From the above data, it is very clear that policy makers have over time continuously focused on the investments which give the better return to GDP and the result is the neglect of low resource, geographical areas like Moneragala, Badulla and the Estate sector . In fact the recent household and Expenditure Survey 2007 reports that the poverty head count in the Estate sector has increased from 30 to 32 percent which to my mind is a very dangerous situation from a deprivation point of view.

The growth of the service sector has led to a neglect of the agricultural sector and the indications are of rural households getting into a poverty trap given that Sri Lanka is essentially an agriculture driven economy from a geographic point of view. The result of this investment strategy is what we see in Sri Lanka now where we are facing severe challenges in the Tea, Paddy and Coconut industry. In fact the overall productivity in the agricultural sector has declined due to the age old agricultural practices yet being followed. There are studies done globally that geography and climate tend to have a strong relationship with terrorism by way of providing a safe haven for training and hideouts for terrorism. The geographic terrain in Mullativu is a classic example in Sri Lanka.

Rest of the Country –  poverty drops to 15.2%

On the other hand if we take the rest of the country research indicates the overall poverty head count has dropped to 22.7 percent as against the previous number of 28.8 percent which is encouraging. However, the 22.7 percent means that the number of people affected by poverty is 3-5 million Sri Lankans. In addition the research also reveals that the non-poor, are closely clustered just above the poverty line which means that the number of poor is subject to sharp increases when slight changes in economic conditions happen like a natural disaster or price increases. If we examine closely the numbers further it reveals that in the rural and urban sectors the headcount ratios are 25 and 8 percent respectively, which means that poverty is essentially a rural phenomenon. If the line coefficient for consumption inequality remains unchanged at the level of 2002 and growth continuous at the same rate as it did in 2004 and 2005, poverty will fall by more than 50% to 8.2% by 2015. If however, consumption inequality increases – as it did in the last 10 years – poverty will fall to 14.8% from 26% in 1990/91 (World Bank, 2006) Further, urban poverty halved between 1990-91 and 2000, while rural poverty declined by less than 5 percentage points, and poverty in the Estates increased by about 50 per cent making this sector the poorest in the country. The latest poverty report launched by the World Bank has revealed that in the Estate sector the poverty has increased to 30% in 2002 which is way above the 1990-91 levels.  However with the increasing prices of Tea the thinking is that a stronger social welfare programme can lead to the poverty level dropping.

Recent research reveals that the overall poverty levels have dropped down to 15.2% which means the pro poor approach of driving the economy is working on this count. In fact it is the best in the Asian region. The challenge however is that the levels of inequality can be greater.

War in Colombo?

In the last one and half years I have heard many a rhetoric of strategies on bringing Peace to Sri Lanka. In the last 25 years all this conceptualization has not brought any results. I feel the best opportunity we have to deflect the core cause of the LTTE leader of having a Tamil home land is if Sri Lanka rallies behind the recently appointed Eastern Chief Minister. It will be a classic case study to the world where a blue blooded ex combatant of a terrorist organization has joined the democratic process and there by becoming the Chief Minister of a geographical area. The challenge is the pace at which the socialization process can happen where the new governance structure can drive the key pivots like IDP resettlement successfully, spruce up the economic development and practice a governance model with a strong language policy that is acceptable to the area. It is up to every citizen of Sri Lanka to shoulder this responsibility.

If Sri Lanka makes the Eastern model work we will see a major swing in opinion of the International community where the current LTTE leadership is also asked to follow suit - to may be replicate the Eastern Model. This can be the turning point to my mind in this complex stage where there are many ideologies emerging as the way out. The fact remains is that Sri Lanka cannot afford a 150 billion expenditure on the war when the oil bill is estimated to reach a 4 billion dollars this year which is more than the combine annual turnover of the top two export revenue earners -Tea and Garments.