Columns - The Sunday Times Economic Analysis

Inadequate progress in poverty reduction

By the Economist

There is a serious apprehension that the country is unlikely to achieve the Millennium Development Goal (MDG) of poverty reduction by 2015. A UN background briefing prepared for the World Summit on the Millennium targets at the United Nations in New York next month said 11 Asian countries with poverty rates above five per cent were "likely to miss the income-poverty target”. These included Bangladesh, Georgia, India, the Philippines, Sri Lanka and Uzbekistan. In contrast, East and Southeast Asia had already met the target of halving extreme poverty, while countries like India and Nepal still had a long way to achieve their poverty level targets of the MDG.

When the Millennium Development Goals were set, Sri Lanka was ahead of other countries and several of the MDGs had been already achieved. The millennium development goals cover indicators like poverty, health and education by 2015. Even then the weak performance was in poverty reduction. However there was every hope that with economic gains the country would be able to achieve it. This has not been the case. There must be a serious resolve to reduce poverty in the next five years.

Despite the country’s economic growth of recent years, there are serious concerns in the country’s poverty. The persistent high level of poverty in the country, especially in rural and estate areas is a serious dilemma. Though there were signs of abatement in poverty in 2008, there are indications that poverty has grown more recently. Some of this growing poverty is not documented but one that is evident owing to the increased urban unemployment and the rise in the costs of basic commodities that have reduced the real incomes of the poor. The issue of poverty in the North and East is an additional serious concern.

In as far as the other millennium goals are concerned the country is well ahead. In the last six decades life expectancy at birth increased from around 55 years to 74 years, with female life expectancy at birth rising to 77. 9 years.

There have been significant improvements in maternal mortality, infant mortality and under 5 mortality as well. Maternal mortality decreased from 560 to less than 100 per one hundred thousand live births, while infant mortality declined from 82 at independence to 10 per thousand and under 5 mortality has declined to less than 17 per thousand.

Adult literacy increased from 57.8 per cent in 1945 to 91.5 per cent, with female literacy improving more sharply during this period from 43.8 per cent (1945) to 90 per cent. Male literacy increased from 70.1 per cent to 92.8 per cent. Female school enrolment which lagged behind male school enrolment has caught up and is higher than male school enrolment.

There have also been significant improvements in social amenities such as housing, potable water, sanitation and access to electricity and telephones. The country has already achieved most of the Millennium Development Goals set for 2015 except that of reducing poverty.

However the country must not be satisfied with these achievements as the foundation for their achievement was laid over six decades ago and much was achieved several decades ago. In fact the slow progress of human or social indicators and the fact that the country’s position has fallen with respect to other countries must be taken as of serious concern. The composite Human Development Index that has shown a high figure for Sri Lanka in the past shows that the country’s relative position with respect to other countries of the world has declined over the last decade. Although Sri Lanka has improved its HDI index to .759, it has fallen in its relative positioning in the world in recent years from the 89th position among 173 countries in 2000 to the 102nd position among 182 countries in 2008.

Economic performance has much to do with this relative decline. These developments challenge the country’s economic performance of recent years in several ways. Has the economy grown in the manner and levels that official statistics indicate or is the nature of the economic growth such that it does not benefit the poor sections? The early gains in social development have decelerated owing to economic strains.

The Human Development Index (HDI) at 0.759 (2008) is above those of most countries at similar levels of income and higher than other South Asian countries. However the HDI ranking has fallen in recent years. This is indicative of the improvements in the country lagging behind other countries. Most countries in East Asia and South East Asia, such as Singapore, Malaysia and the Republic of Korea that were behind the achievements of Sri Lanka in the 1950s and 1960s, have overtaken the country.

Although these attainments over the entire period are quite impressive, the economic strains of the 1970s were responsible for a deceleration in their improvement. For instance a literacy level of 87.2 per cent that was attained in 1981 declined to 86.9 per cent in 1991 and has risen to 92.5 per cent in 2004. Similarly school enrolment that rose sharply to reach 70 per cent by 1981 increased only marginally to 73.4 per cent in 1991 and rose thereafter to reach 97.5 per cent in 2006. With the initial growth in school enrolment the expectation was that one hundred per cent school enrolment would be achieved. This remains a goal with the primary school enrolment dropping from 97.5 per cent to 89.9 percent in 2008 owing to pockets of acute poverty and war torn areas in the country. Although health indicators have improved, the morbidity pattern still discloses a high incidence of illnesses associated with poverty, poor housing and malnutrition.

There has been a slowing down of the country’s social development more recently. There were “spectacular” achievements in literacy, curtailment of mortality and achievements in life expectancy in the i950s but there has been a slowing down of progress in these in the later years. Of course it is easier to make significant gains earlier when moving from lower levels than later when a higher level has been attained. Despite the improvements in mortality rates, literacy and school enrolment, high rates of diseases associated with poverty and poor living conditions persist. Further, the quality of health and educational services leaves much to be desired. There are also significant regional disparities and urban-rural differences. The tardy progress in social indicators in recent years it could be argued is due to slow economic growth and progress.

Notwithstanding these qualifications there is no doubt that the country’s social and human development indicators are notable. Yet, the country’s relative position has declined significantly and this should be recognized for both economic and social policy formulation and implementation.

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