The verbal outbursts that erupted in Parliament on June 23 on the issue of selecting beneficiaries for the Aswesuma, adopting a criterion less apparent to the public, were indeed predictable. Strange unity between the political divide centred around this issue, ignoring the party affiliations to condemn the selection criteria, highlights the frustration among politicians in failing to select beneficiaries of their liking.
The “Samurdhi” trade union leaders and their supporters lost most of their political relevance as many beneficiaries lost their entitlements under the new guidelines. The issue of staging mass protests instigated by politicians to restructure welfare programs according to their liking is also not new. An attempt to restructure the welfare state by raising the price of rationed rice in line with import price by the then finance minister J. R. Jayewardene led to a political agitation that ended up with a Harthal and the change of Government in 1953.
In 1960, Finance Minister Felix Dias Bandaranaike, who attempted to revise the ration system, faced a similar defeat. Recently (in 2017), an islandwide survey conducted to weed out unsuitable beneficiaries had to be shelved under political pressure after spending vast money and other resources. The only time an attempt to restructure a system of food rationing/subsidising succeeded was the survey in 1978 to select eligible households to establish the food stamp scheme under the J R Jayewardene government.
The current Aswesuma program will cater to more households than Samurdhi. The Samurdhi program had 1,765,592, including 97,623 persons receiving Rs. 1,500; they have not fallen under any specific category of beneficiaries. Yet another 119,000 who received incomes higher than the cutoff point continue to enjoy the benefits of the Samurdhi program for no apparent reason. Therefore, the total number of beneficiaries in the program is 1,669,713, and no systematic database is maintained to verify the numbers or the payments.
Two million households
On the other hand, the new Aswesuma program intends to recruit two million households and elderly, chronically sick and those with chronic kidney diseases as individuals. Thus the number of beneficiaries far exceeds the Samurdhi numbers, and the monthly payments are much superior. Also, about 35 percent of Samurdhi beneficiaries have enjoyed the welfare benefits for over 20 years.
Another 15 percent have remained in the program for more than 15 years, and most are unlikely to be poor. The program has 31,000 public servants appointed to work with beneficiaries, with a dedicated Bank having more than Rs 130 billion in deposits to grant loans to its members. Over 50 percent of beneficiaries failing to cross the poverty line even after 15 years is unacceptable. Investing in such an unproductive program without reassessing it wastes public resources.
Unfortunately, no parliamentary review committee has questioned the role of the Samurdhi Department’s public officials and their contribution to the past 25 years of poverty reduction in the country. Therefore, the current agitations by those who lost their long-term’ entitlements’ rather than poverty support for the family have no logical basis. On the contrary, the Aswesuma is a time-bound program, and the beneficiaries must attempt to overcome the current status of poverty during the specified three-year period.
Poverty, a household problem related to many social and economic conditions connected to geographical locations, social organisation and individual behavioural patterns, has recently increased in all sectors of the country.
However, with expanding the economy and pro-poor policies, poverty in Sri Lanka during the past two decades has rapidly declined, a fall from 22.7 percent in 2002 to 4.1 percent in 2016. Similarly, extreme poverty measured at US$ 1.90 a day was 0.9 percent in 2016, which indicates wiping out the worst forms of consumption poverty. While poverty was relatively low before the pandemic, pre-existing vulnerabilities were high partly due to high informality. However, recent improvements in living standards necessitated a revision of the official poverty line, which came into operation in 2002 and was updated in 2019. The new poverty line put poverty at 14.3 percent in 2019, a change from 4.1 percent in 2016.
Around one out of every six (16.0 percent) people in Sri Lanka are multi-dimensionally poor (M.P.I.). Estate areas are pockets of poverty requiring policy attention as more than half (51.3 percent) of all people living in these areas live in poverty; poverty levels in districts vary significantly from 3.5 percent in Colombo to 44.2 percent in Nuwara Eliya. However, the poverty map with recent inflationary effects, particularly the rising food inflation, changes rapidly, where information on the impact on specific vulnerable groups and geographical spread is sketchy.
Negative GDP growth
Also, vulnerability to income shocks aggrieved by rising inflation, where headline inflation rose to 64.3 percent and food inflation to 93.7 percent in August 2022, disproportionately affects the poor and vulnerable. The IMF predicted continuing negative GDP growth of -8.7 in 2022 and -3.2 percent in 2023. The Covid-19 pandemic and the impact of the financial crisis caused a significant setback in economic growth and poverty reduction. The pace of poverty reduction will stall as the country’s growth prospects diminish.
