Sri Lanka: post 1948, Economy and China

By sbarrkum 20 Comments

Some snippets on Economy, Population.   The seeds for the darkest years of our history were being laid.   China was lending a helping hand, and India was backstabbing Sri Lanka by training the LTTE.

Sri Lankas population was approx 7 million in 1948
By 1971 had increased 12 million (70% increase)

Until 1967 or so high rubber prices, were able to sustain a welfare system. Free rice etc. Development of better synthetic rubber, dropped natural rubber price.
Sri Lanka economy crashed and unlike now, no one was willing to lend.

A large part of food, including rice was imported. Gal-Oya type scheme (Large dam/Irrigation system, see here for more descriptive) etc was not sufficient for a population that was increasing by the day. There wasnt enough land to go around for the large population increase.

The first big sign of the crisis caused by the population and an economy unable to keep pace was the 71 insurrection by Sinhalese mainly southern rural youth. Once the insurrection was suppressed, Land Reform was put into place and  imposed a ceiling of twenty hectares (50 acres) on privately owned land and sought to distribute lands in excess of the ceiling for the benefit of landless peasants.

No foreign exchange, we had to engage in barter, eg the Rubber Rice pact with China.  Then as usual the Americans twisted our balls. Their surplus wheat that had gone mouldy was given under PL480. It was not free, SL had to pay for it.

So, we had to learn from scratch, without much capital to be self sufficient.

The economy of Jaffna and the Vanni boomed. Much of the veggies, chillies came from there.

Then in 1977 JR Jayawardene opened up the economy. The farming economy and local industry, collapsed specially in the North.    !977 riots, burning of the Jaffna library helped us well on the way to self destruction.

Well worth reading

Prime Minister, Dudley Senanayake, however, fully backed his Minister of Commerce and was prepared to pay this price; he realized that the benefits to Sri Lanka from the agreement far outweighed losses consequent to the cutting-off of American aid. He argued:
“Ceylon’s oil trade pattern has been knocked out by changes in the world market and we have to seek new markets for our needs of essential foodstuffs and for our exports”

R. G. Senanayake: “We noted on the Chinese side the absence of the spirit of bargaining and haggling on comparatively small points. On the other hand, they gave us the impression of being large minded and forthright in their dealings”

http://www.island.lk/2002/12/22/featur06.html

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20 Replies to “Sri Lanka: post 1948, Economy and China”

  1. Good summary, SL is a fascinating country and is a case study for what the subcontinent nations can aspire to realistically in the medium term.

    The things that I see SL as having done well –
    – land reforms as you mention
    – free universal school education in the mother tongue, uniforms, books, etc. I’m aware that the higher university scene is quite poor and that most ambitious youth end up emigrating, but providing the basics sets up a good base to develop from
    – free universal basic medicare
    – a generally law abiding, pragmatic society despite the simmering flash points around language and religion
    – opening up to international tourism in a big way. Paying $50 for attractions like Sigiriya or the World’s end was hard to swallow, but it goes a long way towards the local economy if distributed properly

    I do see dangers of an over-reliance on tourism or remittances creeping in, but developing quickly for a small island nation without an industrial base is always going to be hard and SL’s path is probably the quickest way up. This cannot be extrapolated to India, though clearly though there are aspects one can adopt. I don’t see why Nepal or Bangladesh can’t copy-paste whole parts of the playbook.

    hitching the wagon to China is probably the most hassle-free in the short term but with the use of chinese labour (I heard that chinese prisoners were used to construct the Colombo-Jaffna road, who were strictly prevented from interacting with the locals) and chinese contractors, the benefits don’t really seep in. You do get spanking new infrastructure and world class roads and trains, but the debt can be crippling, as with Hambantota.

    Finally a couple of questions that tie into the identity questions that this blog loves to discuss –
    – why is Tamil synonymous with Hindu in SL? The muslims are tamil speaking as well, but aren’t considered Tamils, which is unlike in TN. Is it a conscious move on their part to separate their identity?
    – Is there finally an emerging Tamil – Sinhalese unity? I see plenty of Tamil-Sinhalese couples here in the UK, would that be uncommon in the mother country?

