Some Aspects of Poverty in Sri Lanka: 1985-90

Abstract:     
Poverty in Sri Lanka is still largely a rural phenomenon. Between 1986 and 1991, national poverty rates declined modestly, almost entirely because of a decline in rural poverty. During the same period, urban poverty increased. Poorer households tend to have higher dependency ratios, fewer years of schooling, lower participation in the labor force, and significantly higher unemployment.

Datt and Gunewardena characterize poverty in Sri Lanka, using data from two recent household surveys (for 1985-86 and 1990-91). Poverty rates in 1990-91 were highest in the rural sector and lowest in the estate sector, with the urban sector in between. Between 1985-86 and 1990-91, national poverty declined modestly, almost entirely because of a fall in rural poverty (although poverty in the estate sector also declined). Agriculture, forestry, and fishing accounted for about 80 percent of the decline in national poverty. Favorable redistribution and growth in rural mean consumption accounted about equally for the decline in rural poverty. During the same period, urban poverty increased.

But poverty in Sri Lanka is still largely a rural phenomenon. Nearly half the poor depend on agriculture for livelihood. Another 30 percent depend on other rural nonagricultural activities. Regional variations in poverty are fairly limited. Female-headed households are associated with greater poverty only in the urban sector. Poorer households tend to have higher dependency ratios, fewer years of schooling, lower rates of participation in the labor force, and significantly higher rates of unemployment. Direct transfer benefits from the Food Stamp Program are progressive and have a greater impact on poverty than uniform allocations from the same budget. Economic growth could reduce poverty considerably.

This paper - a product of the Poverty and Human Resources Division, Policy Research Department - is a revised version of a background paper for the Sri Lanka Poverty Assessment.

Number of Pages in PDF File: 68

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