ISAS Briefs

Income poverty in Sri Lanka, which is measured by the official poverty line, has declined significantly over time. However, this line, which broadly defines the poverty status as the ‘poor’ and ‘non-poor’, does not address the huge disparities within each of these two groups. This paper classifies the poverty status in Sri Lanka into four categories – the ‘extreme poor’, ‘poor’, ‘vulnerable non-poor’ and ‘non-poor’. It is found that 0.2 per cent of the households fall into the ‘extreme poor’ category while 16.3 per cent are in the ‘vulnerable non-poor’ group – they are more likely to fall back into poverty due to small shocks. Therefore, poverty reduction strategies, which target the broadly classified ‘poor group’, may not be sufficient and appropriate to lift those in the ‘extreme poor’ group out of poverty. Additional safety-net programmes are necessary to ensure the well-being of the ‘vulnerable non-poor’.