Peace for the World

Peace for the World
First democratic leader of Justice the Godfather of the Sri Lankan Tamil Struggle: Honourable Samuel James Veluppillai Chelvanayakam

Friday, May 11, 2018

Give poor strength to help themselves

 MAY 08 2018

Speaking at the May Day Rally of the United National Party on 6 May, the Deputy Leader and Housing Minister Sajith Premadasa said a mouthful.
He said that economic growth that does not benefit the poor has no meaning. “On this day I have to tell you that the poor in this country enjoy only four per cent of its wealth. While there is rapid development and economic growth it has served only to make the rich richer”.
He also observed that the gap between rich and poor was increasing alarmingly.

Last week Ceylon Today reported that the Department of Census and Statistics has found that 60 per cent of the country’s districts remained in poverty for the 27th consecutive month as of March this year, while 40 per cent were above the national poverty line of Rs 4,528.

It said that 15 districts recorded a ‘minimum expenditure per person per month to fulfil basic needs’ below Rs 4,528, while nine were above it.
The State statistics office pointed out that Ratnapura, Moneragala, Badulla, Anuradhapura, Puttalam, Kurunegala, Trincomalee, Kilinochchi, Mullaitivu, Vavuniya, Mannar, Jaffna, Galle, Matara and Hambantota were the needy districts.
These statistics shows that poverty persists despite the growth in the post-war period.

Economists have also said that the poverty line at Rs. 4,598 is too low and for a country at the stage of development Sri Lanka is in the line should be drawn at double the current figure. This would add several hundred thousand people living on the margins to those considered poor and thence would receive assistance from the State.

Meanwhile, the economy on the macro-level is doing well.
 Finance Minister Mangala Samaraweera reported last week that this country had attracted the highest ever foreign direct investment US$ 1.9 billion and highest ever exports US$ 11.3 billion  in the history of the country in 2017, while unemployment was at 4.2 per cent. This trend continues into this year as the country attracted US$ 465 million in Foreign Direct Investment (FDI) in the first quarter of 2018 (1Q18), exceeding the Board of Investment (BOI) target of US$ 378 million.

Speaking at the annual sessions of the Asian Development Bank in Manila, the Minister said the Government expects the “economy to accelerate growth driven by private enterprise and exports.

He added that Sri Lanka is “at the doorstep of becoming an upper-middle income country and your continued support to accommodate the desired transition without any hindrance to our national development agenda would be immensely appreciated”.

Although the economy has grown at a lower speed in this year, mostly due to the current political instability, there is still expansion of the economy. But it appears that the beneficiaries of this growth are the economically advantaged classes.

Writing on the “Talking Economics” website, the former head of the Statistics Department Wimal Nanayakkara notes that income disparity has always been a major issue in Sri Lanka. According to statistics available until 2013, it shows that the poorest ten per cent of the country’s population hold only two per cent of the wealth while the top ten per cent hold 38 per cent. There is also little difference in the amount of wealth held between the lowest thirty per cent.

In order that there is a more equitable distribution of wealth, the economic growth rate of the bottom thirty percent of the population has to be significantly higher than the country’s growth rate.

One of the factors identified by planners as well as the international lending agencies is the unfair tax system where the wealthy are able to retain much of their earnings while the poor have to spend whatever they earn just to survive. This is because we pay most of our taxes for consumption. So, a person earning Rs 100,000 pays the same amount of tax on a loaf of bread as someone earning a lot less. The new taxation system attempts to fix that.

But the important matter at hand for the Government is to ensure that the lower thirty per cent are provided with the wherewithal to increase their economic capacity.

Going back to the Housing Minister’s comment, Premadasa, who we believe wants to lead this country some-day, should take a leaf from his father’s policies and seek out the poor and give them the strength to help themselves.
Until then, income disparity will continue to grow.