Page 1


Page 2
ECONOMIC INDICATORS
RUPEES OOOM ILLION
45
40 BROAD MONEY.
SUPPLY 35
TIME & SAVINGs
DEPOSITS
3O
25
2O
15
500 -
ピエーr口
1980 1981 1982 1983 1984
MONEY SUPPY
monthly RUPEES 'O00 M | LL || ONS 6.O
5.O
4.0
3.0
2.0
1982 1983 1984 MECHANDISE TRADE
RUPEES OOOM ILLIONS
2O
18
16
14 NL
12 ASSETS
1 O
CENTRAL BANK
GOVT
'81 '82 '83 '34
450 -
1982ல்
1984 ஜ்
600
1983
COST OF LIVING INDEX NUF
COLOMBO
550 (1983 June to 1985 Ma
レイ
3.
A. -a- AL A.
J J A S O N D J F
Invest (As a
1 981
... 1983
O 5% 1ዐ፯
 
 
 
 
 
 
 
 
 
 

600
1984 1985 BERS | لاح
550 r)
o POINTS IN INDEX S. 6OO
صے حح^ھے 5OO 5 کہ مرمت Cost of Living 1 H
リ「_レ 500 4OO شکم مهم g
محصومبر
3OO کتسمیہ
才エ index 2OO
* 45ዐ
1 OO
1979 1980 1981 1982 1983
M A M J J A S O N D J F M A M
iment and National Savings
percentage of GDP)
Savings Investment
5g 20s 25 30g 35s
ECONOMIC REVIEW, JUNE 1985

Page 3
EKONOMI REVIEW
Published by the Peoリs Ba。 Research リー
Head Cice 。 LSSS a S L SLL LSa SL L LS SS L S L S L S LLSS K L LLSLS Georg 2
Sri Lanka
the economic review is ended to
καον εασε teres in fie
economy and economic devennen
process by a na se presentation o
vievs e reportage, facts and debate. THE E CONCAC RE VEW is a community 、。
*、。
edica considerations only ande net necessay refect Bank roceso
リー 。 e persona Aves he
egtehers and g i represen a
šios g. sich ፴ey de ataced
| similar entributions is vel as
ーリviewリsare *。
CCCAAAC REVIVA is published nchi ed is available bio on ission and on decise
Volume 11.
The Economy
Agriculture
Development Iss
Fisheries
Trade
Tourism
Lloyd Fernando
A Plan Implemen Ministry Study
Lionel Siriwardel
NEXT ISSUE
M:
jini
Տr
丁h
| Sr
丁a
FC
Go
COVER DESIG
S. Palitha Kanna
 
 

Number 3 Jume 1985
OONTENTς
COLUMNS 1. The economy in 1984
13 Recent changes in the retail
market for rice
eS 15 Demographic transition and
family planning techniques
18 Surveillance Zone and consumer fish prices in Colombo
20 Drop in imports of TV sets
21 Partial recovery in tourist
arrivals
SPECIAL REPORT
3. SRI LANKAS INVESTMENT
PROGRAMME
4. Public Investment 1985-1989
7 National Agriculture, Food
and Nutrition Strategy
10 The Planning Process in Sri
Lanka
FEATURES
tation 22 Foreign Employment-the Sri
Lanka experience
la 31 Hanguranketha's Vegetable
Economy - A note on Some basic implications of the existing marketing system
ahaweli Construction-how a 30 year project was telescoped to less than quarter the period
i Lanka as a Welfare State-an economist's overview
he tuition class, social class and educational disparities
i Lanka's import market : Bicycles and Cassette Tapes
ink fish farming in the dry zone
reign Employment-the Sri Lanka experience Part II
overnment intervention in rice marketing
Ν
Lingara

Page 4
THE ECONOMY
 

ECONOMIC R v EW, JUNE 1985

Page 5
ECONOMIC REVIEW, JUNE 1985
 

Page 6
PUBLIC INVESTMENT 1985-1989
Sri Lanka's level of canital
investment is expected to increase
sharply over the next five years. The Government's Public Investment Programme 1985-1989, drawn up by the Finance Ministry's National Planning Division, has projected total investment in the next five years to reach Rs. 291 biÍlion, of which public investment is expected to be Rs. 155 billion and the balance Rs. 136 billion is due to come in through private investment. The anticipated public investment of Rs. 15.5 billion for the next five years contrasts with a Rs. 82 billion public capital investment that materialised in the previous seven years, namely 1978 to 1984, when a major part of the Mahaweli construction, GCEC and urban areas infrastructure and building activity took place.
In the first few years of its new policies the government's objective was to give a new orientation and dynamism to an economy that had limited growth prospects. The evidence quoted of the success of the new development strategy are the increased growth in real terms and the resilience that the economy has displayed in recent years in the face of adverse external and internal circumstances. The official records show that all sectors of the economy have recorded increased levels of activity during this period, and the acceleration of economic activities also created a significant demand for services. The result was that the demand for basic infrastructure facilities both by the business and household sectors have expanded at unprecedented rates over the last 7 years. -
But the trends in public finance also reflect the stresses and strains of the new economic policy adopted by the government since 1977. The public sector took on a leading role and its share of the GDP increased from an average of 7.7 percent between 1970-1977 to 16.6 percent in the 1978-1984 period. By 1984 the share of the public sector in total investment was over 60 percent. The increased public expenditure at the end of
Table 1 TI
ខ្ស
Note: Figures in brack
the 1970's also resulte a serious threat to bl nagement and by 1981 ment was compelled 1 measures for curbing public sector investme1 to persist with strict ment control has bee: all government budgets particularly as the inflic aid was due to slow
to the global recessic tions of the early 1980.
These fears of ex tions affecting Sri Lau tary position has also focus the extent to w financing has facilitate investment effort and recent years to bridge budgetary deficit. Be and 1984 over 40 pe deficit has been covere financing. Finance Mit tions for the next five provision for a major p ment expenditure to from domestic sources foreign resources.
 
 

otal Resources and their Utilization
(RS Billion)
2ts indicate percentages of GDP
d in creating idgetary mathe governto introduce growth of nt. This need public investin Stressed in since 1981, Dw of foreign down owing pnary condi
S.
ernal condiinka’s budgebrought into hich foreign
d the public i helped in
: the overall tween 1978 rcent of the d by foreign nistry projec: years make art of investbe financed rather than
In recent years there has been a conscious policy of cutting down on the public investment GDP ratio and this declining trend is expected to continue over the
next 5 years. The intention here is
to induce the private sector to undertake a greater share of invest
ment in the country, thereby
reducing the need to step up public investment. Private investment is therefore, ultimately expected to take on a more prominent role and public investment including extra budgetary investment is estimated to decline from 15 percent to about 12 percent of the GDP by 1989. Meanwhile, private investment is expected to reach a level of 13 percent of GDP from its present level of 10 percent.
As seen in the table above,
private investment which is due to be nearly Rs. 10 billion less than public investment in 1986 is expected to move up to Rs.39 million by 1989; while at this stage public investment is due to amount to Rs.36 billion.
ECONOMIC REVIEW, JUNE 1985

Page 7
In 1984, net foreign financing in the budget amounted to 8.5 percent of the GDP. During the period 1986 - 89 this dependence on foreign financing is expected to be reduced heavily and by 1989 to account for only 5 percent of GDP. A significant implication of the greater reliance on national resources tO finance investiment is that the national savings ratio will have to go up. As seen in the table above, it is expected to reach a level of 19 percent for the next 5 year period. This compares with an average ratio for the period 1978 - 1983 of 15 percent. The higher targets for increased marginal savings ratio are based on the assumption that there will be significant improvements of the government budget and in the financial management of public sector corporations and agencies. If the expected improvements in national savings materialises planned total investment from foreign savings is expected to come down to about 6 percent of GDP. (See Table 1) The restructuring of the investment pattern of the country is a key element in the government: medium term development strategy, The main intention is the reduction of public investment in the overall share of the country's investment programme. With a view to achieving this objective the government has adopted special measures for screening of projects to be included in the public investment proggramme. One of the basic criteria is that in the public investment programme between 1986 and 1989 attempts will be made to steer as far as possible away from long gestation projects. Another policy objective over this period is that of trying to achieve an improved budgetary position and so reducing dependence on the monetary system for financing the budget deficits. Another important area expected to influence the medium term
ECONOMIC REVIEW, JUNE 1985
strategy will be
of payments p contribution to foreign earnings from merchandi. earnings were pr at an average
annually (in cor the period 1983 the import subst in rice, Sugar anc cultural product emphasis in the gramme itself. T foreign earnings assumption that be made to pro exports in the co same time it is
earnings in inv
transfers which
elements in the p are not likely tc The net réceipts turned negative
ted to continue because of the in of interest and ( ners and slowin arrivals. Similar private transfers by Sri Lankans mainly in the
Table 2
(Percentages of G
 

the future balance osition. The main the growth of are due to come se exports. These ojected to increase rate of 8 percent hstant prices) over - 1989; in view of itution programme i several other agriS and the changing 2 investment prohe projections for are based on the a special effort will mote merchandise pming years. At the assumed that the isible and private were very dynamic revious seven years continue to be so. on invisibles which in 1982 are expecto be so mainly ncrease in payment ividends to foreigg down of tourist y the growth of (remittances made working abroad, Middle Esatern
countries) are anticipated to slow down in the next five year period. The burden of adjustment will therefore fall on exports and to a large extent on import substitution. Imports are expected to grow at a slower annual rate of 4.1 percent in
constant prices. The balance of payments situation
becomes a significant factor in this regard. Even in 1983 and 1984 when Sri Lanka’s payment difficulties eased a considerable amount of long term and short term foreign borrowings were resorted to. In the next 5 years a similar inflow of capital expenditure is envisaged including borrowing on commercial terms. These borrowings however, will be restricted only to projects that can generate sufficient foreign exchange earnings to finance the servicing of debts that arise. Borrowing on commercial terms in the coming years has been roughly estimated at US Dollars 185 million per year; the corresponding net borrowing (ie.net of repayment) being about US Dollars 90 million
per annum.
The increased external debt servicing obligations that have arisen as a result of the heavy reliance on
Domestic Resources and Resource Gap
(Rs. Billion)
D

