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No solution to poverty and debt burden

26 Aug 2019

By Maheesha Mudugamuwa Vegetable farmer R. Sivadasa in Nuwara Eliya was so disappointed with how little he made from his harvest this year, yet he had to pay interest for loans he obtained from a state bank as well as private lenders in order to make ends meet. Sivadasa, 53, is not below the poverty line in Sri Lanka, but he and his family suffer from time to time due to the fluctuations in the vegetable market as well as weather conditions. Usually, he grows leeks, carrots, and cabbage on about an acre of land near his house. This little farm prospered under Sivadasa’s grandfather and father. But now, the family is suffering because the price of vegetables keeps falling. From a good harvest, Sivadasa said, he can earn enough to last his family half a year. But this yield was poor, and what he could sell it for was even worse. “I harvested only half of the vegetables and gave up the rest because if I did harvest it, I would have incurred more losses than profits,” he lamented. “We cannot afford a good education for the children or health facilities.” Sivadasa is not exaggerating. He is one of million other farmers around the country who suffer because of the extremely high cost of living, lack of proper government policies in the agriculture sector, and especially, debt. Farmers cry foul over debt Speaking to The Sunday Morning, All Island Farmers’ Federation (AIFF) President Namal Karunaratne said a majority of the farmers around the country are suffering from extreme poverty and the debt burden. “Farmers usually take one loan after another to pay back their loans and they end up having multiple loans with high interest rates. When the harvest is not up to the expected level, the farmers cannot pay back their loans. The situation is at its worst at present in most parts of the country as it affects the children. In some families, children have given up their education to help their families find a way to come out of poverty,” he explained. According to the latest edition of the World Bank’s Sri Lanka Development Update (SLDU), poverty measured using the World Bank’s international poverty line of $ 3.20 per day (in 2011 PPP) for lower middle-income countries declined from 15.4% in 2013 to 9.7% in 2016. The report further states that the reduction in poverty was accompanied by a decrease in the number of districts with a high incidence of poverty. While the districts with the highest poverty headcount are in the Northern and Eastern Provinces, the majority of the poor reside in other parts of the country. High levels of vulnerability and the multidimensional nature of risk factors continue to present significant challenges to the policymakers. Sri Lanka has the lowest extreme poverty rates among other countries in the region – 1.8% of the population was estimated to be extremely poor in 2013. However, living standards remain low as nearly 45% of the population lived on less than $ 5 per day in 2013. Over the past two decades, Sri Lanka’s economy expanded at a rapid pace and the country did much to address extreme poverty, which resulted in a decline from 15.4% in 2013 to 9.7% in 2016 as measured against the World Bank’s international poverty line of $ 3.20 per day for lower middle-income countries. Measures such as the expansion of the Samurdhi Programme in 2015 offered dividends, although better targeted social assistance would have resulted in larger gains. However, it is vital to note that a large number of people remain just a small shock away from falling back to poverty, says the report, noting that adverse weather conditions have become increasingly influential in recent years. However, according to Central Bank statistics, there is a disparity between various districts, with the highest poverty headcount being reported in the Northern and Eastern Provinces, whereas regions like Ratnapura, Kandy, and Badulla account for more than a quarter of the poor population (when combined). Highly vulnerable However, the report further highlights that the national poverty rate is low and not sufficient to capture the various social inclusion problems in Sri Lanka. There is a high level of vulnerability in the population; a simple simulation exercise that varies the poverty threshold by 20%, 30%, and 50% increases the $ 3.20 per day international poverty rate from 9.7% to 17.4%, 21.9%, and 30.4%, respectively. It further states that this indicates that a large number of people remain just a small shock away from falling back into poverty. The risk factors for vulnerability are diverse – productivity and earnings remain low in the estate sector where poverty is still acutely high. Demographics are an important risk factor as a large share of the rapidly aging population does not have a formal pension to support them. While poverty prevails mainly in rural areas, the health sector unions alleged that the healthcare facilities are not properly provided to this underprivileged rural community. Calls for equal health care Speaking to The Sunday Morning, All Ceylon Nurses’ Union (ALNU) Head S.B. Mediwatta said the healthcare facilities were only centralised to the urban areas, adding that most hospitals in rural areas were not equipped with the necessary facilities and as result, those people have no access to proper healthcare facilities. “There are a number of hospitals in rural areas that are not equipped with some of the basic facilities. If the Government can provide necessary facilities for these hospitals, the congestion in main hospitals will also be reduced,” he stressed. “Non-communicable diseases (NCDs) have become a major problem in the country, and unfortunately, the people have to bear a huge cost for the treatment. There are hospitals where facilities to do a lipid profile to check cholesterol levels are not available. It means that they have to come to main hospitals even for that,” Mediwatta stressed. Every citizen should be given equal access to the healthcare facilities, he added.

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