The Prime Minister’s call will exacerbate Horizontal Inequality in Sri Lanka

The statement by the Prime Minister that wheat flour imports should be banned is an irresponsible statement and must be retracted.  While it may be his choice to consume only rice, or he wishes more people in this country ate rice, he must be made aware that some people in Sri Lanka are totally dependent on wheat flour.

The Household Income and Expenditure Survey (HIES) for 2006 found that an average Tamil family in the estate sector consumed 17.4 Kg of wheat flour per month when the cost per Kg was less than Rs 40.  At the time the national monthly average was 2.4 Kg per household.  Even though price of wheat flour more than doubled since then to close to Rs 85 a Kg currently (the increase was much higher relative to rice), the HIES for the year 2010 found that estate Tamil households consumption fell only marginally to 15.4 Kg per month indicating how price inelastic these household are to wheat flour.  The 2010 data, which covers the entire island, also show that the household wheat flour consumption in the Jaffna district was 19.3 Kg per month while in Vavuniya it was 18.1 Kg per month in contrast to Hambantota at 0.4 Kg per month and Matara at 0.8 Kg per month.

Therefore, someone must explain to the Prime Minister that given the preference for wheat flour in their daily meal even at much higher prices, not only Tamils living on the estates but in the North as well continue to purchase significant amounts of wheat flour.  This is because this segment of our population is used to, and simply enjoy, consuming rotti and other food prepared using wheat flour.

By banning the import of wheat flour, or even increasing the taxes on wheat flour to very high levels, would exacerbate what in economics we call ‘Horizontal Inequalities’ or policies that impact only particular segments of society; in this case, ethnic.  Simply put, the Prime Minister must be briefed that such half-baked policies will have significant negative impacts on the Tamil people of this country just when policies must be designed to reduce such inequalities.

[Editors note: The author is a National List MP representing the United National Party. Download spreadsheet with figures used to create graph above here. The spreadsheet was provided by the author.]