The Sunday Times Economic Analysis

The Sunday Times Economic Analysis By the Economist

Two economies in one: The rich and the poor
There is a world of difference between the economic achievements of the metropolitan economy that are being lauded and celebrated and the economic conditions of the poor at large.

The share market is booming with a record amount of transactions and the crossing of the index to new heights. Foreign portfolio investments are flowing in. There is a tourist boom with a prospect of nearly half a million arriving in the country during the year. Foreign aid commitments for reconstruction and development are massive.

Foreign exchange reserves are rising reaching a level adequate to import nearly six months of imports. Interest rates are declining. Corporate profits are rising. Multilateral agencies, foreign observers and many many others are commending the government's economic programme. An exultation of the economic achievements is a preoccupation of the media.

The trains are too crowded or not running. Bus travel is hazardous and suffocating. The common man cannot get attention at a government hospital, when they do, there are no drugs or the medical equipment is not functioning. Electricity supplies are continuously disrupted. Pipe borne water in the provinces is as uncertain as the weather.

The rate of inflation is decelerating but the prices of basic utilities and food that matter to the poor are increasing. The number in poverty and child malnutrition in the country is increasing. The plain truth for the common man is that he has nothing to celebrate, only a continuation or aggravation of difficulties.

Despite the economic revival the poverty levels are unacceptable. More than one fourth of the population and households do not have adequate food. These households do not have even an adequate quantity of basic food, although the country is celebrating economic achievements and self-sufficiency in rice.

The Household Income and Expenditure Survey of 2002 disclosed that about 30 per cent of households do not have adequate incomes to access their required food needs. This is bound to be so as the poorest twenty per cent spent more than their incomes on food. Even the third poorest ten per cent spent as much as 87 per cent of their income or more on food alone.

There are also significant regional and sectoral differences in poverty and food consumption that should remind us that the metropolitan area and the Western Province are not the country. Significant proportions of the population in remote and less developed areas do not have adequate food.

The proportion of children with malnutrition varied considerably among districts. While the Colombo, Gampaha and Kalutara districts had between 15-19 per cent of children malnourished, over 34 per cent of children in the war affected North Eastern districts of Ampara and Vavuniya districts and over 40 per cent of children in the Mannar district were malnourished. Five other remote districts had 30-33% of children malnourished. Acute malnutrition of children is as high as 22 per cent in some divisions of the Trincomalee district that houses a large number of displaced persons.

The Regaining Sri Lanka strategy is for the overall economic growth and diversified economic activities to provide better employment and income generating to reduce the number of households not obtaining their basic food requirements. Meanwhile, there has to be state intervention to provide the poor their basic food. The poorly targeted Samurdhi has failed to ensure this.

In as far as the bare essentials of food requirements of this section of the population are concerned, it is an issue of poverty and unemployment. However in the foreseeable future economic growth opportunities are not likely to ensure that the proportion of the population unable to access food would be drastically reduced.

Even with a better overall economic performance, there is likely to be many people who would be left behind. These persons have to be provided with safety nets to enable them to obtain their basic food requirements.

There is no doubt that in the long run peace and economic growth are needed to resolve the problems of poverty, malnutrition and ill health. Yet there is growing scepticism that the strategy of the Regaining of Sri Lanka and the perspectives, emphasis and priorities of the government are aggravating the problems rather than ameliorating the conditions of the poor.

We may be reaching for the skies yet stumbling in the backwoods and hinterland where the populace live. By the time the current economic strategy's results filter down to the poor, it may indeed be too late. In fact the benefits may never reach them.

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