Prices without politics

Election times are the season of promises and price controls. Successive governments artificially attempt to drive down the cost of living by slashing prices or not allowing importers to adjust their prices in accordance to international costs. However, this Government recently went in the opposite direction by allowing milk powder companies to increase prices and backed their decision by insisting that the prices were adjusted through a pricing formula that was put in place with the involvement of the private sector.  

The voters may have a different view of the price increase than policy-makers wish. But few would disagree that it is important to reduce politicisation in Sri Lanka’s economy. Having a coherent set of ideas and a plan to achieve them is essential so voters can hold their government accountable long after the allure of voting is over. This is the true value of a democracy and should never be disregarded.

Governments of all hues have been criticised repeatedly for not having national plans. This is extremely difficult in a country such as Sri Lanka where democratic institutions, public sector, media and civil society are too weak to hold the powers at the top accountable for promises made. At the core of this need is data-based policymaking so that decisions are made to reflect ground realties and the public have the capacity to dismantle statements of politicians and understand the true situation of what can be achieved and why.

The Economic Reforms and Public Distribution Ministry has established an Analytics Unit to drive forward data-based policymaking. This is a crucial first step, as Sri Lanka’s Census and Statistics Department, important as it is, does not meet the deep need for impartial data and analysis that is integral to economic planning and resource allocation. The milk pricing formula is a product of this unit. 

In defining a national vision, leaders employ their ideologies and are elected, or not, accordingly. However, the successful implementation of that vision cannot be ideologically driven. It requires sound public policy that is transparent, accountable, and effective.

The best way to improve government is to improve government’s ability to manage risk and produce results. This could be achieved by a shift toward data-based policymaking. While this may sound self-evident, the lack of good statistical data has been a long-felt shortcoming in Sri Lanka where, even at Cabinet level, decisions are made based on belief systems or political ideologies or for personal gain rather than evidence and fact. Increased investment in a national statistics office and other data-gathering institutions is therefore essential. This is a point that bears repeating. For governments, the paucity of good data is further complicated by the weakness of institutions, particularly the civil service. This is exacerbated by the fact that the poor public perception of the civil service results in them not being given enough authority to carry out policies consistently. This means that it is even more important that the civil service have access to the necessary resources to guide its decision-making. 

Data-driven policy-making would also have the additional benefit of allowing for a more rational public debate on sensitive topics. There are many ways data can be used and how it could influence markets, services and industries needs to be a collective or at least a sensible decision. Ensuring that policymaking is done with data is one way to ensure political leaders are doing the job they are selected for.