High economic growth but inequality, poverty high in Sri Lanka

The UNDP’s latest assessment of the Millennium Development Goals (MDGs) puts Sri Lanka among countries with the highest inequality in the Asian region. The MDG report also notes that poverty and environmental degradation has increased in Sri Lanka.

The UN’s 8 MDGs – ranging from halving extreme poverty to halting the spread of HIV/AIDS and providing universal primary education - were set in 2000 and are to be met by 2015. The UNDP report titled ‘The Millennium Development Goals; Progress in Asia and the Pacific 2007’, is the mid-point assessment of how far countries have gone in meeting these 8 goals.

Poor getting poorer
Sri Lanka is on track to meet most of the MDG goals and is noted as an early achiever in many areas, thanks to past investments in social welfare.

However, the findings also show that high economic growth of recent years has not, for the most part, reached the poor. Sri Lanka ranks 4th among Asian countries showing high inequality, based on the Gini-index from 1990s to 2000s.

“In Asia inequality has grown very rapidly. China, despite the record poverty reduction, is one of the most unequal societies in the world.

The worse offenders are Nepal, China, Cambodia, Sri Lanka and Bangladesh,” said the director of the UNDP regional centre in Colombo, Omar Noman, speaking at the launch of the report on Monday.

The report also notes that the number of people in Sri Lanka living on US$ 1 per day increased from 3.8% of the population in 1990, to 5.6% by 2002. The share of national income available to the poor also reduced while the rich got richer. The share of the poorest 20% in national income shrank from 9% in 1990 to 7% in 2002.

Although child and maternal death rates are impressively low in Sri Lanka for a developing country, other aspects of life are not so healthy. Nearly 30% of Sri Lankan children, in the age group of 3 months to 5 years, were underweight according to 2000 data.

Meanwhile data from 2001 to 2003 show that on average, 22% of the entire population was undernourished.

Environment getting poorer
Sri Lanka’s environment is also getting poorer with less forest cover and more carbon dioxide emissions. The land area covered by forest reduced from 36% in 1990 to 29% by 2005. Carbon dioxide emissions increased from 0.2 to 0.6 metric tons per capita from 1990 to 2004.

Sharing growth
UN officials say economic growth must be shared among all social segments because persistent poverty and inequality causes social and political instability. However, the UN says focussing only on economic growth will not reduce poverty.

“We of course agree that economic growth is a necessary condition for reducing poverty; but while necessary it is not a sufficient condition. While water may ‘trickle down’, economic growth from the wealthy does not. For many countries in Asia poverty is no longer a problem of resource scarcity, but mainly of skewed distribution of national income,” said the UN resident coordinator for Sri Lanka, Neil Buhne.

For economic growth to benefit more people, countries are advised to facilitate redistribution of wealth by expanding infrastructure, services and jobs for the poor.

Government response
The government agrees that policies have been less successful in reducing ‘income’ poverty compared to ‘non-income’ poverty. However, according to the government, inequality in Sri Lanka is no longer increasing but decreasing.

“Inequality was on the rise at one point, but now it is reducing. If you look at the Gini index, it went down from 0.49 to 0.46 in 2005 and was 0.43 in 2006,” said the executive director of the National Council for Economic Development, Don S Jayaweera.

The government says it has already started a number of programmes to reduce regional disparities. These programmes are also expected to reduce poverty. Around 5% of the people live in extreme poverty on US $1 per day and 40% live on less than US$ 2 per day. The government plans to lift everyone out of extreme poverty and halve the population on US $ 2 per day, to 20%, by 2015.

The government says it is also addressing environmental problems and points out that although environmental problems have increased, more people have access to safe drinking water and housing, which are positive environmental indicators.

“The main environment sustainability challenges include rapid decline of forest cover, diminishing biological diversity, carbon dioxide emissions and the prevalence of unhygienic, underserved settlements - particularly in the City of Colombo,” said Jayaweera.

The government says it is looking at vehicle emission controls, improving urban infrastructure facilities and relocation of slum communities to contain further environmental degradation.