workers making desperate journeys back home on foot or bicycle. As a result of the BJP’s highly centralised, knee-jerk reaction, India’s economy was the worst hit during the pandemic of any major economy across the world.

Before this, in 2019, the Modi government effected a significant change to India’s citizenship laws, introducing for the first time a religious element, even as Union Home Minister Amit Shah connectedthe amendment to a future citizenship test for India’s Muslims. In 2020, major changes were introduced for the agricultural sector in a top-down manner with little consultation.

Migrant workers climb out of a refrigerated truck after they were stopped by police as they try to return to their villages after a complete lockdown was announced by Prime Minister Modi in 2020. Credit: Danish Siddiqui/Reuters

Democracy to the rescue

Like the Rajapaksas till 2022, Modi is able to manage such a knee-jerk authoritarian style of policy-making since he is backed by a powerful majoritarian, populist appeal that attempts to sweep away checks and balances, projecting them as being inherently illegitimate. Luckily, India is a large, federal country so while Modi has been successful in crystallising power in Delhi, states have often resisted him. On both farm laws and the new citizenship act, opposition from the states was sharp, giving the Modi government a big reason to reconsider both policies.

In India, there is sometimes frustration with policy changed being slowed down by democratic checks and balances, given that several stakeholders need to be considered in order to push forward. However, as the authoritarian turn in both Sri Lanka and, to a lesser degree in India itself shows, those checks also make sure that policy makers do not get things horribly wrong. It is incorrect to assume that the combination of election wins and majoritarian populism removes the need for those democratic checks and balances.

Sri Lanka under the Rajapaksas is a stark warning to any country flirting with the idea.

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