An Analysis of the Poverty and Human Development in Sri Lanka

An Analysis of the Poverty and

Human Development in Sri Lanka








A Report







Principles of Economics

This research is based on the data and information of 1st year 1st semester 





















This report provides important information on poverty, human development, and other related economic conditions in Sri Lanka. They are described briefly and clearly based on examples and data. The current situation in Sri Lanka regarding economic growth and development is considered, based on post-independence economic data. Non-economic factors that contributed to the situation in economic growth and development are also mentioned in the report. The report also describes non-economic factors that contributed to the unsatisfactory change in economic growth and development.


The progress of human development in Sri Lanka compared to other Asian countries and the Human Development Index are discussed in detail. And it’ll discuss the current situation clearly based on the data of the human resources index. Considers the importance and current status of sustainable development in Sri Lanka. The United Nations’ goals of sustainable development are simply stated.

The report is considered poverty and how it has spread globally as well as in Sri Lanka. It considers the steps we can take to eradicate poverty as well as the decisions taken by Sri Lanka as a government. This report has been considered the factors contributing to poverty, including inequality in income distribution, as well as the other factors.


My advice to all readers

This report is created by me in 2020. So, some of the details should be changed when it comes to the year in which you are reading this. Consider this report as a guide for your project. 
Don’t copy and paste anything otherwise, your entire project/report will Decline by the paragraph check and results will your marks are canceled or reduced.
I assume this will be a perfect guide for you. Try to do this better than me.
(P.T. Attygalle)
4th of November 2021



Sri Lanka has been a developing country for a long time. From time to time our country faced various economic situations. It’s not only happened by the economic problems, but also there are political situations, Civil war, Global economic situations, and many more various problems we had to face as a country. When we consider the economy after the independence of 1948, we had a fairly developed economy. But after the independence situation wasn’t a good one for the economy.

As an example, in 1960 Sri Lanka’s per capita GDP was 152 dollars, Taiwan149, but by 1978 Sri Lanka’s per capita GDP was 226, Taiwan 505.







  1. From 1961 to 1964 the government pursued a policy of controlling the economy.
  2. From 1965 to 1970 economic barriers somewhat relaxed.
  3. After 1977 Sri Lanka government was changed the economy to an open economy. Since then, we have had an open economy.
  4. Overall, the average annual GDP growth was 5.2% from 1991 to 2000.
  5. However, in 2001 GDP was a negative value. (-1.4%)
  6. Again, Sri Lanka’s economic growth was becoming 4% in 2002.
  7. The resumption of the civil war in 2005 led to a steep increase in defense expenditure. The increased violence and lawlessness also prompted some donor countries to cut back on aid to the country.
  8. As a result of the civil war and world petroleum prices, inflation was increased to 20%.
  9. After the end of the civil war, economic growth increased to 8% in 2009 and 9.1% in 2010.
  10. However, the boom didn’t last and the GDP growth for 2013 fell to 3.4% in 2013 and only slightly recovered to 4.5% in 2014.
  11. The main economic sectors of the country are tourism, tea export, apparel, textile, rice production, and other agricultural products. In addition to these economic sectors, overseas employment contributes highly to foreign exchange.
















  • After 2014 Sri Lanka’s economic growth ratio was started to decrease.
  • But according to the chart, we can expect a 4.19% economic growth rate in 2021.
  • One of the reasons for this situation is starting again develop projects what we already stopped.
  • But the target is not the easiest one with this Covid pandemic.



  • But there is a problem in our country, it’s poverty we can’t take numbers as perfect value to describe the economy in Sri Lanka.
  • Still, we have poverty, unemployment, and various economic problems.
  • There are lots of people who are unable to fulfill at least their necessary needs.








Human development


Human development or the human development approach is about expanding the richness of human life, rather than simply the richness of the economy in which human beings live. In 1990 the first Human Development Report introduced a new approach for advancing human wellbeing. It is an approach that is focused on people and their opportunities and choices.


Human development index


The Human Development Index (HDI) is a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and having a decent standard of living. The HDI is the geometric mean of normalized indices for each of the three dimensions.




  • As a country economic development is not only the main thing that we can decide a country is a developed country or not, but also there are humans so their wellbeing must be considered.
  • In this case, there we can calculate the Human Development Index for calculating human wellbeing.
  • The Human Development Index (HDI) is a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and having a decent standard of living. The HDI is the geometric mean of normalized indices for each of the three dimensions.


