Read Lanka Right

Structural economic weakness, not illiberalism, caused the crisis. And that weakness doesn’t apply to India

- Somnath Mukherjee

The economic crisis in Sri Lanka has engendered a mélange of complex, seemingly sophisticated analyses – around populism, illiberalism,

majoritarianism, social harmony (or the lack of it) and how they militate against sound policymaking. With the inevitable undertone that India should be “careful” about falling into a similar trap.

But that just doesn’t hold. The key factor in the Lanka crisis is structural weakness in the economy, which made a crisis like this a matter of “when” rather than “if”. Anti-liberal political posturing had nearly no role. If anything, Lanka adopting some of the most treasured liberal causes may have exacerbated the crisis.

Sri Lanka has been a South Asian exemplar for many decades on Human Development Indicators (HDI). Health, education have been at near-European levels. Average income has been above the rest of the subcontinent – with a pre-crisis per-capita income nearly double that of India.

But there were always problems in the island nation.

● The HDI sheen hides the fact that Lanka received IMF bailouts 16 times since 1965.

● There hasn’t been a single decade since the 1960s when Lanka did not receive at least 2 IMF bailouts.

● With time, size of the bailouts has gone up, but essential bug has persisted.

● During this time, Lanka has endured civil war, political instability and long periods of presumptively “liberal, tolerant” governments – but frequency of bailouts needed didn’t change.