Page 8
foreign aid and other forms of foreign borrowings has influenced the strategy of aiming at a comparatively moderate growth of investment. As indicated earlier, there is expected to be an increased reliance on domestic savings and this is guided largely by the desire to arrest the growth of external debt. The total disbursed external debt, excluding debt owed to the IMF and short term debt, stood at 41 percent of GDP at the end of 1984. But despite restraints on expenditure this percentage is expected to increase further, reaching a peak between 1987 and 1990. Debt service payments are also expected to cause a strain on the country's balance of payments situation in the coming years, especially as the period of heavy external borrowings on commercial terms has coincided with a period of high international interest rates. The projections of debt servicing payments and export earnings, shown in the table below, indicate how it is hoped the position would change over the next 15 years.
The main focus of the development strategy over the next five
years is expected issues connected W. transformation of productive capacit year period, 1978 - Domestic Product ( estimated average r per annum. It is a order to sustain th entum, which the C accustomed to, far ni done. Primarily st ments of the econd achieved and the pI
term stabilisation de By the end of 19
stablization was hel more comfortable
ments position, favourable tea pric
fall Situation also h government revenu
tain surpluses in th current budgets for This situation als reduce the budget's the banking syster been a major cause pressures in earlier is necessary to strategies as the COu expect these high coi to continue indefinit
Table 3 Projected Debt Service Payments on External Debt 19
(USS Million)
NOTE: Covers only the medium and long term debt excluding deb
 

o centre around h the Structural the country, 's . During the 7 1984, the Gross GDP) grew at an te of 6 percent pparent that 谥 s growth momountry has got fore needs to be ructural adjustmy have to be oblems of Short
alt with. 84 short term
ped much by a palance of paymainly through es. This wind
elped to boost es and main
e government's 1983 and 1984. o helped to dependence on n, which had of inflationary
years. But it plan alternate ntry could not mmodity prices ely.
85-1989
S owed to IMF.
The government budget has become a key element in the structural adjustment process and the medium
term investment programme provides basic direction in preparation of the budget. In the period from 1978 to 1984 the Public Invesment Programme had less flexibility due to the heavy concentration of investment on projects Such as the Mahaweli, but now that such expenditures are tapering off a new set of priorities can be decided on for the medium term programme. In agriculture for instance the National Agriculture, Food and Nutrition Strategy is expected to lay down the priotities for selection of projects.(See Box)
As in the last 7 years the upgrading of communications, transport and Other infrastructure facilities is also expected to be given due priority. The development of major economic infrastructure facilities over the last seven years greatly reduced the constraints affecting the achievement of high growth rates in production. But the uncertalinity of the economic and political climate had deterred planners from setting higher growth targets than what was achieved during the previous 7 year period. Among the main factors have been the deterioration of the security position of the country, the relatively long gestation character of some of the more important investment projects and the persistence of problems relating to price stability. Making projections for even the next few years can be hazardous exercise in the context of the increaseed uncertainites. However, the major assumptions considered in drafting of the 1985 - 89 investment programme are that:
* The present security promblem in
the Country will ease;
* Normal weather conditions will pre
Vail during most of the period;
ECONOMIC REVIEW, JUNE 1985

Page 9
ECONOMIC REVIEW, JUNE 1985
 

PIONSTRA ماسه به سه به سم به - NUTRTIONAL “ါးခaovesear†
\ O percent. Anuradhapura
household
ר4_S Trincomalee
3adulla
EMPHASIS FOR TUTRITTI IMPROVEMENT

Page 10
* World trade conditions will show a gradual but moderate improvement and Will not be subject to major crises,
* Inflation and currency fluctuation rates in the industrialised countries will gradually stabilize.
It is the view of the planners that it may not be realistic to expect an average growth rate of anything more than what was achieved during the last 7 years. The emphasis in their view will have to shift to the development of the export sector; although the major part of the “demand pull necessary to achieve a projected growth of 5.8 percent during the next 5 years is expected to come from the domestic market. The areas highlighted for significant production developments are paddy, sugar, livestock and fisheries
for the domestic market, and for the export market industrial pro
ducts, based mainly on labour intensive technologies, and also minor agricultural products. Paddy output is expected to increase
from the relatively modest level of 1 15 million bushells in 1984 to
about 136 million bushels in 1989 a level thatsadequate to meet local
demand on the present consumption pattern. Among the three
major traditional products coconut is expected to have far better potential for production increases than tea and rubber.
In considering the developinent of a viable manufacturing sector, the programme has anticipated that all remaining avenues for efficient import substitution will be exhausted soon and that export-oriented manufacturing closely related to the country’s resource endowments will have to he built up.
The development of a viable manufacturing sector, based on a realistic assessment of the country's comparative advantage is regarded as crucial to the achievement of her employment, income and export development objectives. At
N
present, about ( value added in ma in the processing C
coconuts. The pro in this area are cc
relatively slow grc crops. Greater pc found to exist in tries' category wh tory industries, cottage industries. according to the p be to rely more preneurship and government action ed towards the p infrastructure and
appropriate syster In the contex
initiatives, the se industries’ i.e. mar than tea, rubbel processing, is exp higher growth rate tions of moderatel ternal demand. As the average growt the next five year per annunn.
Table 4
 

ne-fifth of the nufacturing arises f tea, rubber and
spects for growth instrained by the
with in the tree tential has been the other indusich includes facimall scale and The policy here Cogramme would on private entreinitiative, while would be direct'ovision of basic maintaining an h of incentives. It of these policy :ctor of other ufacturing other and coconut lected to attain s under assumpy favourable exTable 4 shows, h target set for S is 8.6 percent
In construction it is expected that the high growth rates of the pre-1981 period are unlikely to continue. The capacity of the sector has already expanded to cope with the demands that may arise. The growth in investment is expected to occur at a more moderate rate while the character of the investment programme itself will probably be less construction - intensive. Therefore, in the 19841989 period a growth rate of 7.3 percent per annum has been assumed for the contruction Sector.
Taking into account the
increased expenditure on defence, the capacity expansion in electricity and water supply, the develop(ment of services in the newly settled areas under the Mahaweli Programme and rapid expansion of housing, the overall growth rate for services has been set at 6 percent per annum.
In projecting the likely budgetary outturn for the next 5 years the programme expects cur
Gross Domestic Product by Industrial Origin 1984, 1985, 1986 and 1989 (Rs. Million at constant 1983 prices)
ECONOMIC REVIEW, JUNE 1985

Page 11
rent expenditures to increase from Rs. 26.9 billion in 1985 to Rs.426 billion in 1989 and current revenue to go up from Rs.34.2 billion in 1985 to Rs. 57.1 billion in 1989. (See Table 5).
Past experience has shown the high dependence of budgetary revenues on trade-based taxes. Export duties are very much influenced by the country’s performance in traditional plantation crops, which in turn depends largely on factors outside Sri Lanka's control. It is expected that the share of export duties will decline gradually from a level of 1.2 percent of GDP in 1985 to
about 1 percent of GDP by 1989.
The share of export duties in total current receipts in 1989, however, will amount to about 5 percent. On
the other hand, import duties are
expected to account for little less than 3 percent of GDP right through the period, that is, about
15 percent of total receipts by 1989. Already, some import duty adjustments have been made and further changes are envisaged in the near future to provide the necessary incentives for industrial exports.
The recent Budget shows that over 50 percent of the current receipts are obtained through selective sales taxes and business turnover taxes. In projecting government revenues for the period 198689, it has been assumed that this heavy dependence on indirect taxes
will continue. With an extended .
coverage and improved collections. it is expected that revenue from BTT could reach a level of 6.3 percent of GDP (i.e. almost 33 percent of total receipts) as against 6 percent of GDP (i.e. 31 percent of total receipts) in 1985. Selective sales taxes are expected to remain around 20 percent of total receipts throughout the period.
ECONOMIC REVIEW, JUNE 1985
Table 5
In 1984, counted for 1 revenue. These dual and corpo wealth tax, est: on transfer of also underway administration the view of th ations of reve caution in gran holidays and ot which have a governement re it is expected t tions will not e. total receipts by
 

Budgetary Current Receipts and Expenditure 1985-1989
(Rs. Million)
direct taxes a C7 percent of total taxes include indivirate income taxes, ate duty and taxes assets. Efforts are to improve tax in the country. In e planners, considerinue effort dictate iting additional tax ther such incentives direct bearing on :venue. Nevertheless hat direct tax collecxceed 17 percent of r 1989.
Current expeditures are prOjected to decline marginally during the period to a level of about 14.4 percent of GDP. Government consumption, however, will remain at a level little less than 7 percent of GDP. In these projections consideration has been given to the likely increases in salaries, wages and other expenditures required to maintain at least the present levels of remuneration and services in real terms. Interest on public debt, both domestic and foreign, is projected to decline from a level of nearly 4 percent of GDP in 1985 to about 3.4 percent of GDP by 1989.

Page 12
O
THE PLANNING PROCESS IN SRI LANKA
Lloyd Fernando
Director National Planning, Ministry of Finance and Planning.
National Planning in Sir Lanka has undergone a radical change since 1977. From the practice of writing medium-term plans emboracing the entire economy, the emphasis has shifted to planning as a continuous process, confined mainly to the Public Sector. The Public investment Programme prepared on a 'rolling plan' basis has thus emerged as the centrepiece to the planning process.
This method of planning reflects a cautious pragmatic approach based on past experience. Attempts to plan for the entire economy without adequate provision for implementation was a major weakness of planning in the past. Commencing with the Ten year plan published in 1959, Sri Lanka displayed a veritable ingenuity and technical capacity for preparing plans. The plans put out in later years such as the three year implementation prOgramme published in 1962 anpi the Five Year Pan 1972 - 76 were technically impressive documents. Nonetheless, they had very little impact on the economy due to a lack of adequate machinery for translating them into action.
The massive investments on long gestating projects undertaken by the government such as the Accelerated Mahaweli, Urban and Housing Development, as well as the Free Trade Zone, necessitated a planned phased programme of allocation of re SOU CeS. Further, the Public Sector had expanded its role in the economy because of these heavy investments. During 1978 - 84 public investment as a percentage of GDP increased to 16.6 from 7.7
in 1970 - 77.
The 'rolling plan' technique is eminently suited for economies such as that of Sri Lanka, which are heavily based on agriculture and tightly linked to the international ECONOfANy. This is because this methodology allows greater flexibility to accomodate fluctuations in
resource flows. It is sible to estimate resou a long time span in c arE dependent Of) because of the vagari affecting production
incomes. Similarly,
trade effects are diffic particularly when 3 dependent on primary
whose prices fu ( rapdily.
Thus, the Public in
gramme which covers period is revised ever, into account the position and econom facing the government. 'rolling plan" because i up five year periods. Fo present Public investmen set for 1985-89 while th was for 1984-88. Every budget is presented in Nic forthcoming year, the sources expected to b the economy for inve the next five years on the basis of curre with regard to pro sumption and S. investment is disagg investment by the and the Private Sect investment Programme after formulated in with the line Mini the Budget estimates it is then submitted to ttee of Development approval.
Every year when th Budget is formulated expenditure estimates Public investment Pr used for allocations to try, depending on the tion. f the atter during the course of would be reflected in of resources. This was very close link-and between the Budget 3. investment Programme. is taken up for it

almost imposrce flows over ountries which agriculture es of weather and therefore
inter-national ut to predict,
country is commodities
:tuate more
Vestment Proa five year year, taking
eVV reSOrCe nic challenges it is called a t keeps moving or instance the it Programme is e last year's one year after the ovember for the
total ree available in stment during are estimated nt information duction conavings. Total gregated into Public Sector or. The Public is there
consultation stries, taking as the base. o the CommiSecretaries for
e government the capital given in the
Ogram The are each Minisresource posihas changed the year, it the allocation there is a
interaction
hd the Puboljic No project mplementation
through budgetary allocatioกs, unless it has first been included in the Public investment Programme; in which lies the strength of the principal planning document since 1979. This was, in-fact, rendered possible by the merger of the forfner Ministry of Planning with the Ministry of Finance. The two functions of financing and planning no longer operate independently.
A considerable amount of technical work lies behind the Public Invest ment Programme. First of all, the macro-economic framework detailing sector-wise production, consumption and savings has to be formulated. This is done by the Macro unit of the National Planning Division using Central Bank National Accounts statistics for the base year. The five year forecast is done taking into account a number of government policy guidelines in regard to public and private investment, budgetary and balance of payments objectives, sectoral strategies intra-sectoral priorities etc.
The government took a very important decision regarding investment priorities in February 1984. This decision reflects its goals of economic and social development, which in a broad sense have been expressed as the achievement of rapid rates of economic growth, employment creation, improvement in living standards and better income distribution while mainTÄNKT financial and economic stability.
It was decided by government that before embarking on new projects in the future, adequate resources must be first allocated for the operation and maintenance of existing capital assets. They include, inter alia, repair and maintenance of existing roads, buildings,
irrigation channels, water supply,
sewerage, education, health, electricity and telecommunication Services. Operation and maintenance of existing assets has been neglected to a very great extent in
ECONOMIC REVIEW, JUNE 1985

