New Delhi: Since last month, Sri Lankans have been paying a record high retail price for sugar amid a shortage of the food item, as speculations grow about an alleged sugar scam at the hands of the Rajapaksa government.
The retail price of sugar now exceeds Sri Lankan Rs 200, compared to roughly Rs 130 in October 2020, leaving most customers in a fix. On 13 October 2020, the Rajapaksa government decided to drop the import tax per kilogram of sugar to 25 cents from Rs 50 (1 Sri Lankan rupee is 100 cents). However, local reports noted that sugar prices have only risen.
“The price of sugar is about Rs 220 right now, and that too only few retailers are selling it,” Kanishka Gunawardena, a 33-year-old attorney living in Wattala, told ThePrint over a WhatsApp call. He claimed that he witnessed law enforcement agencies raid a sugar warehouse in his locality a few days ago.
Sri Lankan MP and former cabinet minister Vijitha Herath has alleged the government is running a sugar scam. He said that sugar, imported for Rs 79 per kg, can be priced at Rs 85 even after taxes, instead of the current prices.
He added that the government is putting on “staged shows” of seizing sugar stocks.
“What they [Sri Lankan government] are doing now is making staged shows of seizing sugar stocks, because the Consumer Affairs Authority would know before the media of any existing sugar stocks (sic),” Herath said last week.
The Consumer Affairs Authority (CAA) is the government organisation responsible for ensuring fair market competition in Sri Lanka.
Herath further accused the government of importing sugar at a low tax, hiding it in warehouses and buying it back for a higher price to help businessmen make a profit.
This comes amid a ‘food emergency’ that was declared by Sri Lankan President Gotabaya Rajapaksa on 30 August in the face of a forex crisis.
Sri Lanka’s sugar requirement is estimated to be 5.9 lakh metric tons per year and the country imports over 90 per cent of its sweetener from nations like India.
Import licenses suspended, but govt imports sugar ‘despite excess stock’
In July this year, the Sri Lankan government decided to import more sugar in order to stabilise the prices. According to Colombo-based Daily FT, the decision was made despite there being excess stock in the country.
Sri Lanka imported 6 lakh metric tons of sugar, a quantity sufficient for one year’s worth of consumption, in the first half of 2021, the report said. As a result, Sri Lanka has an excess of approximately 1.2 lakh metric tons of sugar, given that the average sugar consumption per year is 3.5 to 4 lakh tons.
It must also be noted that in June, the government temporarily suspended permits to import sugar. Thushan Gunawardena, CAA executive director, had reportedly said the ban imposed on sugar imports was a way to ensure traders released stocks of sugar stored prior to the ban.
Janaka Wakkumbura, state minister of development of minor crops (including sugarcane, maize, cashew, pepper, cinnamon, cloves), betel related industries and export promotion, had at the time told Ceylon Today that the trade ministry will be in charge of importing sugar from now on and intends to stabilise the price at Rs 99 per kg.
According to Viyanni Meepe, a 66-year-old mechanic from Kerawalapitiya, however, he bought sugar last week at Rs 230 a kilogram. “The state-owned corporate societies sell it for Rs 130, but you have to wait in long queues for that,” Meepe told ThePrint.
Tax cut cost govt over Rs 15 billion
In March this year, Sri Lanka’s finance ministry revealed that the government’s decision to cut the import tax cost the government Rs 15.9 billion. Instead of terming it a loss, Treasury Secretary S.R. Attygalle had referred to this as “foregone earnings” — the difference between actual earnings and what could have been achieved by way of tax.
Soon after, Sri Lanka’s Marxist party JVP filed a petition with the Supreme Court to look into the matter.
In March, Lasantha Alagiyawanna, state minister of co-operative services, marketing development and consumer protection, told Ceylon Today that the tax cut was intended to give consumers relief amid the Covid pandemic.
“As I said before, the honest intention of the government was giving a relief to the consumers. However, I accept that the consumers did not receive the entire relief (100 per cent) as we expected. However, they did receive a relief of about 60-65 per cent,” he said.
(Edited by Manasa Mohan)