What does Sri Lanka’s rural economy look like after decades of exclusion? If the recently- released findings of the Household Income and Expenditure Survey (HIES) 2016 are any indication, the picture is dismal, particularly in the rural and estate sectors.
In recent decades, economic policies have mainly focused on urban development, even claiming that urbanisation is the panacea for all economic woes. A problematic discourse of “poverty” has become the central concern to address the economically deprived of the calculation of cash necessary for survival. Targeted measures are deployed on the poor, as if to inject them like organisms, with the nutrients necessary to keep them afloat.
Will the Government, at least now, wake up to the challenges facing the countryside with the persisting drought, stagnant incomes and deprivation? When the government presents Budget 2018 this week, we might get a sense of its approach to the country’s rural economy over the next year. However, consequences of prolonged neglect of our rural economy demand fundamental rethinking of policy.
Urban and rural
According to the last Census of Population and Housing in 2012, our rural population is 77.4%, the estate population is 4.4% and the urban population is 18.2%. Now the categories rural and urban are subject to debate; it is those living in the Municipal Council and Urban Council areas that are claimed to be urban in Sri Lanka. What is considered rural in Sri Lanka is not necessarily the same as what for example is considered rural in India; particularly in terms of proximity to urban centres, the form of economic activity and access to services.
Scholarship on the “rural” often sees it through the prism of “land” or “peasants”, as rural economic life is identified primarily with agricultural production, which is in turn linked to land and the peasantry. However, recent researches on rural economies are highlighting the diversity of economic activities. While the landed agricultural base continues to be important, people in rural areas draw from varied income sources, including informal work, petty production and migrant labour in the cities or abroad. The same is true of the estate sector, where many from and even living in the plantations are involved in informal work in the towns.
Despite the varied economic efforts of rural and estate people, the HIES 2016 illustrates the massive disparity in levels of poverty and incomes compared to urban people. The poverty head count is 4.3%, 8.8% and 1.9% - amounting to as many as 693,956 persons, 82,308 persons and 67,649 persons - in the rural, estate and urban sectors respectively. Furthermore, the median per capita income is Rs. 11,140, Rs. 7,107 and Rs. 14,090 in the rural, estate and urban sectors respectively.
Clearly, the rural and estate sectors combined, where 82% of the population resides, are relatively more deprived. However, successive governments’ economic policies have focused on the urban, from the beautification of Colombo, Megapolis, the international financial centre and the World Bank’s strategic cities project. Even as the rural sectors are neglected in policy priorities, rapid urban development combined with financialisation is likely to create bubbles that eventually lead to severe economic crises as seen around the world from the Asian economic crisis of 1997 to the global economic crisis of 2008. Indeed, for a country like ours, prioritising investment in the rural sector is essential for sustainable development.
Economic base and accumulation
Rural economic life is different in that even today a significant portion of incomes and expenditure are non-monetised; such production is often not captured in national data. From foraging firewood for fuel to home gardens providing vegetables and livestock, to a portion of agricultural and fisheries production retained for domestic consumption, rural households depend on an economic base partly hidden from mainstream economic analysis.
However, such an economic base can deteriorate when hit by natural disasters such as droughts or floods, and for that matter market pressures. For example, when communities become indebted, with the omnipresent debt trap created by predatory micro finance loans in many areas in the country, they face the risk of losing their capacity to maintain their home gardens and agricultural production. More worryingly, they might be dispossessed from their land and productive assets such as boats and agricultural equipment.
For most small scale fishermen for example, their livelihood does not merely depend on their small boat and engine. Rather, the assets for successful artisan fishing depends on a range of different nets to fish different species such as crabs, sear fish etc. Such fishermen may have nets worth a total of Rs 1 million to catch four or five different species. Therefore, in order to sustain their livelihoods and earn decent incomes, fisher folk would have to save enough over time to build their main economic base, which is central to their livelihood.
Such accumulation is not merely related to the labour they put into production or their efficiency, as some would quickly conclude. It depends very much on how conducive state policies are, and more specifically its willingness to invest in rural infrastructure, local industries for value additions, conducive trade policies restricting agricultural imports and market connectivity without traders’ exploitation.
Poverty and rural development
The rural crisis is often reduced to “poverty”. The problem with the discourse of poverty, including in the HIES 2016, is that it sees a person’s economic status only through minimal incomes necessary for survival. Going by that, a person earning Rs. 4,166 per month in 2016 is not considered “poor”. Besides ignoring questions about people’s needs, the poverty discourse also fails to consider their economic base, their level of indebtedness and the dynamics of their rural social life including access to social welfare services and livelihood opportunities.
An even more ridiculous calculation in relation to poverty is the poverty gap, which is the amount of transfers necessary to get people out of poverty. I would argue that it is through such targeted measures that the state congratulates itself, claiming it has brought down the poverty headcount in Sri Lanka from 28.8% in 1995/1996 to 15.2%in 2006/2007 to 4.1% in 2016. The HIES 2016 calculations show that if Rs. 523 million per month (Rs 6 billion per year) was allocated in a targeted manner to reach the poor, then poverty can be completely eradicated. That is just 15% of the meagre Samurdhi cash income support of Rs 40 billion, and only 3% of Rs 200 billion of the government investment in “transport and communications” with prioritisation of road and highway construction. (Finance Ministry’s Annual Report 2016).
Indeed, the global neoliberal discourse of poverty reduction and targeted measures might excite technocrats to work with such ludicrous conceptions. But they mean little for the lives of people. While poverty headcount can point to excruciating economic situations, including regional disparities, it has little by way to offer for economic alternatives and solutions. Indeed, scholarly writings over the decades on the rural question underscore the importance of substantive programmes of social welfare and policies of rural development that can ensure a stronger economic base for rural folk and possibilities for livelihoods and accumulation.
The failure to address rural discontent from time to time, have led to struggles and uprisings. As we know from our own history, such sentiments are often captured by authoritarian figures with reactionary views. It is high time we recognised the simmering rural discontent and worked towards meaningful alternatives for the rural economy.