After meeting with a few beneficiaries of the current social welfare programme ‘Aswesuma’ over the course of the past few months, I could note a common belief among them; most of them felt entitled to continue receiving benefits. This sentiment stems either from a belief that the Government is obligated to support them long-term or from a lack of confidence in their ability to escape poverty.
This recalls a study recently published by LIRNEasia, a local think tank. In its research findings titled ‘Social Safety Nets and the State of Poverty in Sri Lanka,’ LIRNEasia highlights a grave concern, which is that those on social welfare programmes receive monthly cash transfers for 10 years and three months on average, which could even increase to 28 years.
LIRNEasia attributes this to limited and opaque pathways to exit social welfare. The research findings note that only 17% of those who received social welfare benefits exited the programme at one point, indicating that a whopping 83% continues to rely on these welfare schemes. This highlights both dependency and the gravity of poverty.
Another pressing concern is that the Committee on Public Accounts (COPA) last year revealed that nearly 33% of the families currently receiving welfare benefits are not eligible for it, while a similar percentage of families who should be receiving the benefit are not. This finding emerged from a comprehensive survey conducted across the entire island between 2015 and 2017. The survey indicated that 449,979 families should be removed from the welfare programmes.
Social welfare trends
In 1988, then President Ranasinghe Premadasa launched the ‘Janasaviya’ Programme, aimed at alleviating poverty in Sri Lanka. According to a June 1998 research paper by the Immigration and Refugee Board of Canada, by October 1990, the programme’s first phase had provided a $ 62 monthly ‘investment and consumption package’ to between 150,000 and 165,000 families.
In 1995, the Sri Lankan Government introduced the ‘Samurdhi’ Programme, also known as the Prosperity Programme, continuing its efforts to combat poverty. This programme, managed by a dedicated ministry and the Samurdhi Authority, faced significant challenges due to the absence of a robust management system for monitoring and evaluation, making it prone to politicisation. Concerns were also raised about its focus on welfare activities fostering dependency rather than promoting socioeconomic development.
A World Bank blog published in June 2023 noted that despite one-fourth of the country’s population falling into poverty, many did not receive Government support due to weaknesses in social welfare schemes. More than 50% of Sri Lanka’s poorest population were not covered by welfare programmes such as ‘Samurdhi,’ which is bogged down by administrative inefficiencies and possible political interference. As a result, many eligible individuals are excluded, while some ineligible ones receive benefits.
LIRNEasia’s findings reveal that eligibility criteria based on monthly income/expenditure are difficult to verify in many poor households, leading to high discretion by officials and programmes being co-opted for political gain. The think tank suggests establishing reevaluation and exit mechanisms to address eligibility concerns.
Addressing exit rate concerns
University of Colombo Department of Economics Prof. Priyanga Dunusinghe told The Sunday Morning Business that under the ‘Janasaviya’ Programme, beneficiaries had been encouraged to enhance their skills and create opportunities for income generation.
However, this focus had diminished under the ‘Samurdhi’ Programme, which became more of a subsidy distribution initiative rather than one that enhanced the capacities of the poor. As a result, successive governments maintained the number of ‘Samurdhi’ recipients instead of reducing it by empowering them to become self-sufficient.
“Most of the people who exited ‘Samurdhi’ were those who changed their status themselves. For instance, they did their studies and accessed good jobs through that,” Prof. Dunusinghe explained.
He acknowledged that while some recipients managed to escape poverty through personal efforts or by utilising available loan schemes, these were not the outcomes of deliberate policy efforts. The low graduation rate from poverty under ‘Samurdhi’ constitutes a significant issue. “That was the main reason why graduating from poverty remained very low under the previous schemes,” he said.
Under the new ‘Aswesuma’ programme, there is a plan to implement a more comprehensive graduation programme aimed at enhancing the skills and opportunities of recipients. “It is expected that the graduation scheme will work under the new programme in a much more comprehensive manner,” Prof. Dunusinghe stated.
The centralisation of ‘Samurdhi’ payment selection allows officers to focus entirely on capacity development and skill enhancement among ‘Aswesuma’ recipients. “They can fully focus on enhancing capacities among ‘Aswesuma’ recipients,” he concluded, expressing hope for the improved impact of the new programme.
Meanwhile, Economist and regular columnist for the International Monetary Fund (IMF) Talal Rafi told The Sunday Morning Business that people did not leave welfare schemes because there was no proper monitoring or mechanism to encourage them to leave.
“Twelve percent of the richest 20% of income holders had been receiving ‘Samurdhi’ in 2019, while out of the poorest 10% of society, only 31% received ‘Samurdhi,’ showing there is no regular monitoring or evaluation of their eligibility,” he noted.
According to him, digitisation of welfare schemes is a solution for these issues, since it will reduce inefficiency given that around 40% of the ‘Samurdhi’ budget goes towards administration costs. Further, better coordination of different Government institutions to identify those ineligible and looking at electricity consumption to identify eligibility were some of the methods the Government could opt for in order to solve this issue, he added.
Over one million dependent families
Speaking to The Sunday Morning Business, State Minister of Finance Shehan Semasinghe shared that the number of beneficiary families under ‘Aswesuma’ had increased from two million to 2.4 million, with an anticipated expenditure of Rs. 205 billion this year to support the poor and vulnerable.
“We started the first round in July 2023, which will come to an end in July 2024,” he said. “To commence from July this year, we will start enumerations in June. The process includes two segments: evaluating 450,000 new applications and recertifying the existing beneficiaries.”
Regarding poverty reduction and the exit rate from welfare schemes, Semasinghe acknowledged the challenges posed by the global economic environment. “The Government’s target is to reduce the poverty level to single digits,” he stated, however noting that this would be a mid-term and long-term plan due to the current economic conditions.
Semasinghe highlighted the dual approach of the ‘Aswesuma’ Programme, which aims to support and empower vulnerable families. He noted that while it may not be possible to lift all 2.4 million families out of poverty immediately, a phased approach would be taken.
“There will be a significant component of over one million or 1.2 million families which this country will have to look after until their demise,” he explained. “But there is another component which can be empowered.”
Empowerment initiatives are critical to the programme’s success, according to Semasinghe. He identified the transitional and vulnerable groups as priorities for empowerment, given their relatively temporary economic hardships. “The segment that can be empowered to exit ‘Aswesuma’ are those belonging to the transitional and vulnerable categories, who can be empowered within the shortest time period.”
When asked about the IMF’s stance on Sri Lanka’s social welfare measures, Semasinghe affirmed that the fund was satisfied with the progress. He emphasised the challenging nature of the reforms, which were necessary but long overdue. “The reforms we are carrying out now should have been done in 2000,” he stated.
One of the key targets set by the IMF is to mitigate the financial burden on the poor and vulnerable during this transitional period. The IMF and the World Bank were both focused on ensuring that the reforms led to financial stability, debt sustainability, and effective targeting of welfare benefits, he added.