The recently-released findings of Sri Lanka’s Household Income and Expenditure Survey has revealed that eight years after the civil war ended, people in the war-hit north and east are gripped by poverty. Kilinochchi, the former rebel stronghold, has the highest level of poverty headcount at 18.2%, over four times the national average.
The coastal district of Mullaitivu, which witnessed the gore of the final offensive that claimed an estimated 40,000 lives as the armed forces defeated the LTTE, has the country’s lowest median household income per month, at LKR 25,526 (about ₹10,000), significantly lesser than the national median of LKR 43,511. Even the estate sector, notorious for its persisting poverty levels and exploitation, fairs marginally better.
Recovering from three decades of strife was never going to be easy, considering the enormous loss of assets and livelihoods. The government’s post-war development drive was centred on infrastructure and credit-driven entrepreneurship. Even though the new infrastructure restored much-needed connectivity for those living in the former battle zone, its reach and purpose remained rather limited in a local economy that had degenerated in the years of war. It was mostly traders from the south who took maximum advantage of it.
Aggressive expansion of credit through loans and microfinance, with predatory interest rates, pushed a livelihood-starved population into an even deeper debt crisis. In effect, not only did the state’s measures fail to resurrect an ailing economy, but loose credit from banks and financial companies also created a poverty trap, firmly entrenching it as a post-war reality.
There were early manifestations of the problem soon after the war, in falling incomes, people migrating for employment and debt-ridden individuals even committing suicide. However, it drew little notice from those in power, both at the Centre and at the provincial level, until recently.
It was the Central Bank that first acknowledged the problem in May and undertook a study on the high levels of household debt pervading families in the north and east. The seriousness of the situation prompted its Governor to look at regulatory measures to free the people from the firm clasp of financial companies. The apex bank’s intervention has now brought belated national attention to the matter.
Recently launching ‘Gramashakti’, an initiative focussing on the island’s rural areas, President Maithripala Sirisena spoke of a likely relief package in the coming Budget for families under a huge debt burden. “Private banks and financial institutions descended on the north and east soon after the war and motivated most of the families to obtain loans under their microfinance programmes,” he said.
Two narratives
In declaring 2017 as the year of poverty alleviation in Sri Lanka, initiating a programme that focusses on the country’s villages, and voicing concern over debt, President Sirisena has turned the spotlight on Sri Lanka’s rural economy, apparently counter-balancing Prime Minister Ranil Wickremesinghe’s emphasis on urban development and trade liberalisation. Through their respective thrust areas, the two leaders are also speaking to their core electorates.
The senior politicians will know well that prevailing economic conditions are central to people’s voting decisions. And that is perhaps why at a Cabinet meeting last month, Mr. Sirisena reportedly brought up the rising costs of living as an impediment to facing elections.
Meera Srinivasan works for The Hindu and is based in Colombo
