ISSN: 1391 - 0531
Sunday, March 11, 2007
Vol. 41 - No 41
Financial Times  

Regional disparities in growth – fact or fiction?

By Lal de Mel
Past President - Sri Lanka Institute of Marketing

Professor Willie Mendis identified the need for East-West and North-South highways a decade ago, but no action was taken.
Mahinda Chintana has correctly identified the absence of highways as the major impediment to regional growth.

There is no possibility of locating major industries in the regions where there are no roads capable of handling container traffic.
The 10-year Development Framework needs to focus on this immense task, without diverting any more scarce resources towards handouts.

The unequal growth of the regions has become a buzzword.

The purpose of this article is firstly to draw the attention of the policy planners to find out the causes for the dramatic annual variations in the contribution of each region to GDP. Secondly, to get the assistance of the sociology and economics faculties of the regional universities and their unemployed graduates, to carry out both quantitative and qualitative surveys of needs, wants, aspirations and self-esteem of the inhabitants of each region and report on the actions required to alleviate poverty. This will provide an excellent training to these unemployed graduates.

The contributions to the total GDP of the Western and Central provinces given below, raises the question whether the claim of regional disparities in the rate of growth is a fact or fiction.

The contribution of the Central Province to total GDP increased from 9.2 percent in 1999 to 9.5 percent 2002. It then declined to 8.9 percent in 2003. This is a dramatic reversal of a healthy trend and needs further study.

The drop in the contribution of the Central Province to 8.5 percent in 2005 might be related to the perilous state of the main road between Nuwara Eliya and Gampola, which restricted the movement of vegetables from this region to Dambulla and Kandy markets.

The usage of motor cycles and three-wheelers is an indication of the number of people with some means. If the GDP growth of the Central Province lagged behind the Western Province, as indicated above, there should be a corresponding trend in the number of motor cycles and three wheelers.

However, the usage of motor cycles and three wheelers have increased from 13.3% of the percentage in Western Province in 2001 to 14.2% in 2004, indicating a relatively higher growth of prosperity in the Central Province.

This is an indication of the need to verify whether the claim of relatively lower growth in plantation regions is a fact or fiction.

The estimated number of Sri Lankans in foreign employment in 2004 was 1,217,053 and accounts for 15% of the total labour force. When considering the 213,453 Sri Lankans who left for foreign employment in 2004, the number employed abroad is 5.7 times the number of departures. The number of migrants from Central Province in 2004 was 15,643 and hence the estimated number employed abroad accounts for 4.8% of the total population of Central Province.

The official remittance from a foreign worker was Rs.72, 600 or approximately Rs. 6,000 per month. It is a known fact that a significant amount of remittances is received through unofficial channels.

Many migrants maintain NRFC accounts in branches of banks located in Colombo and suburbs, for ease of transactions.

Is it possible that such remittances are accounted for the GDP of Western Province, leading to the conclusion that there are regional disparities in growth? It is a difficult task to estimate the contribution to GDP from unofficial channels including the consumption of illicit liquor and hence there is a possibility of the per capita GDP of the provinces being under estimated.

A CEO of a telecommunication company mentioned that in every new provincial town they found the size of the market to be three times the size estimated from official figures.

Hence, I believe there is a need to use ‘Big Mac’ type of measurements to compare the standard of living. Measurements such as the usage of motor cycles and trishaws, telecommunication services, upmarket consumer goods such as Lux soap, the size of the TV sets and the usage of refrigerators need to be used in assessing the number of households living above poverty level and the extent of alleviation of poverty through the various programmes.

There is a belief that poverty is widespread in the formal plantation sector, partly based on the official daily wages.

The total remuneration package includes extensive performance based incentives, mostly cottage type housing, an on-site co-operative store, dispensary with a maternity ward and RMP, a crèche and a school.

There are many other fringe benefits and no travelling expenses. In addition, most of employees possess vegetable plots and cows. The total package needs to be considered in comparing the income of plantation workers with the poor villagers living outside the estate boundaries.

According to official figures, 70.6% of the households in the Central province possessed television sets vis-à-vis an all island average of 70.8%. The consumption of infant milk in the Central Province is 35 grams per month in contrast to the national average of 30 grams per month.

The consumption of fresh milk in the Central Province is 90 ml per month versus the average of 47 ml. These figures do not provide evidence of significant poverty in the plantation areas.

The low self-esteem attached to working in plantations appears to be responsible for the serious problem of addiction to liquor.
The high consumption of liquor by women leads to high maternal mortality, infant mortality, low life expectancy and family quarrels. There is a need for social workers to understand the factors that result in this problem and focus on providing the necessary facilities for rehabilitation. The estate management companies need to address the problem of low self-esteem to avert an acute labour shortage within ten years.

My father-in-law Lambert Perera was the superintendent of Labookellie Estate for over two decades and after his retirement lived in the village of Palagolla.

This village is in the Ramboda Pass, sandwiched between Labookellie and Wedamulla Estates. About 200 poor families live in wattle and daub huts in this village that faces the Kotmale Dam. Kuda Oya, which flows past the village, feeds the Kotmale Dam. All the appeals made by Lambert Perera, who was the president of the village development society, jointly with the Viharadipathi of Palagolla, for the supply of electricity to the village were of no avail.

There was a political vendetta carried out by the politicians against these poor people who did not elect a MP from the ruling party that built the dam.

The response from CEB to the plea to provide electricity to this poor village was that the low return on investment did not justify electrification under the terms of the loan provided by the World Bank.

I hope the focus on poverty alleviation in the Mahinda Chintana will minimise the repetition of this type of neglect of the poor villagers in all parts of the island.

Top to the page

Copyright 2007 Wijeya Newspapers Ltd.Colombo. Sri Lanka.