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Arthacharya’s Analysis

Understanding Poverty: Arthacharya’s Analysis

Poverty can be seen as the limited ability to satisfy basic needs. Another perspective is that poverty deprives people of access to resources and services while it does not leave too many choices with the poor. Poor are powerless and voiceless. Therefore, there is an issue of power among the poor too. There are many who live in a vicious cycle of poverty when absolute poverty is widespread. In this case, the level of severity of poverty needs to be understood. Poverty is inter-generational for many poor; it is inherited from the previous generation and passed over to the next generation.

Identifying the poor

Economists see poverty in terms of absolute poverty and relative poverty. This is based mainly on incomes made in cash. The poverty line drawn on the basis of absolute poverty is a useful tool that can be used in identifying the poor below the poverty line, or even the families just above the poverty line as well. Though it may sound a good yardstick the experience has proven that it is always more reliable to use participatory methods such as wealth ranking or a household index.


Poverty alleviation activities of the government see the poorest of the poor who are below the poverty line as a homogeneous group. The poverty line which always keeps changing was Rs. 3,780 per head per month in November, 2014 according to the Department of Census and Statistics. According to the head count index of the DCS the percentage of poor below the poverty line in 2006/7 was 15.2% while it was 6.7 in the urban sector, 15.7 in the rural sector and 32.0 in the estate sector.

Even the poorest of the poor are not homogeneous

The experience of Arthacharya Foundation gathered over a period of 23 years is that even the poorest of the poor are at least three categories. Arthacharya has classified them in the following manner.


1.Enterprising poor  :   This category of poor is self-motivated and are keen to get out of their present situation. There are certain very clear indicators identified by the Arthacharya staff in identifying the enterprising poor.


Often they are the ones who approach the facilitators of the programme when they enter the community for the first time; they are more eager to see what opportunities are offered by Arthacharya; their houses are very clean and organized though they are poor; many have grown at least some flowers in their small gardens; they value the higher education of their children and spend their limited incomes on private tuition; vices of their men such as smoking and drinking are limited if not absent; they save money though in small amounts; there is no vicious cycle of indebtedness; many are already engaged in some kind of microenterprise.


Arthacharya uses them as role models for the others since they are taken out of poverty more quickly. However, they are not more than 15% to 20% among the poorest.


2.Coping poor : These are the poor who have inherited poverty from their parents and who would pass it over to their children. In other words, they are in a vicious cycle of poverty. They struggle to stay in poverty. They are called coping poor since they follow so many strategies to cope with poverty. Some of them are mortgaging or selling their assets; burrowing money from all possible sources; having only two or one meal a day; their houses are not clean; drug addiction, alcoholism and smoking are high; many young men are involved in thefts; moral standards are low; children drop out of schools early; domestic violence is high; mobilization of this group is challenging.

There are many female headed households among the coping poor. They are about 70% to 80% among the poorest of the poor


3.Declining poor : these are the extreme poor who are not in a position to get out of poverty on their own even with external support. Their situation could be caused by disability, chronic diseases, absence of bread winners and old age with no children to look after etc.


What this group needs is not poverty reduction interventions but welfare measures which are not a part of the Arthacharya programme. They are not more than 5% of the poorest of the poor.


Different forms of exclusion and marginalization of the poor

One of the goals of the Arthacharya programme is to mainstream the poor who live outside the mainstream of development. These poor are marginalized or excluded in three different ways according to the experience of the Arthacharya Foundation.

  1. Spatial exclusion : distance to service centres could prevent the poor accessing resources, services and facilities. In some villages in Wellawaya and Tanamalwila where Arthacharya is active the closest town could be more than 20 to 30 km away. In remote districts the infrastructure is generally very poor in peripheral villages. On the contrary, in Colombo or in its suburbs even the poor have access to many services.
  2. Social exclusion : People can be socially excluded in terms of class, caste and livelihood activities etc. While the slums and shanties are excluded in urban areas some rural groups are excluded due to the caste or livelihood activity.
  3. Political exclusion : In the third world polities the poor who have identified themselves with the party in opposition may get politically victimized by not getting the safety net and other social benefits such as disaster relief. Also, another group which may get politically victimized is the minority communities. It was this kind of victimization that went on for many years after independence which eventually led to the civil war that lasted for 30 years.

