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Average per Capita Income and Real Income

According to the central bank Annual Report 2008 per capita income at market prices topped $2014. But does this represent Real income improvement? The Rupee value of GDP at market prices is converted at the average US$ Rupee exchange rate. But this Rate is an over-valuation of the Rupee and does not reflect the relative purchasing power of the Dollar. It doesn’t take into account the purchasing power of the Rupee either. We see elsewhere in the Annual Report other indicators which should make us cautious in quoting this figure as proof of an improvement in average living conditions of the people.

 Despite all the statistics of economic growth has the education or health services improved? Income level has gone up in dollar terms but has real income improved? The real wages of public sector workers suffered a loss of 12.2-12.5% during the year 2008 ( CB Report . ) Although the nominal wage rates of Wages Board trades were raised there was only a marginal increase in real wages of employees in the formal private sector agriculture, industry commerce and services. What about the informal sector which provides employment to a large number in Agriculture, Construction etc. As the CB says ‘when the increases in the nominal daily wages were adjusted for inflation, employees in the Construction sector and sub- categories in the Agriculture sector, viz tea, and paddy ( female employees) suffered losses in their real wages during 2008. Even skilled workers like carpenters and masons in the construction industry experienced real wage losses in 2008.

The population below the poverty line has declined over the years to 15% but this depends on how we pick the poverty line. There are some other statistics which show that all is not well. The number of families getting Samurdhi is 33%.  The Proportion of population below minimum level of dietary energy consumption (2030 kcal) is 50.7%(2007) whereas the Millenium Development target is 25%. The proportion of under-weight children below 5 years is 21.6%(2007) whereas the MDG target is 19%. Let us not delude ourselves with the figures of per capita income in dollar terms. 

R. M. B. Senanayake   

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