Page 13
the past in favour of new projects. This has resulted in the decline in the some of the services and unless this aspect is adequately looked after, massive capital investments will be required to simply replace
worn out existing assets. It was therefore decided by government, that highest priority should be given to operation and maintenance of existing assets in the period ahead.
It was also decided by government that in the admission of new projects into the Public Investment Programme the first basic rule to be followed should be to leave out activities which could be more easily and efficiently handled by the private sector. There are only a very few areas, which for social or security reasons, that cannot be allowed to the private sector on the basis of this decision. Even in the case of those areas which the private sector cannot undertake on its own, due to lack of capital or technology, public investment will in principle be directed towards filling those gaps.
Thus it has been decided that in the medium term ahead, public investment will concentrate on the following areas :
(a) Quick-yielding production oriented projects which would reduce the balance of payments problem either through export expansion or efficient import substitution and which the private sector cannot undertake on its own;
(b) essential infrastructure needs in power, irrigation, transport and commication; and
(c) urgent needs in health, education, housing and nutritional standards of the people.
The government decision of February 1984 also covered the procedures to be followed with regard to the admission of new projects into the Public Investment Programme. Accordingly, once a project is
ECONOMIC REVIEW, JUNE 1985
identified, base and social objec ment and ac priorities, a br with at least a t the costs and b Submitted to Development Se val in principle to the next development. Which is chaire Secretary and to discuss pla issues is service Planning Division
Appraisal of the the Committee Secretaries after by the National It is then submi final approval. with the appro are conducted Resources Depa val by Cabine thereafter inclu Investment Prog resource allocat tation.
Technical improw the level of plar tantly effected interaction with
nomic institution
sities and researc particularly thro logue with the C Ministries and National Planning benefited inne technical base by the Perspecti of the former The system of and the Macrothe perspective are the foundatic refinements were mulate the Prografinne
it is, however, ing in Sri Lank to the Public Si a situation wher looking to the investinnert in
there is a need
sary incentives f
匾
 

d on the economic tives of the governcepted investment oad outline of it, entative estimate of benefits, would be the Committee of scretaries for approbefore proceeding stage of project This Committee 2d by the Cabinet meets every week inning and policy 'd by the National
project is done by of Development initial secreening Planning Division. tted to Cabinet for Final negotiations priate Aid Agency by the External rtment after approt. The project is ded in the Public ramme for annual ion and implemen
"ements to upgrade ining are being cons
through training,
international ecos, including Univerh organisations and ugh technical diaentra Bank and line
departments. The Division has also Insely from the
:reated for planning ve Planning Division Vinistry of Planning.
National Accounts frame developed by Planning Division
ons on which further carried out to forPublic Investment
recognized that Plana cannot be confined ector. Particularly in 2 the government is Private Sector for productive activity, to provide the necesor the private sector
to take up the right type of activity. That is, the private sector should be motivated to invest in high priority areas which are considered socially desirable by the government. This is the area of 'indicative planning' which is different to the planning done n the government sector through budgetary allocations and administrative fiat.
Some form of indicative planning is being already practised today. The sector strategies outlined in the Public Investment Programme indicate the areas which are being promoted and the policy measures that are being adopted for this purpose. However, no targets are being set product wise or even sector-wise for implementation by the private Sector. Such detailed planning requires not only enormous technical skis both at the national and sectoral-ministerial level but also arrangementS for effective participation through dialogue and technical work by the private sector.
it has been decided as a matter of policy to develop a system of indicative planning and the initial steps are being taken in this regard. The Agriculture Food & Nutrition Strategy work which has been very nearly completed, the Medium Term investment Programme for the priwate sector estates and the Industrial Policy exercise undertaken in collaboration with the private sector are some of the important preliminary steps. Further work depends to a large extent on the amount of technical competence in planning that
could be generated. - - The National Planning Division is organis
ing a number of training programmes with technical assistancCe from the UNDP, UNICEF and Bradford University. Training courses are being held in Colombo and in the Districts, the latter with the assistance of the Ministry of Plan implementation. High level policy dialogues, at the level of Ministry Secretaries and Senior Private Sector representatives are
arranged through Seminars and Workshops, one of the most important
of Which was the one held in Ahungalle in August last year. At this Workshop, Senior Private Sector representatives and government officials got together to discuss industrial development issues. It was consequent on this workshop that the high level Industrial Policy Committee was set up by government.
11

Page 14
12
 

ECONOMIC REVIEW, JUNE 1985

Page 15
RECENTCHANGES IN THE RETAL MARKET FOR RICE
Paddy production in the 1983/84 Maha season came down to 65 million bushels, the lowest level of production recorded for a Maha season since 1971, due to the adverse weather conditions that prewaited in the early part of 1984.The decline in production was as much as 20.4 million bushels or nearly "one quarter less than that of the pre
Table 1
(a) Previsional
Vious Maha Sea ased producti Yaja SeaSiOn, h of the 1984 the adverse e damage, estima Maha 1983/ recover from
of this trend
cent decrease paddy under t Scheme by th Board (PMB) dt
Paddy Prod
(b) The fertilizer issues during cultivation year and calendar year Cultivation year comprises Maha (September/October-March (c) Yield per hectare for Maha and Yala are calculated using d are based on crop cutting surveys while total yield is calcul
wested.
(d) Maha paddy harvest is purchased during the period front
the period from August to December.
Source: Central Bank Annual Report 1984
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000LGSLOLOLOEEEL 000EESaMhLTM S S LLL SCTTTTLLLLL
ECONOMIC REVIEW, JUNE 1985
 
 
 
 
 

sora. Although increon in the ensuing alped to bridge part production shortfall, ffects of the crop ted at 15 percent in 34, was hard to A significant feature was the almost 50 in the purchases of he Guaranteed Price e Paddy Marketing
ring 1984. See table
Apart from the smaller quantities available for purchase the PMB was also unable to carry out its normal purchasing operations due to the unsettled situation in the Northern Districts. Furthermore the open market price for paddy continued to be higher than PMB's guaranteed price of Rs.62/50 per bushel (Rs.2/99 per kg) throughout 1984, when the monthly average open market price worked eut to as much as Rs 78/-, per bushel (Rs 3773 per kg).The gap between the open market price and the guaranteed price rose form Rs 15/- per
uction and Purchases 1983 and 1984
are invariably different.
/April) and Yala (April/May -August/September.) ata from the Department of Census and Statistics which ated by dividing total production by the net extent har
January to July while Yala harvest is purchased during
bushe in the first half of 1984 to Rs 16/50 per bushel in the latter half. Even though the open market price improved over 1984 the rising cost of production (an increase of about 15% in major producing districts) eroded producer margins. This situation has highlihgted the need for an upward revision of the guaranteed price for paddy which has remained constant at Rs.62/50 a bushe since March 1983. It also focuses on the increasing difficul
13

Page 16
ties of the Paddy Marketing Board to compete with private sector paddy purchasers.
Table 2 Purchase and Distribution of Rice by the Food Commi
Agrarian Service accordance with directi Ve.
Table 3 Market Price of Paddy and Rice
it is clear that a major reason for
the low procurement of paddy during last year's Maha season was the crop damage arising from floods in some of the major paddy producing areas; though another significant factor was the restriction
of the paddy procurement agents of the PMB to Co-operatives and
The floods that
February 1984 resi damage to the Cro Maha Season. The a this disaster, name comalee, Anura naruwa, Batticaloa, and Mullaitivu dist
Table 4 Retail Prices of Rice at the Co-operative Soci
電臺
Source: Food Co.
 
 
 
 

entres only, in nearly 60 percent of the total pura Government chases of paddy by the Paddy Marketing Board. These areas have
isioner and the Paddy Marketing Board
sustained significant damage in respect to their rice milling actis vities too as a result of the floods.
With the drop in total production of paddy during the 1983/84 Maha season and heavy demand for whatever paddy was available, and also due to the obstacles in the way of efficient market activities the signs of an increase in the retail prices of rice, particularly in the latter part of 1984 , was clear. The extent of this increase was, however, influenced by factors, such as the level of efficiency of the Food Commissioners Department and the PMB when rice stocks are issued in the dhapura, Pofon- Wholesale market and also the effiMannar. Vavuniya ciency of the Co-operative and PMB ricts account for outlets which carry out the funceties tion of retailing rice in competition
Rs/Kg with the private sector. The PIVB depend heavily for its smooth functioning on the operations of the Food Commissioner; but since the Food Commissioner had to maintain a regular trading stock of rice, particularly to meet the requireinents of the Food Stamp Scheme, it has to be assured of a stable supply from the PMB. There has to be very close co-ordination of the activities of these two institutions, especially paddy procurement and rice marketing, and in this context the Central Bank has even suggested that by amalgamating these functions into one institution more effi. cient operations could be ensured
L.
OCCurred in mid ulted in extensive p of the 1983/84 reas that suffered yl, Amparai, Trin
tnissioner's Department
ECONOMIC REVIEW, JUNE 1985