Factors which increase Poverty

A ground reality which Arthacharya has grasped during this period is that however effective its microfinance activities could be, there are other factors which could still increase poverty unless they are carefully attended to. Poverty reduction therefore is not only a process of increasing incomes through microfinance but it has to simultaneously address various other independent factors which could increase poverty. These factors can be divided into two categories. 1. Internal factors or weaknesses or vices of the individual which push the down to a level of secondary poverty. 2. External factors that exist in the society or the physical environment where we live. Some of these external factors which Arthacharya has identified and developed programmes to handle them are:


1.Environmental degradation


This is a factor which has increased poverty directly in many communities where Arthacharya has been active. In the dry zone of Sri Lanka the primitive cultivation practice of “slash and burn” or chena has allowed the monsoon rains to wash away the top soil and expose the land for erosion. Clearing the vegetation has reduced the moisture in the atmosphere and increased the temperature and makes the rainfall even more erratic eventually leading to frequent crop failure which has increased poverty.

In urban areas unmanaged solid waste has blocked drainage systems and waterways thus generating mosquitoes which spread dengue and filaria which drain out the limited incomes of the poor while dengue deaths would make them even more vulnerable. Diarrhea and other bowel diseases as well as scabies caused by flies too cost the poor their time, energy and limited incomes.

  1. Lack of good governance causing corruption

Lack of accountability and transparency that exist in government, local government as well as civil society institutions could make the life much more expensive for the poor. If the poor have to pay bribes to the bureaucrats, technocrats or politicians to get the required services provided it will further diminish their meager incomes. The need to bribe some principals prevents the accessibility of poor children to better schools. Similarly corrupt politicians and bureaucrats could embezzle the resources which are supposed to be distributed among the poor. An example is the misappropriation of funds set apart for disaster relief. The inability of the poor to receive relief funds during disaster times could make them poorer. Similarly, the more powerful elements in grassroots organisations could siphon off the funds from government which are meant for the members.

  1. Violence

There are many definitions on violence that exist in legal and sociological literature. Basically, violence means harming another person or a group. Violence could be categorized in essence as individual or direct violence and structural violence which is often more indirect. Violence is also classified as social violence, cultural violence, gender based violence, economic violence, institutional violence and political violence. Violence practiced against a caste or a class or a socially excluded group can be considered as social violence. Similarly, violence practiced against a religious group or a language group is called cultural violence. A more common and a cross cutting form of violence which is very common in any third world society is gender based violence where perpetrators are often men while women are the victims. Thefts, extortion and mugging can be treated as economic violence. Sometimes those who are supposed to maintain peace may practice violence. There can be incidents of police officers practicing violence against urban poor. Some years ago, the president of the Bar Association of Sri Lanka was badly assaulted by a police officer. The impunity exercised by the authorities in favour of criminals too should be treated as institutional violence since it is a situation of a government institution or an officer supporting violence or protecting a perpetrator. Political violence is attacking or even murdering the leaders, activists or the supporters of another political party. A civil war too is considered a situation of political violence.


Whatever the form violence is a strong factor in increasing poverty. Mexico, which was a very decent middle income country with so much of natural resources and a wealth of human resources today, has more than 45% of its population living below the poverty line due to the extreme violent situation it has been going through. Violence while generating insecurity prevents the victim from engaging in productive work, deprives him of physical resources, destroys social capital, human capital and other forms of capital.

  1. Displacement

Displacement can be voluntary or forced. The farmers of Matara and Hambantota districts who migrate to the more difficult areas in Moneragala district, looking for greener pastures, is voluntary displacement. On the other hand the Muslims who migrated to Puttalam from Mannar were forced to leave their areas by LTTE is forced displacement which was completely against their wishes. Arthacharya works with both types of displacement. Displacement exposes the poor to new challenges where the ejection from the social and kinship networks that were attached to can be considered the key since this affects the psychology of the poor more negatively. The poor for their survival adopt various coping strategies. Among them is the interdependency created through their social and kinship networks. Once they are uprooted from the networks and planted somewhere they have to function in isolation or with limited social capital with the strangers they meet in their new locations the life becomes extremely challenging. Arthacharya through its work in the harsh dry zone areas has observed over a long period that this is the main contributing factor among others for the high level of suicides in country which has placed Sri Lanka among the top ten countries in the world.


Besides, displacement exposes them to other challenges such as having to compete with the host communities for limited resources and service where the host communities are always at the receiving end of the hostilities of the host community. Lack of recognition, unfriendly bureaucracy and technocracy, socioeconomic differences with the neighbours, harsh ecology, new health issues that they are not familiar with, lack of infrastructure and economic dominance of the shop keepers and money lenders are some of the other serious challenges they are faced with.