    1. Paying $50 for attractions like Sigiriya or the World’s end was hard to swallow
      Maybe you got ripped off:
      Sigiriya USD35 (UNESCO recommendations).
      Sigiriya has a SAARC rate (half I think).
      Worlds End (and other parks): USD 25

      I do see dangers of an over-reliance on tourism or remittances
      Not going to be there for a long time, post covid-19.

      chinese labour (I heard that chinese prisoners
      That was quite a while back. Was stopped. Now mainly technical and chinese supervisors.
      Local labor and some technical, local Engineers. Much slower with local labor, tea breaks etc.
      There is big ongoing project near my place.

      but the debt can be crippling, as with Hambantota.
      The West leaning govt of 2015-2019 fxxked it up. Bad mouthed China thinking the US and West would bail them. Nada and had to go with tail between the legs back to China, and they took their pound of flesh.

      Tamil synonymous with Hindu
      More of West reporting thing, Hindu Tamils vs Buddhist Sinhalese. That said many of Tamil politicians are protestant Christians. eg Sumanthiran or the late SJV Chelvanayagam

      muslims are tamil speaking as well, but aren’t considered Tamils
      Its changing, more Sinhalese speaking, specially in the south, younger generation.

      I think the breaking point was when the LTTE chased out the Muslims from the North and East.

      Tamil – Sinhalese unity? I see plenty of Tamil-Sinhalese couples here in the UK

      Common enough among the urban english speaking class, specially among Christians. eg my Maternal grandparents, 1910 Deep South Galle.
      Also among the urban poor living next to each other.

      There have been quite a few marriages between Sinhalese soldiers and Tamils in the North and East.

      Has to do with, if they get to interact with each other. Towns, Villages with mixed population (more so in the south), Uni, Work place. Jaffna etc is mono ethnic, a result of LTTE ethnic cleansing. The majority of Sinhalese in these areas are Govt Servants or Military.

  2. Couple of things I notice about SL. A small town guy who doesn’t speak english still has a noteworthy air of competency and a high standard of personal hygiene. There are very few places I can observe this in India, perhaps kerala and konkan and some patches of the northeast. I recently spent a day with a driver on the southern coast. This guy had a nice large car, spotless, zero english, but he was quite comfortable using google voice translation to communicate. It was a complete random accident meeting him near the town of Matara and he wasn’t linked to a resort or anything, but I couldn’t imagine a chauffeur from the Taj mahal palace in mumbai being this presentable.
    Apart from this I had an interesting and frank exchange with another guy working in the hospitality space on the south coast. We were talking about India which he had visited once but had clearly formed and shared an opinion about. He said a bit coyly, hoping not to offend (we had built a rapport over days), “Indians are not so disciplined people”. A lot of the BP discussions look at prosperity from a very structuralist approach, oddly marxian from people who are aligned centre-right, but certain aspects of prosperity just seem downstream of culture. Despite what many perceive as wrong-headed economic policies, malayalees share this sort of discipline about them, and they “feel” more prosperous than their GDSP would indicate.

    1. Spot on, totally agree. I haven’t spent much time in Kerala apart from the tourist spots but I feel TN has a lot of the elements you’re referring to as well – a generally literate population, a good work ethic, a focus on competence and simplicity of lifestyle. Maybe I’m romanticising it a little, but I found the towns and villages in TN start buzzing with life and activity even before the crack of dawn, and most people are generally well turned out, though simple. No wonder it’s one of the most industrialised and urbanised states in India.

      In SL, I was surprised about the relative lack of English proficiency even in Colombo among the youth, but I was able to get by with Tamil, surprisingly. The chinese presence was everywhere, especially near the harbourside with the massive Port City project that’s underway.

      1. Yes, TN produces particularly competent people in the trades. A carpenter I’ve worked with (originally from a village near madurai), could pass for a CA, and we can speak at length in english about fun topics like traditional lumber curing techniques. (BP post idea?)