Page 17
DEVELOPMENT issues
The population of any country depends mainly on three demographic variables: fertility, mortality; and international migration. Sri Lanka has undergone three classical demographic transitional phases as revealed by the country's fertility and mortality rates (crude birth rates and crude death rates). Tha first phase covers the period from 1871 to 1946 the Second form 1946 - 1963 and the third covers the period since 1963.
The first transitional phase is characterised by high death rate. The average crude birth rate (C.B.R) was 34.9 and the average annual population growth rate at this time varied from 0.9% to 1.7%. In the second phase the population increased from 6.7 million to 8.1 million. During this period fertility levels remained high while mortality rates registered a sharp decline. For instance, in this second transitional period the CBR and CDR (Crude Death Rate) were 37.4 and 11.3 respectively. During the third tran
sitional phase the CBR declined from 34.4 in 1963 to approximately 26.2 in 1983. The CDR has
varied from 8.5 in 1963 to 6.1 in
1983. As shown by the above rates there was a remarkable decline in fertility as well as mortality, during the third transitional phase when compared to first and second phases.
* The first Census of Population, in the modern meaning of the term, was taken in 1871.
ECONOMIC REVIEW, JUNE 1985
DEMOGRAPHIC TRANSITION AND FAMILY PLANNING TECHNIQUES
Percentage of Unmarried Women in 1953, 197
Decline of C.B. R. a number of bro; mic factors and a
reasons such as th
traceptives. The ch mainiy dependent ria campaign in thi war years, impr health care servi facilities, better nu nomic condition
economic factors the rapid decline
higher educational ter labour force p cially among fem degree of urbani: mercialisation in r des. It is apparent trend towards a pc delaying in marria tors were largely
example, the perce Women in the crit age group of 20 - has dropped in 1953 to 1971 an while the proport has kept increasing The literacy rate
as the percentage
at 10 years and ov
to read and write uage, rose from 69 in 1971, and 86.5 both male and fel labour force partic 18.9 in 1953 16.4 in 1971 to 1 percentage of th population in 1963 to 22.4 in 1971,
down in 1981 to 2
 
 
 
 

is associated with ader socio-econolso more specific e adoption of con anges in CDR was
on the antimala
e immediate postovement of the
Ces and medical trition and ecoS. Among the
that influenced in fertility, were | attainment,greaarticipation (espeales) and a high zation and com
nore recent deca
that there was a stponement and ge and these facresponsible. For 2ntage of married ical child bearing
24 and 25 - 29 the period from d 1971 to 1981, ion of un marrjed See table below,
which is defined of the population
and 1981
tad
ter Who were abole at least one lamanin 1953 to 78.5 in 1981 for male. The female Dipation rate was increased from 7.1 in 1981. The
e total urban 3 was 19 and rose though it came 1.5%.
These indictors show the relationship between socio economic fac. tors and fertility changes; but it is very difficult to single out particular factors because they are all highly inter-related. For instance, the total fertility rate (TFR) for Sri Lanka has also been estimated. This is regarded a more refined measure of fertility as it interprets the total number of births a woman would have during her reproductive years under the existing fertility regime. One such analysis of fertility trends for the 1960 to 1975 period, shows that during the ten year period from 1963 to 1974 the TFR dropped from 5.3 to 3.6.
P riod
Source Alan & Cleland f 1981)
in the case of Sri Lanka the interesting question is whether the downward trend in fertility can be explained fully or partly by increased contraceptive usage. Organised family planning activities were started in 1953, with the setting up of the Family Planning Association of Ceylon (FPA) as a voluntary organisation. A number of clinics were established by the FPA during the period 1953 to 1966 with indirect support from the Government. The
period of direct participation of the
Government in the family planning programme began in 1966 with the Ministry of Health intergrating family planning activities in its exis
ting maternal and child care services.
However, the declining fertility trend is observed from an earlier period, before the launching of a national family planning programme in 1966. (See the CBR figures during the transitional
period).
15

Page 18
Total Population and Family Planning New Accept
* Provisional Souce: Central Bank's Review of the Economy
Family Health Bureau.
Percent Decline in Duration Specific Marital Fertility R Cumulated to 20 years for Sub-Groups of Population
 
 

torS One possible measure of the relative impact of contraceptive usage may be the percentage of new acceptors of contraception.
As indicated in the table at left the percentage of family planning new
acceptors Was Comparatively very low during the period. On the other hand the number of people who accepted family planning methods had increased only 22 percent between 1971 to 1983. it has therefore been argued that although family planning practices had a definite impact on fertility ievels, when compared with other
social and economic factors it is negligible.
Sri Lanka's fertility decline pattern has been found to be similar to that of most other Asian countries during this period, where rising age at marriage initiated the trend in declining fertility rates. Thus, over the period 1963 - 77 the main contribution to the decline in TFR (59%) was found to be as a result of the changes in the age of marri
age.
Rates
ECONOMIC REVIEW, JUNE 1985

Page 19
In attempting to ascertain the reasons for this trend a popular notion is that there is a direct relationship between contraceptive use and fertility levels. But here too it is not easy to generalise for Sri Lanka
as fertility levels have been found to differ between women of various occupational categories, and ethnic and religious groupings. For instance, the Sri Lanka Constraceptive Prevalence Survey of 1982, 70 percent of Lanka Contraceptive Prevalence Survey of 1982 has shown in a table a clear decline in
specific marital fertility rates be
tween 1960 - 65 and 1970 - 75. These findings, the report states, indicate that the cultural factors associated with ethnic group and religion and also region of residence have played a more important role. than the socio-economic factors such as type and place of residence, education and occupation in determining the fertility differentials in the country.
However, in recent years the population has gradually been more exposed to modern contraceptive. methods with a resultant increase in the total number of family planning new acceptors. As indica ted from a Family Health Bureau Survey held in 1982, 70 percent of married women had practised at least one modern contraceptive
method, though found that only 3 respondents were contraceptive meth nitum in the fami|| gramme was revita mainly through ar number of Steraliza modern methods and tubectomies sh ease during the f 1980's due to thefi being offerred.
Among these ne use of vasectomie increased more t during the period Tubectomies and
moderate level of as the I.U.D. app traceptive methoc gained in popularit
Family Planning New Acceptors by Meth
New Techniques)
Souce: Family Health Bureau, Review of the Economy-Central
ECONOMC REVIEW, JUNE 1985
 
 

this survey also 4 percent of the using modern ods. The momey planning proIized after 1977, increase in the tions. Use of the of vasectomies how a rapid incrirst half of the inancia incentives
w techniques the as and pills have han 50 percent 1981 to 1983. injections show a f increase where ears to be a counthat has hardly Ey
ods
Bank, 1983.
The Sri Lanka Contraceptive Prevalence Survey of 1982 has shown that traditional methods of contraception are still more popular among married women. Almost 66 percent of women who were married used contraceptives of which 43.5 percent use traditional methods. (See table above),
This survey also shows that the practice of contraception among couples has increased remarkably from 1975 to 1982. Ever-use increased form 43.2 percent to 65.9 percent and current-use from 32 percent to 54.9 percent. The increase was relatively higher for traditional methods than for modern methods.
Also there were indications of an emerging trend to use contraception for spacing of births and the majority were those women of low family size and younger ages.
This survey report concludes that low levels of use of modern methods cannot be attributed to lack of knowledge;because knowledge of traditional and modern methods are equally high and universal. This has posed the important question of why the traditional methods are preferred to modern methods, particularly by younger women or women of low parities.
K.G.

Page 20
18
FISHERES
SURVEILLANCE ZONE AND COLOMBO CONSUMERFISH PRICES The declaration of a Surveillance zone in the Northern region in late November 1984 directly affected fishing activities from Mullaitivu on the North Eastern coast to Mannar on the North Western Coast (Map 1. ). The Zone is parallel to the coast line. This is an area in which marine fishermen were very active and the declaration of the surveillance Zone has resulted in a deccrease in the activities of these
Table - SEAFISH LANDINGS BY REGIONS (1982)
people. Three major fishing areas (Divisional Fisheries Extension Officers areas) namely, Mullaitivu, Jaffna and Mannar, which are within this zone have always contributed a large proportion of fish to the total national fish production. According to the Ministry of Fisheries, nearly 35.6 percent of the country's production or 63,000 tons in 1982 came from these areas. In the following years activity and maintenance of proper records has been disrupted. . . (Table 1) These areas are thinly populated and therefore the excess production is delivered to the
Rs. 函s。鄞]
densely populated a Colombo where th demand which cann the production in the
The man-landed fish Mullativu and Manir 1: 141 pounds per while it was 1:7 in and Kalutara district demand and supply from these figures. doubtedly with thes sions being doubtec
Surveillance Zone the significant impact or tional fish productio Sumers living in den: areas. According to ments, prepared by t Fisheries the drop i tion that has occurs declaration of the su in the North is in th to 30 percent of th situation was seen after the zone was da ember 1984. and 1985. But in Febru Some of the fisherm operated their fishin
Rs.
20:00
30-00
 
 
 
 
 
 

CaS - Such aS re is a high bt be met by se areas alone.
ratio in Jaffna, ar region was year in 1982 the Colombo S. The areas of are very clear Therefore, une DFEO Divilly within the
are has been a
i the total nan and On consely populated rough assesshe Ministry of in fish produced due to the rveillance Zone e region of 25 2 country.This immediately 2clared in Dec2arly January ry and March
2n who earlier fleets in the
Rs 40.00
surveillance zone migrated for fishing down to the areas where they have contact adjacent to the Zone. For example, to areas like Trincomalee, Batticaloa, Kalmunai in the East Coast and Puttalam on the West Coast. Further, the relaxation of restrictions imposed on operating in the surveillance Zone enabled the Northern fishermen to restart fishing in Northern seas from March 1985. Hence, the production drop may not have been as steep as estimated.
The records reveal that the drop in fish production in the North had not seriously affected the market prices of fish at Pettah in December 1984, the fish prices at Pettah market in November and December 1984 were lower than those of June and July in the same year. But in 1985 fish prices had gone up slightly with the seasonal shortage of fish supplied from all parts of the island; and this trend is not closely connected with the unsettled conditions in the North and East. (see Table II) Further, in recent times the falling value οί the Sri Lanka Rupee has also gradually affected the increase of all prices, including the prices in the Colombo fish market. Available sources show that the Pettah Fish market annually handled about 60,000 to 65,000 tons of fish before the recent disturbances. Also, they show that soon after the disturbances
supply was 50 percent of earlier supply and had droped by about 80 tons per day. Although supplies dropped steeply the increase. in prices was not as drastic (Table II). Moreover when
t2ܓܠ
-سسسسسسسسس "LLUPITİYA
5000
ECONOMic REVIEW, JUNE 1985

Page 21
ཀ་
- Table 1.1
compared with the trend in fish prices in the Colombo fish market over the past few years, and the trends in national fish production, the price trends of the past few months do not reflect any dramatic depletion in production of fish during the recent months. As seen in the data in table III. , there appears to be a comparatively steady upward trend in prices.
Table III ANNUAL AVERAGE FRESH FISH PRICES FROM 1980 to 1984
Generally, and Kullup. much high the Pettah
is not influe in the Nort kets do no fish produci purchase th the Pettah in
 
 
 

