COLOMBO, May 25 : In the backdrop of the import restrictions and price controls that triggered shortages of red rice, Sri Lanka’s Trade Ministry is now drawing flak over the creation of a new ‘mafia’ in salt, a leading news portal of the island nation said.
Sri Lanka’s so-called ‘rice mafia’ and ‘maize mafia’ are crony Mercantilists or rent seekers in economic terms, who are allowed to exploit consumers under cover of 1970s style import licences, EconomyNext reported.
Food, being an essential item, is one of the easiest ways that businesses close to the elected rulers can extract extra profits or ‘rents’ from the consumers.
The rent seekers gained market power during the ousted (former prime minister Mahinda) Rajapaksa regime, by restricting competition with state help and were inherited by the current administration.
Unlike an import duty, which pushes up the cost of food by a fixed amount determined by the government, import licencing by the state places a quantitative restriction on consumers, where prices can soar far above the tax plus price.
“Now a salt mafia has developed in this country,” opposition legislator Rauff Hakeem told parliament.
“Is someone giving an incentive to produce this salt mafia It is against this type of practice that people gave a big mandate to the government.”
Some private salt traders were also involved in the board of directors of a state salt company, Hakeem alleged.
“The price of a packet of salt which was 130 rupees, is now 360 rupees,” Hakeem said. “It can be sold at 150 rupees or even 200 rupees.
“Instead of doing that, a big salt mafia that places big burden on the people has now developed,” he added, (UNI)
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