  1. Climate change and disasters

The poor farmers are aware of climate changes according to the experience of Arthacharya in remote areas. But other than felling of trees for slash and burn cultivation they have no complete idea about the contributing factors. Also, there are still many farmers, who due to poverty still destroy the environment for immediate or short term benefits, for instance creating wild fires to hunt animals, though they know that it could affect the climate patterns.

Failure or change of pattern of monsoons and other types of seasonal rainfall expose the poor who are engaged in rainfed farming to vulnerability. Mitigation and adaptation strategies are not yet widely disseminated among the farmers given the collapse of extension network and the necessary work is left with a few NGO s which are focusing in this field. In a situation where not only the rainfed farming is affected but also the major irrigation tanks have dried out due to failure of rains it is critically important to mobilize farmers to follow alternative strategies cope up with the increasing threat of crop failures.


Tsunami that Sri Lanka experienced proved that even the middle classes could become poor overnight when affected by a disaster such as tsunami which takes the human life, destroy resources and livelihood assets, housing and other infrastructure as well as financial resources. Though at a lesser scale, the floods and droughts experienced by the poor always make them poorer.


The internal factors or weaknesses or vices of the individual which are also called “leakages” which push them down to a level of secondary poverty are:

  1. Substance abuse : Alcoholism can be considered a serious problem among the poor in the whole country while drug addiction is concentrated more in towns and semi urban areas. Alcoholism is the main factor preventing poverty reduction activities among the poor in the plantation sector according to the experiences of Arthacharya activities. Plantation sector, its main inhabitants being the Tamils of Indian origin, behind the urban and rural sectors is considered to be the poorest by the World Bank’s Poverty Report.

Research has revealed that alcoholism was purposely introduced by the colonial raj to keep the workers army under control. Similarly, alcohol being one of the main sources of income of the government and is a popular business among many politicians who get alcohol permits to sell alcohol using their political power promote the expansion of alcohol supply network. However, due to ever increasing prices of the official supply of alcohol the consumption of illicit liquor has become quite popular among the poor. Drug business too is carried out with the blessings of some politicians and authorities though there are many who are against it. In a situation where alcohol and drugs are indirectly promoted dealing with the prevention of and rehabilitation from substance abuse is a task left with a few NGOs.

  1. Smoking : The field staff of Arthacharya has calculated that the costs of alcohol and smoking put together could take away the good nutrition and health standards of poor families.
  2. Gambling : Another negative factor going against the poor is gambling which goes on in both official and illegal forms. Gambling in rural setting was only a vice of the men in the past but with the popularization of official gambling programmes it has taken root among women too. Official gambling methods are promoted by various government institutions and they are a key source of income for them.
  3. Wrong values and lifestyles : The majority of the poor have no good sense of family budget planning and even the ones who have an income which would enable them to manage their monthly affairs are often under a deficit due to unnecessary wastage. Poor are often the victims of meaningless values such as partying and going on trips and picnics too often as well imitating and copying the life styles of the middle classes.

The mushrooming emergence of food outlets in urban and semi urban areas have prevented many poor women from cooking a simple and inexpensive but healthy meal and made them dependent on fast and junk food which children prefer. Also, the poor have become serious victims of consumerist values promoted particularly by the marketers of clothes, cosmetics, electronics and mobile telephones among others. The restaurant culture which is spreading like a wild fire in urban, semi urban and small towns in rural areas

  1. Accidents, Illnesses and death : It is a well-known fact that the poor are much more accident prone than the educated and better off middle classes. Their livelihood activities often expose them to dangerous situations in their work places where they work with machinery, in the sea or forests or in the plantations etc. Lack of awareness and poor health facilities in remote areas and urban low income pockets expose the poor to various communicable diseases which cost them their daily incomes and meager savings. Death of a bread winner could push a poor family down to extreme poverty while any death in a family could compel them to burrow from money lenders.
  2. Indebtedness : When all the above factors or some of them operate together it is almost unpreventable that the poor end up in a vicious cycle of indebtedness where there is no way out. Multiple borrowing is a common feature in the lives of the poor. Research studies say that rural indebtedness increased following the introduction of the green revolution technologies which increased the agricultural production. Though new technologies were introduced in the late fifties and sixties there was no financial infrastructure for the farmers to have the required capital to purchase inputs such as hybrid varieties, agrochemicals, fertilizer and rent tractors. Burrowing from the money lender to meet these needs was the beginning of the vicious cycle of indebtedness for many. This eventually costs them their lands too and contributed to the increasing numbers of landless agricultural labourers particularly in the wet zone who are always in debt. Multiple borrowings are made from various sources such as relations and friends, shop keepers and money lenders, NGO s and MFIs. Often they burrow from one source to pay the other.