World map representing Human Development Index categories (based on 2019 data, published in 2020).








  • Sri Lanka takes 72nd place from 189 countries in the HDI ranking. it’s a good situation as a country
  • The HDI is measured on a 0-1 scale, Sri Lanka was measured .625 in 1990.
  •  Healthy life measures life expectancy at birth where Sri Lanka’s average life expectancy is now just over 76 years. This is well above the World Health Organization’s 2016 global life expectancy rate of 72. That is the second-highest n South Asia where only the Maldives has Sri Lanka beat by one year.
  • The knowledge dimension is measured through the expected years of schooling and mean years of schooling. Sri Lanka’s expected years of schooling is 14 years and its mean years of schooling comes in at a little over 11 years.
  •  Compared to Sri Lanka, other South Asian countries aside from the Maldives are in the Medium Human Development or Low Human Development categories.
  •  India has been ranked at 129, Bhutan at 134, Bangladesh at 135, Nepal at 147, Pakistan at 152, and Afghanistan at 170 in the 2019 index.


















Sustainability development is known as not only using natural resources in the present process but also saving them for the future generation to fulfill their needs. Therefore Sustainability Development is not only utilizing existing resources but also developing them and protecting those resources for future generations to fulfill their necessary needs.

  • The foundation of Sustainability Development is Sustainable Forest Management which was developed in the 17th and 18th centuries.
  • It contains two key concepts. Those are
  1. The concept of needs – Essential needs of the world’s poor.
  2. The idea of limitations imposed by the state of technology and social organization on the environment’s ability to meet present and future needs.  — World Commission on Environment and Development, Our Common Future (1987)
  • In 1992, the UN Conference on Environment and Development published the Earth Charter, which outlines the building of a just, sustainable, and peaceful global society in the 21st century.
  • In Sustainability Development everyone is a person who uses information.

Sri Lanka Sustainability Development Index

+ Overall score = 66.9

+ Overall rank = 94

+ Spillover score = 96.5



Scheme of Sustainability Development



Scheme of sustainable development:

at the confluence of three constituent parts. (2006)

  • Sustainability Development can be three spheres. Those are social, environmental, and economic.
  • This three spheres framework was initially proposed by the economist Rene Passat in 1979.
  • Sometimes there may be four spheres with including politics 






Poverty is the state of not having enough material possessions or income for a person’s basic needs. Poverty may include social, economic, and political elements. We can see some different types of poverty here.

  1. Situational Poverty – This has happened through unexpected crises or losses, and this is often temporary. Environmental disasters, divorce, health problems can because by this situation.
  2. Generational poverty – This occurs in families where at least two generations have been born as poverty.
  3. Absolute poverty – This means there are some people who can’t fulfill their necessary needs. (Foods, cloth, houses)
  4. Relative poverty – This refers to the economic status of a family whose income is insufficient to meet its society’s average standard of living.
  5. Urban poverty – This occurs in metropolitan areas with populations of at least 50,000 people.
  6. Rural poverty – occurs in nonmetropolitan areas with populations below 50,000. The rural poverty rate is growing and has exceeded the urban rate every year since data collection began in the 1960s.

The Effects of Poverty

  1. Emotional and social challenges.
  2. Acute and chronic stressors.
  3. Cognitive lags.
  4. Health and safety issues

Solutions for Poverty

  • Develop and implement rapid and sustained economic growth policies and programs.
  • Improve management of water and other natural resources.
  • Invest in and implement agricultural programs.
  • Encourage countries to engage in trade as a path out of poverty.
  • Create and improve access to jobs.
  • Providing all people with access to basic social services.
  • Progressively developing social protection systems to support those who cannot support themselves.
  • Remove barriers to equal access to resources and services.




The national poverty line is the minimum level of income deemed adequate in a particular country.

the poverty line is usually calculated by the cost of necessary resources used by elder humans within a year. The poverty line could be calculated annually. The poverty line is a higher value in developed countries than in developing countries.




Multi-Dimensional Poverty Index is an international measure of acute poverty covering over 100 developing countries. The Multi-Dimensional Poverty Index assesses poverty at individually.