ES ATST JOHNS FISH MARKET PETTAH - 1984 { Rs. per 500 gms)
Source : Ministry of Fisheries
prices of fish at Borella
tiya markets have been the main fish dealer and the coun. er than the prices at try’s distribution centre, fish prices fish market. But thic here Were lower than in the Sursnced by fish production rounding fish market. The Pettah h, as those satellite mar- fish market dealt mostly on a I deal directly with the wholesale basis with producers ng areas. They normally right round the country and also eir Stocks of fish from with the fish mudalalis and vendors market. Since Pettah was in the surrounding areas. But
the markets in the satellite area, namely, Borella and Kullupitiya,
and MONTHLY AVERAGE deal mostly with direct consumers. $500 : Although the drop of fish produc--- tion in the North should have directly affected the quantity and prices of fish in the Pettah market this is not clearly reflected in the
prices of fish in the market. Though the satellite markets depend
on the fish supplies of Pettah market, their prices are fixed on a different basis, which is not directly influenced by Pettah, their prices are based on direct characteristics referred to in the market areas, that is, socio-economic conditions of the consumers, the chain of transactions that occur in the course of fish supply, etc. It thus appears that whether fishing is possible or not in the surveillance Zone the ultimate outcome would be higher fish prices at the consumers end for the city folk, which fact has been proved by price trends in 1984. L. de A.
Alinistry of Fisheries
19

Page 22
2O.
Drop in imports of TV Sets
In 1979, the year that television was first introduced to Sri Lanka a total of 2,766 licences for TV sets were issued by the Department of Posts and Telecommunications. In 1980 the figure rose to 27,618 but by the end of 1984 as many as 415,308 TV receivers were licenced by the Department of Posts and Telecommunications in Sri Lanka; the average number of licences issued annually over the six years being nearly 70,000 per year.
The demand for TV sets has plummeted in 1984 to less than one third that of the previous two years, if import figures are an indication of the situation. From a mere 2000 sets in 1978, imports reached a peak of 146,544 by 1983. Import figures the previous year, amounting to 144,850 sets, were not far behind and had created a record up to that time. According to importers a large share of the demand came from Indian buyers who visited the Duty Free Complex; but after 1983 the number of Indian buyers dwindled rapidly. The result was that in 1984, according to Customs
records, only 46. imported .
Unlike in India wh was only for black for over 20 years,
1982, when colou duced; in the cas there has been a d
black and whit
Table 3
SRI L.
sets from the 1 and 2.) A closer look at in these tables shot rence shifted from to colour sets by in 1982 65 percer comprised B/W rec 35 percent in the In 1983 too it
Tall
SRI LANKA S 7 MAIN SUPPLE
Source: Sri Laika CuStOS
Table 2
IMPORTS OF TELEVISION
 
 
 
 
 
 

033 sets were
lere the demand and white sets from 1950 up to r TV was introe Of Sri Lanka emand for both e and colour
start.(See tables
the import data WS that the preteblack and white
1981, but again it of the imports eivers with only çolour category. was 62 percent ble 1
OF
7862 000 2 0.98 – 16:1,174 နှီး
B/W receivers as against 38 percent colour sets. However, a marked change in this trend takes place in 1984, where the import content of the colour sets has overtaken the B/W receivers, the percentage
figures being 61 percent for colour and 39 percent for B/W. In terms
of value it was 78 percent of imports on colour sets and 22 percent on R/W -
The composition of the source of Supply of TV SetS has also changed
Source : Sri Lanka CuStOmS
during this period. Japan always had a commanding lead as the major exporter of TV sets to Sri Lanka but by 1984 its share had come down to less than 50 percent, while South Korea had moved up as the second largest exporter to Sri Lanka in 1984 (21.2%) and Singapore occupied third place with a share of 12 percent. The
y y S S S 0 00 S0 S S S 0 0S
41ο τοεδαε καιρο 34,71 η 22.
Source: Sri Lanka Custom s
ECONOMIC REVIEW, JUNE 1985

Page 23
preceeding year (1983) saw Japan well in the lead with a share of 69 percent of our TV receiver imports; While Singapore accounted for 13 percent and Taiwan 6 percent (See Table 3)
The total value of imports on TV sets which initially amounted to a
comparatively meagre Rs 1 million
in 1978 peaked to Rs 398 million in 1982. Since then, this figure has been on the decline amounting to "Rs 271 million and Rs 161 million in 1983 and 1984 respectively. Out of the total expenditure on imports of TV sets, in the years 1982, 1983 and 1984, between 60 to 70 percent has been expended on import of colour systems
The reasons for this could be attributed to the higher unit prices for the colour category.
According to the statistics of the Department of Posts and Telecommunications, which is the licencing authority for TV and Radio receivers, the of sets licenced at the end of 1984 was 415,308. The Department suspects however that a fair number have yet to obtain licence. But exact estimates of the number of sets unlicenced are not possible as there is yet no accurate record of the number of sets in the country. According to the import data between 1978 and 1984 as many as 457,770 sets were imported by the trade in this seven year period. The trade also estimates that in addition at least another 10 percent or about 45,000 sets have been brought in personally by Sri Lankans and others coming into the country. The quantity of these items are not recorded in the Customs Returns. So too with the number of sets purchased at the Duty Free Complex and taken out of the country, where estimates vary from 15 to 25 percent of total
imports. Another source of supply
is local assembly where about 20,000 sets have been put out on the local market in recent years.
ECONOMIC REVIEW, JUNE 1985
number.
TOURISM
PARTIAL RE
There were activity was yet be arrivals, room occu up last year. In 19 of economic recov tries. However, the
Foreign ext 1984, about 5.5 pe
Occupancy South Coast regior
ACComodation ca,
ത്തെ
 
 
 
 
 

COVERY IN ARRIVALS
signs of a partial recovery in the tourism sector in 1984, though low the levels of 1982 and 1983. The main indicators such as tourist pancy and earnings showed that activity in the industry was picking 84 there was a revival from the West European region with the signs ery and a major Teurist Board promotional campaign in these counce was a 52 percent drop in arrivals of Indian tourists.
Shange earnings from tourism was estimated at Rs.2,738 million in FCent lower than earnings in 1983.
rates in graded hotels showed a drop in the Greater Colombo and
S.
TOURIST ARRIVALS & STAYS IN SRI LANKA 1982-834
Latin Anerica Africa fiddle East Eastern Europe Australia
—~— Latifn America 『=義窪ica
Middle East Easter Europe Austrasilis
Where they came from ജുള്ള
Latin America Africa
rith Ranerica - North America
fiddle East
Easter Europe
Australia America
932 1983 1984
here they were accomodated
Ancient Cities
South Coast
Occupancy
bacity
21

Page 24
22
FOREIGN EMPLOYMENT Sri Lanka Exp.
Planning Division Study)
Considerable public interest has been focussed on the subject of migration in recent years. Today the outflow of workers from a wide range of occupations has become a prominent feature of the Sri Lankan labour market. Migrant remittances has become the
second largest source of foreignexchange to the country. The remittances made by migrant workers have not only contributed to the economy but it has also become an important source of income support for the lower and middle income households. Significant numbers of females
-have been accepting temporary empl
oyment outside the country. Accor
| ding to available information, about
250,000 to 300,000 families or about one-tenth of the total
population of Sri Lanka appears to have been directly involved in this phenomenon of having a family member who has worked abroad or is working abroad. Thus the Socio-economic impact of migration appears to be widespread on consumption and investment, family bonds and socioCultural values.
(A Ministry of Plan Implementation, Employment and Manpower
Although, migration
increasing impact on Community, it is not a
has been well researc ately documented. Ha able data is available migrants.
introduction
An analytical accoun surveys undertaken b of Plan implemental ment and Manpower sion to study the Lankan migration fo loyment is provided tion was collected employment agencie migrants in foreign migrant workers whi the country for ei migrant workers who after working abroad the survey was id earlier but was delay
resOur CeS. At the beginning of the loss of academic ssionally qualified p migration became an
 
 
 

erience Part 1
has had an the life of the a subject which ned and adequrdly any relie On returned
it of the three y the Ministry tion's EmployPlanning Divisubject of Sri r foreign emphere. Informarom sampled
s that placed
employment, p were leaving mployment, and had returned
The need for
entified much ed for vvant of
the last decade ally and profeersons through important issue
as a resui ei acute shortage of medical doctors, engineers, university teachers and other highly qualified
personnel. There has been much
public interest on how to contain "brain drain losses through migration, and on policies and programmes that should be adopted to improve conditions for their return. While these brain drain Outfl'OWS Were Continuing, migration of skilled and unskilled workers to the Middle East commenced around 1975. A number of factors which were favourable to the growth of this migratory flow have encourged the large scale migra
tion of Sri Lankan workers. The exodus of skilled workers which resulted in manpower scarcities had its deliterious effects on industry but unlike in the case of the 'brain drain the economic advantages have been generally considered to outweigh the adverse consequences. Further, the migration of married and unmarried females in large numbers for domestic and other unskilled work with its many implications had not been an unmixed blessing. While income accrucing through migrant remitances has become the second most important source of foreign exchange to the country (Rs. 6,915 million in 1983) private transfers made by the migrants to their families and individuals, while contributing to income
support and improvement of living standards had caused noteworthy changes in consumption and investment patterns and value:S
Migration has had an important bearing on unemployment, and on income distribution. It is necessary to have reliable information on the dimensions of current migratory flows and on the economic, social and demographic implications of such migration. Migration opportunities have diversified recently and migrants are proceeding to many countries and regions outside the Middle East. The opportunities in the Middle East could remain
open to Sri Lankan migrants ti|| about the end of this century. Un
ECONOMIC REVIEW, JUNE 1985

Page 25
employment, low incomes, ethnic issues together with rising aspiration could fuel these flows. In this context programmes and policies directed to this sector Will have to be regularly reviewed and for this a strong and reliable data base is a prerequisite.
Foreign Employment Agencies
The role played by private foreign employment agencies engaged in the task of placing Sri Lankan migration is an important one which determines the size, composition
and growth of Sri Lankan migration
for foreign employment. Consequent to the employment boom in the Middle East a number of fee evying private employment agencies were established in the Country after 1975. The Foreign Employment Division of the Department of Labour which was established in 1976 was entrusted with the funct tions of supervising and regulating the work of these agencies.
Foreign employment agencies were registered under the provisions of the Fee Charging Employment Agency Act No. 37 of 1956 and bv the end of 1978 the number of fee levying private foeign employment agencies registered with separtment of Labour had increased to 125. With increasing demand for Sri Lankan abour in the Middle East this number exceeded 525 by the end of 1980. Simultaneously due to the heavy demand for foreign employment from prospective migrants on the one side and the finaincial attraction of the business on the other, a number of unregistered employment agencies mushroomed throughout the country. With the emergence of unregistered agencies and the mal practices committed by them, it was necessary to make provision to safe, guard the rights of job seekers and prospective migrants. Even the business of the licensed-employment agencies suffered due to the activi
ECONOMIC REVIEW, JUNE 1985
ties of these and they too with protect the enactment loyment Age 1980 Where ment agencie register their Department c ber of agencie Act reached 4 1984.
Table 1
Distribution of Employment A
District
Colombo Gampaha Kalutara Kandy Matae Galle Jaffna Batticaloa Ampara Kurunegala Puttalam Badulla
Inspite of the F Agency Act of of unregistered agencies have throughout the
to available inf ber of migri employment it
licensed agenci higher than the the licensed em These unregula general y activa Cure job orders and they carry clandestinely. compile inforr though the num agencies would
the number lice rities.
 