Factors which increase Poverty

  1. Existing attitudes, mindset and dependency syndrome

The political culture cultivated by the colonial rule was to create dependency of the people on the government. The two rebellions that took place in the 19th century enabled the British rulers to realize that the Sri Lankan rural masses were an independent group of people who were based on their simple but sustainable economies. The long term strategy of the colonial rule was to destabilize the decentralized local system of governance and create dependency through centralization. The heavily bureaucratic system of administration that was established with a long hierarchy further took away the independent initiatives of the people.

This system of dependency was further continued by the rulers of independent Sri Lanka. Through the consolidation of the welfarist system which was initially introduced by the British they established a culture of subsidies. Though some of these subsidies were removed by the liberalized economy in the seventies the poor still receive them under the safety net programmes such as Janasaviya and Samurdhi.

Today, as a result of maintaining poverty through subsidies over a long period of time, the poor believe that it is the responsibility of the government to provide them a much bigger basket of subsidies. One of the challenges that Arthacharya faces is the dependency syndrome of the poor where they expect immediate or short term benefits from whatever the programmes that are introduced for poverty reduction. The further promotion of this dependency mentality by local politicians makes the situation even more challenging for poverty reduction activities of Arthacharya.

  1. Existing colonial structures

This is the other side of the story explained above. The bureaucracies and technocracies established by the colonial rule and further consolidated by the independent governments resist any partnerships with poor who are the beneficiaries of their programmes. They are aware that the partnerships with or participatory activities of the poor could reduce the power and controls that they exercise at present. In implementing participatory solid waste management activities in many municipal councils by Arthacharya Foundation during last fifteen years the biggest barrier was the technocracy which was losing its grip on waste management. Similarly, these two groups would immediately react negatively towards participatory activities which empower the poor.

  1. Absence of clear policy on poverty reduction

Despite the fact that Sri Lanka was one of the lowest per capita income countries in the world for a long time until it changed recently the country does not have a clear cut poverty reduction policy developed by any government focusing on the need for the mobilization of the poor. In the absence of such policy participatory activities suffer due to lack of clarity that exist with regard to the government’s principles, values, objectives and goals and strategy with regard to the effective activities that can be used to mobilize the poor for poverty reduction such as microfinance , microenterprise development, participatory irrigation development and participatory solid waste management etc.

  1. Existing market structures

This is one of the most critical barriers preventing the poor from getting out of poverty. In rural areas the village production system is in the hands of input suppliers (mudalalis), money lenders, land owners, tractor owners, transporters and other intermediary collectors. In many cases, most of these roles are played by the same individual making the situation even more challenging.

The above network network is linked with the parallel networks at district, provincial and national levels. The severe controls maintained by the powerful networks have minimized the bargaining power of the poor individual farmer who is not organized in most cases. All the existing solutions such as the cooperative mechanisms, NGO activities and governmental programmes to guarantee an acceptable price level to the farmers have been effective mainly to the upper layers of farmers who are well above the poverty line. There is hardly any successful model developed by any stakeholder to benefit the poorest farmers in dealing with the market networks.

  1. Competition between politicians and NGOs

Another key constraint encountered by the nongovernmental operations is the negative attitude of all governments of the country towards their programmes. This is mainly due to the competition the politicians have with NGO sector in maintaining their vote bases. The poor and low income groups which constitute a large section of the population are the main part of the vote base of the politicians. When they are mobilized by the NGO s to increase their incomes, satisfy their basic needs, protect their rights and eventually empower them these activities may go against the wishes of the politicians due to the fact that the loyalties of the voters may get divided. The resulting hostile attitudes and activities of the politicians is often a serious problem for NGOs.

  1. Negative media

Added to the above situation is the negative attitude of the media towards the NGOs and their anti-NGO misinformation which affect attitudes of the public on NGOs.

  1. Bad NGOs

There have been NGO s with all kinds of agendas. Also there are many whose level of transparency and accountability are questionable. There is another set of NGO s which increase dependency through distribution based programmes where the main goal is not poverty reduction. Another negative feature of many NGO s is their severe competition with others for limited resources.