Many studies conducted locally and internationally highlighted the inherent weaknesses of the Samurdhi program in beneficiary selection. A World Bank study (2022) identified that the program benefits 45 percent of people experiencing poverty and 18 percent of non-poor households, classified as poor under the national definition of poverty.
A recent study reported that 69 percent of beneficiaries come from the poorest 40 percent of households. Among the poorest 10 percent of households in which one member receives Samurdhi, the monthly benefit levels are Rs. 2,423, equal to about 12 percent of monthly consumption for those households. In short, the two conditions are apparent, faulty targeting and inadequate support provided under Samurdhi, even selected.
The Government’s response to the two critical observations is to resurvey and select the real poor to receive benefits and to enhance the payment as required. A demanding attempt to select the right target group to grant benefits to those in need is complicated and challenging. Attempts to restructure welfare payments through improved targeting were abundant on the Government’s directives.
One primary concern for implementors of the new Aswesuma program is selecting eligible beneficiaries by adopting a suitable dampened model with fewer exclusion and inclusion errors to receive benefits under specific welfare programs. For this, there are several well-tested methods, such as the Head Count Index (HCI), Proxy Means Test (P.M.T.), and Multi-dimensional Deprivation Scoring (MDS). After a careful study, a decision has been made to adopt the MDS to screen the beneficiaries for welfare payment distribution.
Nevertheless, any statistical model deployed to screen beneficiaries must satisfy two initial conditions to build public confidence. Firstly, there should be a proven track record of the chosen method/technique used here or elsewhere in selecting beneficiaries with minimum inclusion and exclusion errors. Secondly, there should be a well-acknowledged indicator that is easy to verify at the community level to prove the fairness of the method used to convince the larger community, including but not limited to the elected members of political organisations.
Independent variable
For this purpose, an accepted independent variable, the monthly electricity usage bill, embedded in the MDS equation, may be used separately as a community-level verifiable indicator of severe poverty. Though the MPI has been a significant step forward, it still has some methodological weaknesses. The Correlation Sensitive Poverty Index (CSPI) can overcome these weaknesses, allowing more informed policy-making.
Non-availability of timely data deferred the authentication of some critical comments published by local and multinational agencies, as reports adopting different survey methodologies and sample sizes comparisons were unpractical to present a more reliable account of the current status of people experiencing poverty.
However, monthly published economic indicators, such as food prices and inflation reveal the general direction of the movement of the economy without having a specific reference to its impact on individuals or communities.
Though routinely collected administrative data to assess the current trend in the direction of poverty is available, rigid data-sharing arrangements among institutions limit the prompt assessment.
Some argued that out of many variables adopted to identify poverty, electricity is a single powerful predictor, easily verifiable and reliable. The analysis presented in this perspective shows that the alternative of using a threshold of 60kWh of electricity use per month by a household as a preliminary eligibility criterion will reach about 50 percent of the population and over 80 percent of the poorest among them and performs best among a set of alternatives. The appropriate cutoff point of fewer than 60 units of electricity consumption per month is proposed to separate people with low incomes from the non-poor.
According to CEB data of January 2023 analysed by PUCSL out of 6.37 million domestic customers, about 200,000 have moved from higher categories to under 30 kWh, and another nearly 300,000 to the 30 to 60 kWh category. So, out of 6.3 million domestic consumers, 1.89 million households consume less than 30 kWh per month, 19.3 percent of all domestic consumers, and another 1.21 million households consume more than 30 kWh and less than 60 kWh monthly. So, a little over 3.1 million out of 6.37 million domestic users, or 49 percent, used less than 60 kWh per month in January 2023. The inference in this new and timely information is that many households were dragged into poverty recently. As predicted by several assessments, the worsening economic situation exposes many people in near or ultra-poverty to severe food insecurity or starvation.
The Aswesuma program targeted the 1.2 million ultra-poor (400,000) and less poor (800,000) families using less than 30 units of electricity per month (1.89 Million HH), who qualify to register in the program had they been selected under the MDS method.
Advanced welfare scheme
The policy response to the issue has been the introduction of a new and much-advanced welfare scheme to assist 2.2 million families of the poor and vulnerable by adopting a proper selection criterion with an annual cost of Rs. 195 billion. Planned to be effective from this month, the program, in the background of improving economic conditions, would help reduce food vulnerability appreciably in a short period.
However, to make the situation sustainable, those poor in the categories of severely impoverished (400,000) and poor (800,00000) requires to be exposed to a well-articulated and proven program based on given poverty metrics and, therefore, can be considered ready to “graduate” from the interventions dedicated to enabling this transition in a pre-determinant period.
An action-oriented program with community support and participation with adequate financing for three years would ease the burden of vulnerability and hardcore poverty among the participants.