unregistered agencies, had to be provided on. This resulted in of the Foreign Emp*ncy Act No.37 of the foreign employ!s were required to business with the Bf Labour. The nums registered under this 00 at the beginning of
f Licensed Agencies
Number of Agencies Registered
330
1
5
1
=ജ്ഞത്ത
Oreign Employment 980 a large number oreign employment :ontinued to operate Country. According
rmation, the numints who secure rough these un
es is significantly numbers placed by ployment agencies. ted agencies are ed When they seto supply labour put their activities is difficult to ation on them per of these smal 9 much more than sed by the autho
Only the licensed employment agencies registered with the Department of Labour amounted to 388. The distribution of these agen
cies by district, is given in Table 1.
Preliminary Survey
A premilinary survey revealed that the responding agencies from the commencement of their business had placed 81,924 migrants in foreign employment. 5 large agencies, all within the Colombo Municipal limit, had placed more than 6,000 persons each from the inception of their business; and the highest number placed by a single agency was 14,000.
The break down of number of placements made by the responding agencies for 1983 is given in Table 2. The 5 big agencies, all located within the Colombo area, have contributed largely to this total by placing 2976, 2750, 1936, 1547 and 1286 a total of 10495.
It is noteworthy that 3 of the agencies which placed 2750, 1736, and 1286 respectively had made placements for the first time in 1983.
District Distribution
The district distribution of registe
red employment agencies appears
in Table 1. It shows that the conCentration of agencies is acute;85% being located within the district of Colombo, a cosiderable number as much as 269 (69.3%) of the 330 agencies in the Colombo district being located within the Colombo Municipal area. Outside Colombo, the districts of Gampaha, Jaffna, Kalutara and Kandy are represented by a number of agencies. The prevalance of a number of small unregistered agencies at the district level appear to have prevented the kind of vacuum that
23

Page 26
Table 2
Number of Placements made by Registered Employment Agencies
Manpower Level No. of Placements % Professional 403 1.7 Middle Lewe 2,171 9.O Skilled 3,994 16.5 Unskilled 4,289 17.7 Housemaids 13,328 55.1
Total 24,185 1 OOO
would have arisen due to the (iii) to assist foreign
absence of registered employment agencies. The very fact of their existence would have denied or at least restricted the opportunities for licensed agencies functioning within the rules to operate profitably. It is necessary to state that SOne licensed and unlicensed agencies reached the districts through their agents functioning in the regional level.
Services undertaken by Employment Agencies
The existence of employment agencies and their readiness to assist job seekers has been an important determinant of migration. Their intervention in a very competitive job market has been an important means of employment promotion. The main services provided by the employment
agencies are
(i) to actively participate in a competitive foreign employment market to secure foreign employment opportunities.
(ii) to service the foreign job market in Sri Lanka by providing aspirants with the opportunity to apply for placements by advertising the available foreign jobs.
24
and their agents suitably qualifi nnel.
(iv) to process docu - migrants selected employment.
(v) to arrange orient
grammes for selec Workers
(vi) to intervene in
and disputes suci tion of conditio tracts by the abroad and to p dress to
(vii) to undertake re of Sri Lankan Wo
(viii) to assist migran to obtain com from employers
The intervention of Sta specifically by agencie Department of Labou Foreign Affairs and th it possible to oversee taken by the agenci migrant workers. The generally provided servires described at
level. It is generally which infrequently
orders. and where the

employers to select ed perso
ments of for
ation proited
problems in as violans of Conemployer rovide remigrants.
patriation rikers.
i Workers pensation abroad.
te Authorities s such as the , Ministry of e Police make e work underes and assist larger agencies nost of the a satisfactory the agencies process job Scale of busi
ness is small, that did not meet the minimum standard expected by their ԱՏՅՐՏ:
Acquisition of Job Orders and Employment Promotion
There are no government to government agreements that Sri Lanka has entered in to with foreign countries which regulate the process of recruitment of Sri Lankans for Work abroad. In the situation the activities undertaken by these agencies for all practical purposes determine the type of jobs available, renumeration and other working conditions and percuisites. Acquisition of job orders have become increasingly competitive due to a number of factors which include
(i) restrictions imposed by labour importing countries due to diminishing employment opportunities and the policy of Arabization taking place in the Middle East.
(ii) prevailing competition
among labour exporting countries such as India Pakistan, Bangladesh, Thailand and Philippines.
(iii) competition from unregulated agencies who undercut the registered agencies in job procurement.
The survey revealed that the agencies utilize several methods to canvas for job orders. The percentage that had advertised in the countries of recruitment amounted to 37.8%. The majority of firms resorted to the least cost method of employment promotion, that of writing to selected firms abroad which may require expatriate
"workers. However representatives of
48.9% of the agencies had visited the countries of recruitment to canvas for job orders. This method
ECONOMIC REVIEW, JUNE 1985

Page 27
appears to be beyond the capacity of many agencies engaged in this business. Of the sampled agencies 22 had sent their officials to the countries of recruitment for employment promotion purposes.
The survey data disclosed that a given agency had been concentrating on a particular country in which it had secured business, and several trips had been made to secure job orders. Other than for a few visits to Bombay and Delhi in India and Bangkok and Singapore all other
business visits had been to Middle
Eastern countries. Apart from the countries listed, the reporting agencies had visited Jordan, Lebanon , Oman and Oatar. Only a senior member of the firm undertook the visit generally the proprietor or the principal, manager of the firm. It is observed from the data that the cost of a visit had ranged from Rs.23,333 to Rs.100,000.
Processing Job Orders
The time taken to process the job order is an important element which determines the success of the agnecy. The employment agents have reported that in some instances *hev have to be able to process the job order and the recruit in a matter of days. The time taken to process the job orders in respect of which placements have been effected by the sampled agencies is given in Table 3, It shows that on an average the agencies have taken 2 - 4 weeks to process the job orders they had received. The size of these job orders had varied
from 1 - 600 placements.
The time taken to process depends
on several factors, the size of the job order, the number of occupations for which recruitment is made, the availability of adequately qualified (manpower supply) and time taken to obtain the approval of the authorities. Of the sampled agencies 10 agencies (22.2%) had declared that they were given very short notice by their principals and that the time was inadequate to effici
ECONOMIC REVIEW, JUNE 1985
ently prO About half who operate ently were s given adequa job orders b
Placement b
The breakd by industry
More
ജ
20 agen ties. almost 80 pe ments that a were in the
tions. The C had amount was known workers had ment in Fin in Agricultu in the table.
Sector
Agricult Mining a Manufac Electrici Construc Wholesal Transpot insuranc Finance
Services
Not Stat
A Sect

cess the job orders. the sampled agencies
their business efficiatisfied that they were te time to process the their clients abroad.
f industry Sector
own of placements
Commissions Earned
The income employment
earned by foreign agencies is mainly
through commissions paid by their principals abroad who could either be employers themselves or an
employment agent in the host was furnished by only
Table 3 Time Taken to Process Job Orders
tion No. of No. of job Size of Job Orders
Agencies Orders Minimum Maximum
7 Days O3 04 103 500 14 Days O2 O3 50 250 21 Days 04 25 O1 375 Days - 1 month 06 18 O3 600 2 months O3 O3 112 32 3 months O1 O1 170 -
than 3 months 03 O3. 16 1,320
Table 4 shows that Cnuntry. It is the attractiveness of
!rcent of the job placegencies had contracted service sector occupaonstruction sector jobs ed to 15 percent. It
that a number of also obtained employancial Institutions and e, though not shown
the commission in rupee terms that led to large numbers of agencies to enter this business. The information on the commissions paid by their principals and clients abroad in 1983 Vvas obtained from the sampled agencies. The data was obtained on the maximum and minimum Commissions received by them by occupation and country. This information
Table 4
Distribution of Placements by Industry Sector
No. of Agencies No. Placed %
re ܓܚ ܒ -- -- ld Ouarrying O1 59 0.9 :uring O3 240 3.8 y, Gas and Water O1 O6 0.1 tion O8 947 15.0 > & Retaj Trade O1 O1 t O3 40 * O.6
Business Services -- --
13 5024 79.6 d 25 --
S 6317 100.0
25

Page 28
was supplied by 26 agencies. Although the agencies were informed that the information supplied would be treated in confidence there appears to have been an under-declaration of Commissions received. Table 5 presents the minimum and maximum amounts received by agencies categorised by occupation and Country.
According to this infomation commission received had varied from US Dollars 25 for housemaids and unskilled workers to about US Dollars 300 per person for engineers. The commissions for supplying skilled workers and technicians had been above US Dollars 100 per person. The table shows that some agencies have negotiated to supply the entire package of services including recruitment and transporting of migrants to the host country. The commissions paid had depended on a number of
factors; the size and
the organisation rec country of recruitm
gory of labour suppli
- city, size of iob o
services provided agents in Sri Lanka the job orders. The agents or the quently visited the ticipate in the recru and the assistance r local agents to thes been taken into a CCC missions are paid. , the data the comm varied widely ever the same Category the same Country. The surveyed emp cies had reported been a strong ten reducing the commi The stiff competiti
supplying agencies
bouring countries
Tabo|| Commissions Received by F
Occupation Minimum Commission
Amount Country US Dollars
Engineers 250 Saudi Ara Professionals 1 OO Saud Ara Technicians 1 OO U.A.E. Heavy Vehicle Drivers 150 Saudi Ara Cooks 150 Saudi Ara Drivers 60 Catar Room Boys 125 Saudi Ara House Boys 50 Saudi Ara General Helpers 25 Lebanon Housemaids シー 25 Kuwait
Housemaids (without air passage) 350 Kuwait All Categories 25 . A Midd
Countries A Categories 60 + wisa
fees diem
& travel cost Singapore to obtain visa

the nature of
:ruiting labour, ment, the cate
ied and its scarrder and the
by recruiting in processing
principals i freCountry to paritment process endered by the e missions have punt When COmAs disclosed in issions received for supplying of \workers to
loyment agenthat there had dency towards ssions recently. on from abour
Pakistan and Bangladesh have lowered the commission payable. Inter
nationally, the existence of a large number of unregistered agencies whose overheads are relatively low and sometimes negligible have lowered the commissions payable specially in the case of occupations such as skilled and unskilled labour, and for housemaids. Some of these unregistered agencies had in some. instances supplied labour without charging any commission from their principals abroad, recovering the entire cost of recruitment from the migrant. When there is a supply of readily available labour desparately looking for these opportunities it is to be expected that the wages received by them would be low, the working conditions poor and in addition the workers themselves would have to bear the bur
in the neigh- den of meeting the costs of s , particularly recruitment.
e 5 oreign Employment Agencies
Maximum Commission Amount Country US Dollars
bia 3OO Soudi Arabia
bia -
bia -
bia
bia −
bia 75 -
50 Saudi Arabia 200 Saudi Arabia,Oman,
Kuwait Bahrain
500 Bahrain, U.A.E. e Easten 125 U.A.E.,
Saudi Arabia
125 + visa per diern & trave Cost Singapore to obtain visa
ECONOMIC REVIEW, JUNE 1985

