Former war-torn regions’ economic growth bypasses rest in 2015

Sri Lanka’s former war-torn Northern and Eastern provinces have emerged as the fastest growing provincial economies in the country last year, recording double digit growth with their share of the overall gross domestic product (GDP) expanding, Central Bank data showed.  

Though relatively small in contribution, the two provinces have grown their economies by a nominal 12.1 percent and 10.9 percent in 2015—a clear sign of raising its share in the mainstream economic activities in the country,
Their share in the overall economy also increased to 3.5 percent and 6.0 percent respectively, of the total GDP in 2015 from 3.3 percent and 5.8 percent in 2014.  
Meanwhile, the Western Province’s share continued to slip as the growth slowed to 5.8 percent in 2015 from 7.6 percent in 2014. 
The Western Province also saw its share in the GDP slipping to 41.2 percent from 41.7 percent in 2014 in a sign of gradual reduction in regional disparities but the per capita income in the province was 1.4 times of the national per capita income in 2015. 

The Western Province is followed by North Western Province with 10.9 percent, Southern Province with 10.4 percent and Central Province with 10.3 percent contribution levels, with the former two slipping from 2014 levels while the latter’s contribution remained unchanged.  

In its journey towards an upper middle income country, Sri Lanka’s main socio economic issue is identified as the extreme level of income disparity as almost 30 percent of the population engages in low productive agriculture which contributes less than 20 percent to the country’s GDP. 

However, the per capita income ratio in the Western Province has declined marginally over the period of 2014 to 2015, the Central Bank said. 
“In Northern and North Central provinces, the per capita income ratio increased while in other provinces, the per capita income ratio remained unchanged except in the Uva province,” the Central Bank said. 

The agriculture sector’s contribution to the Western Province’s GDP was 1.7 percent, the lowest out of the lot. In Uva, Northern and North Central Provinces agriculture accounted for 16.3 percent, 15 percent and 13.8 percent, respectively. 

Sri Lanka’s industries suffer from high dearth of labour. As result, the policy makers are trying to import labour to bridge the lacuna, though many a time it has been pointed out that the issue as well as its solution lies within.

For instance, the excess labour in agriculture sector could be gradually diverted to high productive industry and services sectors. But the process takes time. 
Meanwhile, notably the Northern Province stands atop in services sector as its contribution to the Province’s GDP is as high as 60.6 percent and even the Western Province stands behind it. 
Western Province is largely an industrialized economy with the industry sector accounting for 34.6 percent, the highest, but the Eastern Province stands second with 31.7 percent contribution. 
A section of the economists have long been calling for financial devolution to the provinces, allowing Provincial Councils to play a bigger role in collecting and spending the tax money, ensuring efficiency 
and accountability.