Part II will present the techniques, methodology and the way-forward strategy of the Isuru Project implemented by the Central Bank as a poverty alleviation project. Part III will discuss the methodology and the future of the Forward Sale Contract Scheme as a price discovery and price-stabilising mechanism for main agricultural produce. Part IV will be devoted to the presentation of a summary and conclusions. Part I A critical review of poverty alleviation strategies A continuous high economic growth over a few decades has been recognised as the main solution for the problem of poverty. While high economic growth reduces the incidence of poverty, it also raises the absolute income of those who still remain in poverty thereby ameliorating their living standards to some extent 5 . Hence, many developing countries in 1950s and 1960s pursued high growth policies as a way out for the poverty stricken masses of their respective countries. When an economy grows and the overall income level increases, it provides opportunities for the poor to secure gainful employment and raise living standards. As an economy proceeds along this path, if investments are made to raise the educational and health standards of the poor, the economy would get into an auto-pilot system moving to still higher levels of output, income and employment. Hence, there is no better alternative than a continuous high economic growth to eradicate poverty on a sustainable basis.
Many micro enterprises fail within the first few years of operation, if the producers do not pay heed to this vital requirement. The distancing of the project management from the selection of business line is a well thought out process, because it forces the beneficiaries to make business decisions and take responsibility for same. To build their capacity to make these decisions, training was provided as to how they should conduct simple and quick market surveys and how they could satisfy the quality requirements expected by their customers. After the beneficiaries have selected their business projects, they are referred to the relevant regional development bank for funding support. In view of the speciality and complexity of the loan objectives, micro loans are granted to beneficiaries on the strength of a mutual guarantee or an interse guarantee. If any member of a group defaults the loan, other members of the group are called upon to repay the loan. This ensures credit discipline and compels the members of the group to be constantly alert and vigilant on how a member of a group is using the funds lent to him, because if he defaults, the other members have to bear the burden of repaying the loan of the defaulting member. The peer pressure exercised by members on each other is a better loan management and monitoring system than what the mainstream bankers usually do through their branch network and local staff.