Sri Lanka - Poverty and wealth

The wealthy, representing those engaged in commerce and industry, are largely concentrated in urban areas, while the poorest live on plantations and in rural areas. While the rich live in luxury, many urban poor live

GDP per Capita (US$)
Country 1975 1980 1985 1990 1998
Sri Lanka 382 452 536 590 802
United States 19,364 21,529 23,200 25,363 29,683
India 222 231 270 331 444
Bangladesh 203 220 253 274 348
SOURCE: United Nations. Human Development Report 2000; Trends in human development and per capita income.

Distribution of Income or Consumption by Percentage Share: Sri Lanka
Lowest 10% 3.5
Lowest 20% 8.0
Second 20% 11.8
Third 20% 15.8
Fourth 20% 21.5
Highest 20% 42.8
Highest 10% 28.0
Survey year: 1995
Note: This information refers to expenditure shares by percentiles of the population and is ranked by per capita expenditure.
SOURCE: 2000 World Development Indicators [CD-ROM].

in shanty houses with no sanitary facilities. The urban poor in Sri Lanka are found mainly in the capital, Colombo. The majority of the Sri Lankan population live in rural areas, and the major source of wealth among them is land. Landlessness and unequal distribution of land are key determinants of rural poverty. Those living on plantations are laborers with no access to land ownership or alternative employment opportunities. They live in sub-standard houses supplied by the owners of plantations. A fourth group of poor, those displaced by the continuing war in the north and east, live in various refugee camps with no access to any amenity or opportunities.

The overall degree of disparity in wealth is reflected in the distribution of incomes. The wealthiest 20 percent of the population account for over 52 percent of the nation's income while the poorest 10 percent account for only 2 percent. Disparities in wealth have risen steadily during the post-1977 period, a result of policy reforms that paved the way for more wealth generation through the increased participation of the private sector. An important byproduct of the policy reforms was the soaring inflation induced by the falling value of Sri Lankan currency, raising the cost of living of the poor disproportionately. Meeting basic needs is a struggle to the poor, because average Sri Lankans spend over 40 percent of their income on food alone. Rising poverty has led to considerable social unrest; strikes in work places and protest rallies are common occurrences. The government maintains several subsidy programs to improve the position of the poor. Over 45 percent of the population benefits from one such income supplementary program called Samurdhi. Another, the dry ration program, is aimed at helping displaced families of the north and east due to the continuing civil war. International agencies such as the World Bank and Asian Development Bank have sought to help Sri Lanka reduce poverty. Several funded projects have directly targeted the poorest segments of the population. Despite low per capita income levels, and high levels of the incidence of poverty, the quality of life in Sri Lanka is relatively high when compared with its neighbor, India.

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