What Remains to be Done: Minimising Inequality in Sri LankaPriyanthi FernandoExecutive Director Centre for Poverty AnalysisThe Human Development Index (HDI) has become an alternative to Gross Domestic Product(GDP) for measuring ‘development’ or the progress of nations. Introduced in the firstHuman Development Report published by the United Nations in 1990, it is based on the premise that “people are the real wealth of a nation”. As Amartya Sen pointed out in the 20
Anniversary volume of the Human Development Report published in 2010 the HDI turnedout to be almost as crude a measure as the GDP, but it did what it was expected to, moveattention away from a singular focus on incomes.It is encouraging to see that the HDI itself is evolving, and that as better and more data becomes available, more meaningful measures are used. Its evolution is testimony to theunderstanding that human development is complex and has multiple causes and effects.Recognising the inadequacy of a single measure to capture all dimensions of humandevelopment, the UNDP has recently developed three new indices to expand our understanding. They are; the Inequality-adjusted Human Development Index (IHDI), theGender Inequality Index and the Multidimensional Poverty Index (MPI). They help us focus
on what remains to be done
, despite great strides in human development over the lastdecades.The focus on what remains to be done is what is really important for Sri Lanka. The latestHousehold Income and Expenditure survey for 2009/2010 suggests that the decrease in thePoverty Head Count Index recorded at the previous Household Income and Expendituresurvey in 2006 has been consolidated. Our achievements in improving social conditions,health and education and the Millennium Development Goals (MDGs) are encouraging. But,it is in trying to work out what remains to be done that the IHDI becomes significant, becauseit focuses
, and the aggregate national figures tend to hide a number of inequalities that exist in our society.The first step when thinking about what remains to be done, is to acknowledge that inequalityexists and that it is increasing.Table 1 (Marga Institute, 2009) shows clearly that the poorest peoples’ share of the income isdeclining, while the richest peoples’ share of the income is increasing. The Gini coefficientshows that income disparities have grown significantly in the urban and estate sector and hasremained relatively static in the rural sector. We also know from other studies that theoverall increases in consumption accrued disproportionately to the better off, and that growthin per capita consumption was negligible for the bottom 40 percent and sizeable for the top20 percent of both urban and rural populations (World Bank 2007a).