The Sunday Times Economic Analysis
By the Economist
 

Targeting the really poor
It was heartening to learn that the minister in charge of Samurdhi had agreed that the benefits of the scheme should go only to the really poor and deserving. An admission that he as the Minister of Samurdhi in the previous government was responsible for doling out the tax payers money to the undeserving. In an accountable democracy such a minister would resign. Unfortunately our ministers can say anything, do anything and still continue to stay in office.

Everyone knows from his or her own experience, or from the startling fact that over one half of the households in this country were beneficiaries of Samurdhi, that lots of people who should not be getting the benefit are obtaining the money. In fact, according to official statistics, about 60 per cent of households are said to have received such benefits. It appears that we are a nation of beggars!

It is also an equally well-known fact that many of the really deserving poor do not get Samurdhi benefits. Who then are these Samurdhi beneficiaries? In any event, the change of heart or mind of the minister was most welcome. It was not so long ago, soon after he was once again made a minister under the UNF government, that he announced that he would expand the scheme to cover 70 per cent of households in the country. He has either had a change in heart and mind or he has indeed been made to see sense owing to the stringent public finances in the country. The latter is more likely.

Those who are concerned about the responsible and accountable manner in which public money should be spent would no doubt welcome the change. Successive governments since 1977 have preached the principle of targeting the poor. Economists continue to speak about the need for proper targeting. Yet what we have achieved is a hopeless system of doling out money to the undeserving. In some cultures it is a disgrace to get something free. Therefore only the desperately poor, who have no means of obtaining an income, resort to poor relief. Not so in Sri Lanka where anything free is worth getting. There is even a Sinhala saying that a person would even take a cold if it were free. An indication of a deeply entrenched cultural value.

In the last Budget the Finance Minister announced that he intends to screen the poor. The sooner this system is put in place the better for the country's public finances. If a proper means test could be established, then this could also be used for screening the really deserving for public health services, free education and other welfare benefits, that should be the entitlements of only the poor. Not as today when the rich and the poor alike obtain these benefits.

A better-targeted welfare programme could achieve several objectives. By reducing the number of beneficiaries to the really poor, they could get a better support package. As it is today, far too many get too little. The deserving few must get adequately to meet their basic needs. The public expenditure on a well-targeted program is likely to be less. Consequently the quality of the welfare package could be improved. It is meaningless to give free education and health (often better education and health services) to the rich, while denying the poor basic amenities.

There are considerable difficulties in targeting the poor and the deserving. Apart from the cultural values that we have already referred to, a large proportion of the population are informal or non-institutional employment. This means that there it is difficult to determine actual incomes. Nevertheless it may be possible to develop a system that would over time improve information and ensure better targeting. A start must be made and all political parties must subscribe to the need to do so without trying to gain votes by doling out public funds.

The sooner we are able to design welfare programmes for the deserving poor, the sooner we will be able to provide meaningful relief and benefits for them. It will also relieve the public finances of the country from unnecessary and wasteful expenditure. Can we ensure a better targeting of our welfare benefits?


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