Page 29
DEMOGRAPHIC CHARACTERISTICS OF MIGRANTS
The analysis and observation in the sections appearing below had been made after combining the information available from the 3 surveys underataken for this study in 1984.
Age Distribution
Tha data shows that 86% of the male migrants fall within the age range of 20 - 40 years. Professionals and sub professionals in the age groups beyond 40 years and upto around 55 - 60 years, with long experience too have had opportunities for migration and this is reflected in the data which includes a small percentage at the upper end of the age scale.
The age range of the professional and sub professional categories is between 25 - 55 years, while in the case of skilled workers it had fallen to between 22 - 50 years. In the case of females for domestic employment the age was generally between 17 - 45 years. Thus these migration opportunities have mainly attracted persons who are in their most economically active period in their working lives. The relatively harsher climatic conditions and the need to work from temporary accommodation and camps sites, and the necessity to be on call for 12 - 15 hours a day as in the case of housemaids have determined the age pattern. Thus ability to adjust to a new environment and physical fitness have been considerations that have been given priority by recruitment agencies, to avoid the risk of repatriation in case of premature termination of contracts. These conditions have had an important bearing on the age pattern of the migrant population.
The age distribution of the migrant population is likely to show an upward trend in the years ahead as the percentage of remigrants increase. This trend will be further butre--
ECONOMIC REVIEW, JUNE 1985
ssed With fi tion on the
ditions and
age groupS ti employment
Distribution
The availabi confirmed female migra ment has co the years. r prised 47.3 and this ir 1980, and th The survey ment disclo: be 57%. ,
A comparisc period 1979 number of professional, skilled categ mained stat declined. Th of female em where femal centrated in ching, clerica office emplc very little f technical an tions, and ei tion trades
pattern of ot males in sho ment in the few opportu teachers in the lack of have restricte openings in
and typing ai pations. The
migration f ment is refle unlikely tha ficant chang profile of m is likely that females in tions and clé employment

tering down of informattractive economic Conwhen workers from older )o become acceptable to agencies.
by Sex
data on migration has hat the number of nts for foreign employ tinued to increase over 1979 females com6 of total migration creased to 50.8% in em to 52.5% in 1981:.* of migrants of employ. sed this percentage to
in of the data for the - 1981 shows that the emales migrating from sub-professional and ories have either reic or has marginally e occupational profile ployment in Sri Lanka, e employment is conunskilled or in tea. I, nursing and few other yment grades, with emale participation in di supervisory occupangineering and construhave determined the tflows. Preference for ps and office employ. Middle East and the nities for Sri Lankan his region, because of knowledge of Arabic d the opportunities to nursing, stenography ld hotel industry occus apid growth of female ir domestic employsted in the data. It is t there will be a signi! in the occupational gration of females. It more opportunites for lealth sector occuparica and other office in the Middle East
will occur in the years ahead with the further development of health sector facilities and other social infrastructure. The slow rate of entry of females to technical and skilled employment will not allow for a significant increase in the migration of females from these occupations. Thus female migration would be largely determined by the volume of opportunities that will be available for domestic employment and other unskilled work in service sector occupations, in hotels and restaurants and the catering services.
Ethnic Distribution
Preference for Muslims in the recruitment of labour to the Middle East is clearly reflected in the ethnic distribution of the migrants. Labour contractors in the Middle East have in many instances stipulated that higher quotas of Muslims should be recruited and local employment agents indicate this preference when placements are adver. tised. Some Middle Eastern countries have further influenced the ethnic distribution of migration by giving preference to Muslims when granting visas to contract labour recruiting agents. The Sri Lanka Moors who comprise only 7.1% of the population have received 22% of foreign employment. The disproportionate share received by the Sri Lanka Moors has lowered the relative proportion of the Sinhalese and Indian Tamils in total migration,
The survery of Migrants for Employment conducted at the Colombo international Airport also revealed that significant numbers of Sri Lanka Tamil, mainly youths hoth males and females have been
* Ministry of Plan Implementation Employment and Manpower Planning Division Enumeration of Embarkation Cards 1979 - 1981.

Page 30
leaving the country to Western Europe and North America. Immigration records do not indicate that their migration is for a long period of residence with the object of securing employment. Frequently the purpose of travel has been stated as on holiday or 'visiting relatives'. These Tamil youths have been migrating to West Germany, Australia, Switzerland, Italy, France Spain, Canada and U. S. A. and
when interviewed stated that they were not proceeding abroad for employment. This migration has been going on for some time since the ethnic problem and the annual outflows are large and the majority of them have sought refugee status on arrival in the host country. It is difficult to compile data on this
clandestine migration as the persons
themselves and the employment agencies engaged in transfering these persons will not disclose their intentions on immigration and other records.
Educational Attainment
Data on the educational attain ments of the migrant population have not been collected in the earier surveys and therefore, it was not
possible to make assessment of trenc might be said that st flows which classifie detailed occupation provides information dition, because of th tion between occ
educational attain educational attainm migrant popula
through the surveys c employment and retu and relative propor labour force as rex Census 1981 are giv
The eductional attair migrants are signifi than those of female are mainly migrating employment, while th tain professionals, sub and skilled workers. samples were not
examine the educati tion within occupa whether they corre educational distribu parent population fr was drawn.
The available evide that on the average possessed better Wor
Distribution of Migrants Leaving for and Returning
Foreign Employment by Educational Attainment and Sex
Table 6
(Census 1981. Labour Force Survey)
Passed Grades 8-9 and G.C.E. (O/L) in less th
 
 
 
 
 

comparative
s. However, it atistics on outd migrants by a breakdown On this cone high corelaupation and mentS. The ents of the
tion elicited n migrants for rned migrants tions in the
realed in the
en in Table 6.
ment of male cantly higher s as the atter for domestic
e former Con-professionals The survey adequate to 2nal distribu
ations to see spond to the tion of the
om Which it
nce indicates migrants who k experience
g after
han 6 subjects.
and also had the opportunity for, working in urban centres in recognized firms and with large contractors, which enable them to produce reference from their employers, had an. advantage over others in the matter of selection for jobs.
Marital Status
Tha age distribution of the migrant population which is biased in favour of young workers explains the marital status distribution of the migrant population. The data from two sub surveys is given in Table 7.
The bias towards young adult age groups in the migrant population has closely corresponded with the marital status distribution elicited in the census of population 1981. Unemployment, under employment and more particularly low incomes have led to young adults seeking jobs abroad in the hope of quickly improving their economic condition. High participation of married females in migration has arisen due to a number of factors including those for reducing family burdens, acquiring independent incomes and improving economic and social status of the family. As the demand for unskilled females in domestic employment could continue because of the improving living standards in the Middle East and in some of the fast developing countries in the region more and more families are likely to seek these opportunities in the years ahead.
Geographical Distribution
information on the geographical distribution of the migrants was collected by utilising the addresses declared in the embarkation cards and this imformation is available in respect of 1979, 1980 and 1981. The data from the Survey of Migrants for employment corres
ECONOMIC REVIEW, JUNE 1985

Page 31
ponds well with the data collected previously from the immigration records, and this is evident from the data presented in Table 8.
Table 7
The location of cies which are n in the Colombo feW Other urbaj
Distribution of Migrants by Marital Status and
Table 8 District Distribution of Migrants for Employ
1981 and 1984
ECONOMIC REVIEW, JUNE 1985
 
 

employment agenainly concentrated
district and in a ised districts may
"ment
have also contributed to the present pattern of distribution, Colombo district had 349 employment agencies (85%) while Gampaha had 18. and Kalutara, Kandy and Jaffna contained 7,15, and 9 agencies respectively. In the case of some of the agencies however, they had appointed sub agents and representatives in the districts which enable them to effect recuitment of scare categories from the districts. In addition to the registered employment agencies, a large numberof unlicensed agencies have beer functioning through out the country, almost every town having the services of one or more unlicensed employment agent which enabled persons in peripheral areas to directly come into contact with them. It should be noted that only around 1/3 of the migrants have been placed by registered employment agencies'
The household size of the migrants families is higher than the island average. The average size of the migrants household in the survey of migrants for foreign employment was 6.4 and that of the survey of returned migrants was 5.7. The Labour Force and Socio-Economic Survey 1980 - 1981 estimated the average household size at 5.5 The higher contribution of Muslims to the migration for employment was responsible to a great extent to create a comparatively larger average household size. This higher average size of household has contributed to a higher household income. The household size itself could have been a determinant which influenced migration arising from efforts to reduce family burdens.
*Ministry of Plan Implementation. Employment and Manpower Planning Divisiona Unpublished Records.

Page 32
Table 9 Distribution of Migrants for Employment by
Parenthood Sex and Number of Childre
Data on parents having children below 20 years who have migrated for foreign employment is provided in Table 9.
The percentage of married female migrants without children who had
migrated amounts to 6.8% and the
percentage of married males who were without children who migrated was 9.5%. Infants below 1 year had been left behind by 7.1% of married females and similarly the data shows that 36.4% of the married females had left behind children between the ages 2 - 5 years.
12.8% of the married migrants for employment did not have children at the time of migration. The data shows that 1/3 of the migrant population did not have more than 1 child while slightly over 1/4 of all male migrants had 3 children.
Incomes of Migrants before
Migration
incomes is an important variable which determined the migration
decision of most migrants. in view
3O
of the importance of it the survey of migrants employment attempted information in respect income, and migrant's income. It should be these incomes would downwards, since under of incomes is a phenon has been observed in undertaken recently in The operation of so programmes by the where eligibility criter tance depends on hol personal income levels buted to this under, The inclusion of the m returned on holiday wi receiving foreign incomes and who were to their employment the opposite effect of proportions at the upp the income scales.
The fact that the samp migrants who were abroad earlier, and the
 
 
 
 

his variable,
for foreign to obtain of personal household noted that be biased '-declaration enon Vhich all surveys Sri Lanka. cial subsidy government ja for assissehold and have contri
-declaration. igrants who no had been amployment | going back. abroad had raising the Der end of
le contained employed higher than
average sized families have contributed in raising the household incomes at the upper end. A comparison of the data received from these surveys with that of the Economic Survey 1980 -1981 and the Consumer Finaces Survey 19811982 shows that the average income of the migrants household is higher than that disclosed from the latter.
The average household income amounted to Rs.2096.48 in the survey of migrants for employment while the corresponding statistic in the Socio-Economic Survey 1980 - 1981 Was Rs. 891/- and in the Consumer Finances Survey 1981 - 1982 it was Rs. 712.18. It should also be noted that the variability of the household income was also high. It is to be expected that this variability wouly remain high for the reasons already stated above.
The survey of migrants for employment shows that a large proportion of migrants had reported that they were in receipt of low incomes before migration. The inclusion of a high percentage of females who were engaged in household duties had contributed to this position. The percentage of females who were not in receipt on any income amounted to 40%. It also shows that a percentage as high as: 18% males were also without a regular income before migration.According to the survey 43.7% males and 61.9% females were receiving incomes less than Rs.800 per mensem which is about the monthly average for unskilled workers in Sri Lanka. It should be noted that females who were migrating for domestic work were strictly speaking outside the labour force,the majority having been engaged in household duties.
(f6 be continued)
ECONOMIC REVIEW, JUNE 1985

