Sri Lanka’s Poverty Line: More than Just a Number

By Centre for Poverty Analysis (CEPA)

On 16 February 2016

A media report from late last week claimed that the government has decided to increase the national poverty line from Rs. 3,500 to Rs. 5,500 per person per month. It also quotes the Minister of Social Empowerment and Welfare, S.B. Dissanayake, as saying this would take the number of persons living below the poverty line from 6.8to 22 percent of the population.

Arguably, Minister Dissanayake’s statement, if true, signals a much welcome willingness on the part of government to take a serious look at poverty. That a 63 percent increase in the poverty line leads to a 300 percent increase in the number of people classified as poor underlines the degree of vulnerability in Sri Lanka.

Reasonably high growth rates and rising per capita incomes tend to hide the fact that there are a large number of people who are poor or ‘near-poor’. Indeed, even in 2013, pushing the poverty line up by 10 percent would have resulted in an additional 800,000 Sri Lankans being classified as poor. What this underlines is that those below the poverty line tend to be not just poor, but in fact destitute and barely managing to survive.

Nevertheless, the question remains as to how the figure of Rs. 5500 was arrived at? What was the basket of food items (that can provide at least 2030 kilo calories per day per person) and other non-food basic needs used in the calculation and how were they priced? Making sure that this basket is realistic and sensitive to variations in preferences, prices as well as the quality of both the food and non-food components, especially basic services, across the country poses a major challenge.

Fundamentally though the problem is that this relies on existing levels of consumption rather what the poor really need. For example, what a low income urban household of five people spends on renting a single room or two, which lacks security of tenure and adequate hygiene and sanitation, is no indication of the money actually required to meet their real housing needs.

It is also important to consider this question alongside that of a decent or living wage, especially given the proposal to set Rs. 10,000 per month as a national minimum wage.
Nevertheless, limiting poverty to monetary or absolute measures is insufficient and can even be misleading.  For instance, data shows that income poverty in the estate sector has fallen significantly in recent years but most of its population still lags significantly behind in terms of access to education, water and sanitation, and adequate housing.

Hence multi-dimensional and relative measures of poverty are critical. Expanding public services to ensure access to health, education, water and sanitation and public transport is crucial. But despite Sri Lanka’s impressive record on some of these fronts, it is well known that these services are not always equally accessible. Nor are they always really freebecause of the many hidden costs involved.

Moreover, the supply and quality of these essential services and their distribution is also not even across the country. Hence, even multi-dimensional measures of poverty that rest on availability or access to basic services in a narrow sense will fail to capture a disaggregated picture of disadvantage and vulnerability.

Central to poverty estimates is reliable data, but it also calls for data spanning a breadth of time, i.e. longitudinal studies in which the same households are visited over the years. This is necessary to understand chronic and transitory poverty, which would enable improvements to the poverty alleviation strategies. Similarly, disaggregated data at the level of Grama Niladhari divisions is also critical to capture unevenness in poverty and service provision at the level of the smallest unit of governance.

As much as it is a technical issue, how to measure poverty and inequality is a question too significant to be left to experts alone. It warrants a robust public debate because the stakes are very high. Ongoing discussions around restructuring the social welfare system-Samurdhi and beyond-render this question even more significant.

The poverty line as a monetary measure is more than just a number. It is a threshold that has important consequences, especially when it is used to determine eligibility for social safety net programmes and the exclusion of those just above it, the near-poor, is a major concern with using it as a cut-off for access to entitlements. This is just one reason why the universal access to basic entitlements and social services is critical.

Thinking about poverty as an injustice also implies considering questions of dignity, well-being and rights along with access to basic entitlements, employment and a living wage. It also means thinking about how poverty is experienced differently by those disadvantaged due to the intersection of gender, caste, class, ethnicity, location, age, ability, or exposure to disasters, conflicts and war.

The first step in grappling with poverty is taking the scale and depth of the problem seriously and that is why the comments attributed to Minister Dissanayake are significant and welcome. The need of the hour is to work towards developingrobust, grounded and complex understandings of poverty and vulnerability and design appropriate programmatic responses.  The key to this is a close partnership between and across various agencies of the state, independent experts, academics and researchers, advocacy groups, and most importantlythose living in or at risk of slipping into poverty.