    2. Sri Lanka is less isolated than most of India is. Its a bit like how interior Americans are perceived as a bit crude, compared to coastal Americans. Caveat is that the vast majority of Americans live near the coast, the interior population is actually very small. It is the other way around in India.

      As interior India gets more exposed to the world, these things will change.

      1. Vikram,
        The cultural patterns that make SL or Kerala a certain way are accumulated over many generations, dozens if not hundreds. Their prosperity is a trailing indicator if anything, given that it has survived through all sorts of challenges like civil war and anti-industrial policies. The insular subcontinent does have examples of prosperous societies, like punjab among the flat-landers and different hill people like pahadis and bhutanese. That said, the end result of cultural openness, internationalisation and more prosperity will follow a unique pattern for each of these people. In Karnataka alone, the difference between the coastal people and the people of the eastern deccan interior is staggering. In fact the wealthiest and largest cities of the past were in these dry landscapes, like Vijayanagara, Malkhed, Badami, and Bijapur. Now they lag in every social indicator within the state and are not very different developmentally than the “cow-belt”. Anyone familiar with the region can see the interplay between ecology and culture, acting out over very long periods of time. The status of women, food supply risk, feudal economy interwoven with all these factors create customs that take a long time to lose their hold. Forget about interior north india, the chances that the people of Yadgir and Udupi districts developmentally converging with each other in our lifetimes is almost unthinkable. The former is like Niger and latter like Peru or Thailand.

        1. “Forget about interior north india, the chances that the people of Yadgir and Udupi districts developmentally converging with each other in our lifetimes is almost unthinkable.”

          Shouldn’t migration hasten the process?

          One of India’s problems is low inter-state migration. AFAIK it is lower than inter-country migration in Europe. Difficult to achieve convergence without it.

          1. Prats, anything can happen after a few generations, so limiting my predictions to the next 50 years. If internal migration happens rapidly and at scale, the low social capital migrants possibly change the culture bedrock of the host region for the worse. If it happens gradually, the migrants become a fixed underclass and this whole process of them working up the social hierarchy goes beyond our lifetime. I hope people don’t read too much prejudice in my comments. My people aren’t from a particularly high functional region, lol. Also would say in my experience, some of the most brilliant people come from bihar and interior deccan. But those societies are carrying the legacy of some anti-social outlook that perpetuates low-investment in health and education and intervening and fixing this is very difficult over a single generation.

        2. girmit, the close coupling between ecology, livelihoods and customs breaks down decisively with the arrival of the industrial economy and the modern state. The divergence you mention is the result of the impotency of the Indian state, and does disappear as it gets stronger. Think about female enrollments in higher education for example.

          The local mores that you describe are linked deeply to caste, and the social capital it ascribes diminishes every year as our economy monetizes and gets industrialized.

  3. “The West leaning govt of 2015-2019 fxxked it up. Bad mouthed China thinking the US and West would bail them. Nada and had to go with tail between the legs back to China, and they took their pound of flesh.“

    The pound of flesh will be taken by China regardless- China is good at reinventing causality…. social engineering/pressure is a perfected art form. China has not matured yet to become nontransactional and continues to play zero sum.

    1. I guess the point he was making was that West/India had an opening during the 2015-19 time period to “balance” the Chinese.The Govt went out on a limb and was perhaps the west best chance. Now that chance is lost forever, and its also perhaps an indicator that for all the talk of an alternate to BRI, the west will not come to rescue of the countries who try to break free from the Chinese.

      So in a way it suits the Chinese for allowing some countries to exhibit some “independence” only to come back to them later. This will serve as a reminder to other BRI countries that China is the only country which will “put their money where their mouth is”.

      I would not put this incident as zero sum, since the Chinese won handsomely.

      1. Similar patterns were seen with Mahathir in Malaysia. They backed out of projects, took their time and then went back to China and a new deal was signed which was more beneficial to Malaysia in relative terms.
        Malaysia wins, China wins.
        It is the US, India which are obsessed with Zero-sum dynamics.