Page 33
HANGURANKETHA'S VEGETABLE ECONOMY:
Implications of the existing marketing system
Lione Siriwardena
Research Department. People's Bank
Hangu ranketha is located just 12 miles away from Kandy with comparatively good transport, infra-structure facilities and other services. This is the largest mixed vegetable (both up-country and low-country vegetables) producing area in the country. Between 1,500 metric tons to 2,000 metric tons of various kinds of vegetables, such as brinjalls, golden millets, tomatoes, ladies fingers, cabbage, beans, chillies, raddish etc. are transported from here to the main distributing towns of the country during a satisfactory season.
Hangu ranketha is the closest vegetable producing area to the main distributing towns such as Colombo and Kandy when compared to far distance up-country vegetable producing areas such as Nuwara Eliya and Weimada. The cost and time required for trans
porting vegetables from Hanguran
ketha to Colombo is less than 50 percent that of similar transport costs between Colombo and Nuwara Eliya. This means that theoretically vegetable producers at Hangu ranketha have the adwantage of about a 15-20 percent higher return on sale of their vegetables than the vegetable producers of Nuwara Eliya or Wellinada.
Unlike the other vegetable
growing areas, Hangu ranketha specialises in growing over 10 varieties of vegetable during both Yala and Maha seasons. Vegetable farmers in this area are at a greater advantage than farmers in other
ECONOMIC REVIEW, JUNE 1985
vegetable growin the high level in the crop p: utilization and in the area may 1 beoW.
| During thế tow lands are with paddy whi is utilized for table farming. I due to lack of W. cultivation, the used to grow
tables, such as be
raddish.
In addition
and vegetable cu cultivation is many incentives the Ceylon Toba Hanguranketha.
Fragmentation a of Land
The majori ducers use very si
 

g areas because of -
of diversification
attern. The and cropping system be seen in Table
Table 1
Maha season the cultivated mainly Île the high land OW Country vegein the Yala season later for highland
low lands are
Up-COUntry Vegebans, cabbage and
to both paddy Itivation, tobacco encouraged and are offered by acco Company at
ind Consolidation
ty of the promall plots of land
Source : Agrarian Service Centre, Gramoday Mandala
for irrigated paddy cultivation during the Maha season. About 80 percent of the farmers in this area own less than 1 acre of paddy land. The dominant size of a paddy holding is % acre. Leasing out of paddy land during the Maha season is negligible because the owners need to grow paddy mainly for their own subsistence.
Therefore during the Maha season the cultivation of vege
क्षै
tables is concentrated on highland. HeộWeviêrs; secutivation of these lands with low country vegetables is largely dependent on the financial capacity of the ordinary village farmers. The cultivation of paddy is given more priority by the land owning
subsistence farmers, and the time
and abour available for them to grow their high lands with vegetables limited. Secondly, they require cash for cultivation of paddy as Welt as vegetables which is a difficult task. Usually they lease out their high land and use this money for paddy cultivation.
They are able to lease out an acre of high land for vegetable farming at a rate of Rs.5,000 to
31

Page 34
Rs.6000 which provides them
the necessary capital to be invested on paddy cultivation in the Maha season. Thirdly, Hanguranketha area is closely incorporated into the market economy since its location is so close to Kandy.
Large numbers of commission agents and entrepreneurs lease
high land for vegetable cultivation from the villagers in this area. These simple villagers have given up their high land and remain sub| sistence paddy farmers and agricultural labourers; while the high lands cultivated with vegetables are consolidating the position of richer agricultural entrepreneurs. However, during the Yala season owner cultivators shift from their subsistence paddy farming to upcountry vegetable growing in their low lands. But here once again the cultivators are heavily financed by the same type of rich entrepreneurs from outside and the villagers continue to work under tham as agricultural workers rather than the owners of production.
Unantenna Village
To have a clear picture of the complex issues involved in vegetable production, Unantenna village was selected as a representative sample for a case study. This village is about 3 miles away from Hanguranketha - Kandy main road which is connected by a minor road to the main road. About 420 families live in this village. They own 340 acres of paddy land and 780 acres of high land. About 82 percent of the high lands belonging to villagers were either leased out or mortgaged. About 18 percent of the paddy and was cultivated under a share basis. The average size of a family is about 4 members. They live as land owning agri
cultura labourers paddy farmers.
A minimum of a 15 metric tons of v be produced from a at Unantenna. This about 20-30 lorries to Colombo, Kand and Galle per seas as stated by the Ch. Village Society M tenna, they cannot the clutches of the market agents; tho: buyers apart from producers. When with lorries they ar. to drive their orrie the village, and make deals at the ju main road. They quality, type of veg etc. and it is not th instead those agent to the village and lower prices. Since know the econom and lack of bargair the villagers, vegeta chased at a very lov agents and they del buyers. The foll shows the prices of at each point of t channel through
Marketing System
The marketing sy ed mainly with mark
Table 2
 
 
 

or as poor.
pproximately egetables can nacre of land village sends of vegetables iy, Panadura on. However, airman of the r. . P. B. Unanget out from 2 enterprising se Who keep, the village
OuyerS COme e not allowed es directly to these agents inctions of the discuss the etables, prices e buyers, but :S Who come bargain for those agents ic difficultjes ning power of ables are purv price by the iver it to the Owing table
the vegetables the marketing those agents.
stem associateting of vege
tables in Sri Lanka is broadly categorised into three groupings: the private sector marketing system, the co-operative marketing and marketing through the Department
of Marketing. Those groups in turn operate at three broad levels in the marketing chain: farm level, wholesale level and retail level. Each group however operates through different links of the mar: keting chain depending on the locations in which they operate. Hanguranketha is a classic example where the usual marketing operation at the producer level is different from the common system pola. Those differences are summarised in table 3 on the next
page.
Producers as Marketing Agents
Since enterprising Village producers act as marketing agents the entire vegetable marketing system is under their contro. There are Outside buyers at their gates even before they go into the villages. Both buyers and producers are helpless and badly effected because of the economic, political and social power at the village level of these agents.
Financing Vegetable Production
The level of financing Vegetable farming activities in the area is very high. Total investment on low land up country vegetable farming is about Rs.25,000/- per
Vegetables Prices per Kilogramme
ECONOMIC REVIEW, JUNE 1985

Page 35
YATI:UWARA DIVISION
KANIDY
UDUNUARA
DIVISION
HEWAIIETA - DIVISION
V
Location of the Case Study unantenna
PERAI)ENIYA
LOCATION OF HANGURANKETHA
PATIIADUMBARA
DIVISION
ܓܠ
UDA HEWAITHETA
DIVISION
NUWARA ELIYA DIVISION
Table 3 Vegetable Marketing at Producer Level - Welimada and
Wellmada Area Upcountr
Marketing
Hanguranketha
-Vegetable Marl
1. Different groupings such as the Marketing Department and the Private sector operate here together and there is higher competition among them.
. Because of the wholesale fair (pola) such as that at Welimada, producers are free to select any one of these marketing systems to sell their vegetables at a price they consider favourable, since they can bargain.
|||. Different marketing groups ope
rate at the producer level with the help of a large number of village
level assemblers.
Extreme level of exploitation by the private sector middleman is limited due to competition among themselves as well as between them and the Co-operative or Marketing Department.
V. Commission Agents and other
types of middlemen at the producer level are involved in vegetable marketing as this is their occupation and they devote all their time for such work. They are representatives of the main marketing groups.
ECONOMIC REVIEW, JUNE 1985
Only the Private operates - No c( monopoly of the
No wholesale fa Hanguran ketha. F independent, anc choice other tha Their bargaining controlled by th monopoly.
Different type of available at the pr than private agent:
Since it is the private sector, not only exploited into clients who their patrors, th
Village level ager vegetable marketi job. They are not of the marketing majority of them village producers h
Accumulated pro marketing are b consolidation of table farming.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Hanguranketha
Area Mixed
keting
marketing system
Dmpetition. It is a
agentS.
ir is available at roducers are not they have no an private agents.
power is heavily he private trader's
assemblers are not oducer level other
S.
monopoly of the he producers are but also converted are dependent on he private agents.
Its are involved in ng as a part time the representatives system because the are members of the ouseholds.
its from vegetable eing invested on nigh land for vege
acre. High land low country vegetable farming also requires about
Rs. 10,000/- to Rs. 15,000/- per acre. Because of this high level of financial requirement and the in
ability of ordinary subsistence paddy farmers to invest such a large
volume of capital, the entire Vegetable cultivation process at
Unantenna village Was closely connected with informal financing by those rich village entrepreneurs
cum-marketing agents. They have been able to cut off the financial relationship between producers and
commercia banks in the area through their powerful and effective financial arrangements with
producers. Since this type of economic dependency of produ - cers is very high the majority of
village producers appear to play the role of land owning agricultural workers. About 82 percent
of the ordinary families in the Unantenna village produce vegetables for these rich entrepre
neurs in order to buy their consumer requirements and borrow sufficient for production; they
bořrow and buy in order to produce. This pattern goes on in a cycle without any improvement
in the living conditions of the villagers. These enterpreneurs at Hanguranketha are displacing the
Banks in their relationship with the producers, and available data reVealed that the vegetable producers
have decreased their bank borrowings from 100 percent to 10 percent over a two year period, leaving
the Banks to now play only a very marginal role in vegetable production in the area.
33

Page 36
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The Economic Review in its ten years of publication has produced several issues that are still in high demand. For the benefit of the several members of the reading public who have made repeated inquiries, we give below a list of some of the issues of which few copies are still available.
YEAR MONTH COVER STORY
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October
Transfer of Technology
April IMF Changes Mey/June Co-operatives
July/August Sri Lanka's Economy Sep/Oct. The World Bank Nov./Dec. Accelerated MaháWelli Pro
gramme
Jan./Feb. The Economy Marchi Children (IYC) April/May Rural Credit Oct./Nov. Television in Sri
Lanka
December Rubber
June/July August
Coconut Industry In land Waterways
July Rupavahini
August Ferti | izer
Sept. Presidential polls Oct./Nov. Merchant Banks Dec. National Elections
The contents of Economic Review may be quoted or reproduced with due acknowledgement.
A Publication of the
People’s San K ReSear Ceh Department.
Printed at International Graphic Magazines Limited, 283, K. Cyril C. Perera Mawatha, Colombo 13.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

1983 Jan. 5 Pesticides
Feb/Mar. Budget 1983
April Higher Education . May Global Economic
Recession
June Fisheries || July/Aug. Touri Sm || || Sept. Foreign Aid Oct. Towards Machine
Intelligence (Computers) Now. Budget '84. Dec. Rural Banks
1934 Jan.../Mar. Sri Lanka's Economy
April Mineral Resources
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