Multidimensional poverty Index (MPI)= 0.009(2016)

Multidimensional poverty Headcount Index (H)= 2.4 % (2016)










Sri Lanka Poverty Line


  • Sri Lanka is a lower-middle-income country.
  • There was a civil war in Sri Lanka for about 30years. The economy and the people suffered from that.
  • We can be happy about the actions Sri Lanka takes to avoid poverty but there is lots of people who still suffering from poverty.
  • There are about over 40% of the population are above the poverty line.
  • Further, many groups are highly vulnerable with a higher probability of falling into poverty in the advent of a shock.
  • From the last calculations, we can see Polonnaruwa is the most vulnerable poverty district in Sri Lanka.  And also, Colombo is the lowest one.
  • Here we can see the national poverty line is decreasing, Poverty alleviation is a global goal by 2030 in line with the Sustainable Development Goals.






In September 2015, the General Assembly adopted the 2030 Agenda for Sustainable Development that includes 17 Sustainable Development Goals (SDGs). Building on the principle of “leaving no one behind”, the new Agenda emphasizes a holistic approach to achieving sustainable development for all.The newly implemented 2030 Agenda for Sustainable Development holds a deep promise for persons with disabilities everywhere.



Goal 1 – No poverty

Economic growth must be inclusive to provide sustainable jobs and promote equality




Goal 2 – Zero hunger

The food and agriculture sector offers key solutions for development and is central to hunger and poverty eradication.



Goal 3 – Good health and well-being

Ensuring healthy lives and promoting the well-being of all at all ages is essential to sustainable development.




Goal 4 – Quality education


Obtaining a quality education is the foundation to improving people’s lives and sustainable development






Goal 5 – Gender equality

Gender equality is not only a fundamental human right but a necessary foundation for a peaceful, prosperous and sustainable world.





Goal 6 – Clean water and sanitation

Clean, accessible water for all is an essential part of the world we want to live in.





Goal 7 – Affordable and clean energy

Energy is central to nearly every major challenge and opportunity.





Goal 8: Decent work and economic growth

Sustainable economic growth will require societies to create conditions that allow people to have quality jobs.





Goal 9: Industry, Innovation and Infrastructure

Investments in infrastructure are crucial to achieving sustainable development.





Goal 10: Reduced inequality

To reduce inequalities, policies should be universal in principle, paying attention to the needs of disadvantaged and marginalized populations.





Goal 11: Sustainable cities and communities

There needs to be a future in which cities provide opportunities for all, with access to basic services, energy, housing, transportation and more




Goal 12: Responsible consumption and production

Responsible Production and Consumption



Goal 13: Climate action

Climate change is a global challenge that affects everyone, everywhere.



Goal 14: Life below water

Careful management of this essential global resource is a key feature of a sustainable future.





Goal 15: Life on land

Sustainably manage forests, combat desertification, halt and reverse land degradation, halt biodiversity loss






Goal 16: Peace and justice strong institutions

Access to justice for all, and building effective, accountable institutions at all levels.





GOAL 17: Partnerships to achieve the goal

Revitalize the global partnership for sustainable development.





Poverty in Sri Lanka





Sri Lanka is an island country. There is a 21.7 billion population here. However, in the vocational period, this may be increased from foreigners. Sri Lanka people and the economy suffered from the civil war from 1983 to 2009. therefore, poverty is the main turning point in our economy because it’s a main economic problem for us as a country.

In 2002 our poverty rate was 22.7 % then after 10 years, it’s decreased to 6.7 %.  In 2016 it was 4.1%. Therefore, we can see the poverty in Sri Lanka is decreasing. But there is income inequality. 




A large scale of the population is living in rural areas it’s about 75% in 2013 and also 85% of the poor population are also living in the rural sector. It’s one reason for this unequal spatial distribution of wealth. The large scale of the wealth of Sri Lanka is centralized to the urban sector.  Therefore rural citizens have a problem with resources. But after the civil war, the government started to development of these rural areas.

Almost 30% of the workforce and about 50% of poor employees are worked in the agriculture sector. Typically, there are lower wages and lower chances to advance their jobs. So, we have a problem as a country it’s how to increase their income.

Other socioeconomic issues, such as malnutrition and climate change, directly affect Sri Lanka’s poverty rate. According to the World Food Program, 22% of Sri Lankans are undernourished or malnourished which signifies that many citizens lack necessary vitamins and minerals.