        China has a very well developed construct of using Win-Win (even though the term now is overly used in political context by them). They will still strive to be No 1 overtime as a mega/meta-vision but they are not afraid of playing 2nd fiddle and sucking it up for a good while. End goals matter far too much to let pride side track you.

      2. I would not put it as win-win though. The original deal are so heavily skewed towards China that they can relax terms, it the alternate is the country backing down from the deal altogether. Pretty sure Malaysia would have gotten even a better deal from China had there been an alternate deal on offer.

        Similar can also happen with CPEC where lets say China subleases Gwadar for 100 years or so, in lieu of relaxed terms. I would not put it as win-win. Its more like compromise since both sides hve too much at stake and its costlier for either side to walk away.

        1. I would not put it as win-win though.

          I mean by that harsh of a yard-stick nothing is ever Win-Win. Plus Malaysia having another suitor to hedge is not a fair counter to this because If that was the case China would have adjusted its own offer terms as well because they would have known Malaysia having other options. They hard-balled because they could, they didn’t force anything, Malaysia had the ultimate choice in the end.

          Therefore we don’t need to be that insanely critical with revised Malaysia-China deal. It is going to be very beneficial for Malaysia, people often underestimate the long term positive cumulative effect that a modern Infra has.
          India should know given it wasted 3 decades waiting for it.

          CPEC is different and requires a longer exchange.

          1. Let see , my view its neither as good as China portrays it, nor as bad as the west says it is. Ultimately the debt is being hedged against sovereign assets like land, infra etc. And each country has its own metrics of sovereignty.

  4. Some easy answers first
    In SL, I was surprised about the relative lack of English proficiency even in Colombo among the youth
    Probably you look like expat Sri Lankan. Then the locals not fluent/accent will not speak to you in English. Class issues.
    If you read travel reviews, many are surprised about fluency in English.

    but I was able to get by with Tamil, surprisingly.
    Colombo seems full of Indian/Estate Tamil workers, mid to lower jobs (yeah Genocide).

    If you get a Sinhalese upper class business off the record and a few drinks, they will say they the Estate Tamils work hard. More so than the Sinhalese and Jaffna Tamils.

    Jaffna Tamils are getting remittances from UK/US/Europe etc. From the the district that used to top A/Ls it is the bottom (some have caste theories too).

    The rural Sinhalese (80%) specially males have some 2-10 acre paddy farm land somewhere or other. Too much hard work, for less pay they will jump ship.

  5. These are more controversial thinking on my part.

    malayalees share this sort of discipline about them, and they “feel” more prosperous than their GDSP would indicate.
    malayalees share this sort of discipline about them, and they “feel” more prosperous than their GDSP would indicate

    I really dont know much of Kerala Communism. However, if you look at SL policies and politics, they are very left of center.

    Even the the West leaning UNP, other than for privatizing National enterprises cannot really go beyond that. In fact that is the party that resorts to racism and riots to be in power. (Think Trump).

    Now to the controversial part, which I have said often on this forum.

    SL, Kerala to a lesser extent, Eastern India to an even lesser extent are the last bastions of the Sudras.

    I use the word, Sudras to imply peoples who kind of have ancient concepts of egalitarianism and equality.

    Most Indians/Sri Lankans have Indo/Aryan and or AASI in percentages in a cline. But does Indo Aryan hierarchical social constructs also have a cline.

    I think so, with the least Indo Aryan hierarchical social constructs in increasing order, SL, Kerala, Eastern India/TN maybe for tie. No reference, just anecdotal data.

    A light end,
    https://www.youtube.com/watch?v=bvILaBS5zCI

    1. Will roll with u on the theory.

      I see no reason to think that sudras were inherently more egalitarian. We do not have any literature from their end to suggest that. To think of pre historical times of any area having egalitarianism or equality is a stretch. Sri Lankan egalitarianism could be due to Buddhism as much as Shudra-ism, Buddhism of course is an Indo-Aryan construct. To me egalitarianism or equality this concepts are modern.

      Indus valley for example is seen as having some form of “equality” due to presence of large bathing area and absence of warfare and such. But its still a theory without much proof. For all we know their age was as structured/stratified (more or less) as the people who came after them.

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