ECONOMYNEXT – Sri Lanka’s 2027 budget has heavily focused on rural economic empowerment with high-speed communication and modern road infrastructure with an aim to address rural poverty in rural area across the island nation, President Anura Kumara Dissanayake said.
Rural poverty in Sri Lanka remains disproportionately higher and more entrenched than in urban centers, accounting for roughly 80 percent of the island nation’s poor.
While urban areas benefit from diversified service economies, concentrated foreign direct investment, and higher-paying industrial employment, rural communities remain heavily tied to smallholder agriculture, seasonal labor, and informal enterprises.
Eradicating rural poverty has proven uniquely difficult due to structural constraints, including low agricultural productivity, land fragmentation, and poor market integration.
“This is why, through the 2026 budget, we have focused heavily on empowering rural citizens within their native regions,” President Dissanayake told the gathering at the launch of the Sri Lanka Economic and Investment Summit 2026 on Monday (12).
“This entails high-speed communication infrastructure and robust road networks connecting rural and urban centers. Through these multifaceted programs, we can address rural poverty.”
“It cannot be solved overnight with a quick-fix solution. It requires a long-term, sustained, structured, and targeted plan, and I believe we have laid the foundation for that.”
“Eradicating rural poverty is not something that can be achieved in a year or two simply by building a road or a bridge. It demands a sustained, targeted program.”
Limited Opportunities
He acknowledged that the segment needing a social safety net has grown excessively and the government has been forced to support groups that should not necessarily require state welfare.
“This is because of our failure to create new economic opportunities for the rural population. What economic avenues do they currently have? The rural populace has access to only a very limited scope of economic activities like agriculture, marine and inland fisheries, and running small, marginal village boutiques/shops,” he said.
“These are essentially their only economic opportunities. Therefore, if we are to eliminate rural poverty, our primary challenge is: how do we create new economic avenues for them?”
He said rural agriculture is restricted to small plots of land and has historically been a subsistence economy.
“It was never a commercial economy for a large portion of the population; it was subsistence-based. Consequently, looking at the extent of land and resources available to us, we cannot develop a large-scale commercial agricultural sector solely by targeting individual smallholders. That remains a poverty-alleviation and food-security mechanism; it must be viewed in that light,” he said.
Small-scale farmers frequently lack access to modern technology, cold-storage facilities, affordable credit, and efficient supply chains, leaving them exposed to volatile crop prices, middleman exploitation, and recurring climate shocks like severe droughts and floods.
Furthermore, long-standing fiscal deficits have constrained state investment in rural infrastructure, education, and non-farm employment creation, while administrative inefficiencies in targeted welfare programs such as Aswesuma have often left vulnerable agrarian households without adequate social safety nets during broader macroeconomic downturns.
Dissanayake said the focus is on enabling the rural poor to generate their own economic opportunities amid obstacles such as lack of capital, lack of technology, weak management capacity, and lack of market access.
“The responsibility of the state is to step in and fulfill these requirements,” he said.
“We have already launched a collateral-free loan scheme. They lack financial assets to pledge to banks, so we introduced collateral-free lending. That program has proven successful, channeling nearly 18 billion rupees so far. Next, we are integrating new technology.”
He said the government is relying two approaches to channel the wealth mobilized by the state toward the rural population, spending the revenue collected the Treasury for rural infrastructure development including for the rehabilitation of minor tanks and irrigation canals and community empowerment to directly link rural communities
He also said rapid communication networks between villages and cities to ensure the flow of rapid information and access opportunities and an advanced transport and road network connecting rural production to urban markets could help in creating more economic opportunities for the rural poor. (Colombo/October 13/2026)