To combat these issues, the Sri Lankan government partnered with the World Food Programmed to provide “technical and policy support to build national capacity to ensure access to food, end malnutrition and improve the productivity and incomes of smallholder farmers.” Additionally, the Sri Lankan government has made significant advances in reducing maternal mortality and increasing access to primary education.



The percentage of skilled practitioners attending births in Sri Lanka has increased in recent years. Resultantly, Sri Lanka’s maternal mortality ratio has decreased from 500-600 maternal deaths per 100,000 live births to 60 maternal deaths per 100,000 live births in 2020.

Education is one of the most salient factors in alleviating poverty. Today, 99.08% of children ages 5 to 14 years old attend primary school in Sri Lanka.

Predictions determine that Sri Lanka will experience a 25 percent (or $750 million) decrease in exports due to the COVID pandemic. As a result of that, we had to cut off top export industries like Tea, Apparel, and Rubber.

Therefore, we can decide it has made significant strides to reduce its poverty rate.





Human Development in Sri Lanka

The latest report of the United Nations shows that Sri Lanka has made a significant gain from the human development sector. Sri Lanka gained 0.782 index scoring and take 72nd place from over 189 countries in 2019. The HDI is measured on a 0-1 scale and in 2000 Sri Lanka was measured 0.691. And maintained an annual 0.49 percent growth in HDI from 2010 to 2018




The HDI is a summary of several factors that can be categorized under three broad dimensions:

  • Long and healthy life.
  • Knowledge.
  • Decent standards of living.

Life expectancy at birth in Sri Lanka is 76 years. It’s a good point because HDI average life expectancy at birth is 72 years. When we consider other Asian countries, Sri Lanka takes 2nd place in life expectancy at birth.

The knowledge dimension is measured through the expected years of schooling and mean years of schooling. Sri Lanka’s expected years of schooling is 14 years, and its mean years of schooling come in at a little over 11 years.

The decent standard of living is measured through Gross National Income per capita where Sri Lanka measures at $4,020 in 2019.


The government has recently increased direct taxes and reduced indirect taxes to eliminate income inequality. It helps the poverty alleviation program.







All the contents of this report are excerpts from recent reports and the Central Bank report. On closer inspection, the main point we feel is that Sri Lanka is still a developing and low-income economical country.

Furthermore, Sri Lanka’s economic growth and development are still very low. Recent reports suggest that in the early days after independence, we saw a very good situation but new situations are not a good one as a country. This report makes it clear to us that economic growth should not be a mere numerical value, but a practical mirror of the living standards of all citizens in a country.

Considering the Human Development Index, we feel that the progress we have made in human development compared to other countries in Asia is commendable. It is clear that it is a positive measure of the living standards of the entire population of a country.

Sustainable development shows how a country’s resources are utilized efficiently and effectively, saving future generations. It is also clear that the United Nations Sustainable Development Goals are very simple and well described

Poverty is one of the major economic weaknesses within a country. It is clear that this is a problem in all developed and developing countries. Inequality in income distribution is a major cause of this problem. The steps we can take to eradicate poverty as a country are very brief. The report also cites the district-wide spread of poverty in Sri Lanka. The report also commends the positive decisions we have taken as a country to eradicate poverty.

Overall, we as a country are at a very low economic level. It is clear that poverty is a rooted problem in the Sri Lankan economy. While our progress in human development is commendable, we do not see an economic policy that will take advantage of it and lead the country towards real economic development. All economic and political regimes in power are responsible for this situation.








  • The country must move towards further economic growth and development and actively contribute to the production process by training the workforce.
  • The progress of human development should be used to eradicate poverty and reduce income inequality.
  • The economy must continue to be driven to achieve the goal of sustainable development.
  • Objectives to eradicate poverty should be implemented and rural economic development programs should be implemented.
  • It must be further developed while preserving the progress of human development.
  • The government should move away from the policy of consolidating political power and pursue economic policies aimed at the welfare of the people as a whole.
  • The Central Bank should take steps to implement net financial credit in the country to avoid economic weakness.
  • Outside of the report, entrepreneurs are the basic foundation of a country’s development. They should be encouraged for innovation and business development.








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Sustainable Development Goals of United Nations.

Poverty and HDI Sri Lanka.

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Human Development Reports.






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Pawan Tharindu Attygalle

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