Hence, the overconcentration on agriculture in pro-poor growth strategies appears to be principally supply driven and there are no demanders who actually wish to utilise them to derive benefits. Hence, the continuation of providing state support for rural agriculture, however much it is well intentioned, would trap an unwilling rural population in agriculture, thereby delaying the adjustment which has to take place by way of transferring the excess labour to other gainful areas of the economy and improve the productivity and efficiency of the agricultural sector of the country. This means that the growth strategy should focus on providing gainful employment to the rural poor in other growing areas such as the services sector and integrate it with the global economy so as to ensure income sustainability 14 . Two main issues have been present in Sri Lanka’s state sponsored poverty alleviation programmes in the past. One was the moral hazard problem and the other was the adverse selection problem. Since the poverty alleviation programmes anticipated providing benefits to selected poor individuals free of charge, those individuals did not have to work hard to receive such benefits. Hence, the schemes did not provide any incentive for participants to work hard and get out of poverty. As a result, individuals who were taken into the schemes preferred to be in the scheme forever, thereby perpetuating poverty and raising the cost of its eradication significantly 15 .
This trend of state functioning as the main promoter of growth and fair distribution has continued even to the present day. In Sri Lanka, during the last lap of the British rule, the country converted itself into a model welfare state following the example set by the colonial master in the post-war period 2 . Accordingly, education and health care were universalised and made free of charge, a wide range of food subsidies were introduced and state led development initiatives, in social and physical infrastructure, industry and agriculture, were started. All these pro-poor policies were intended to ensure socio-economic security for a wide spectrum of population, allowing the unprivileged to have social mobility through state support and intervention. The model yielded some results such as higher human development, but, economically pushed the country behind many late starters like Singapore or South Korea. Both these countries which were ranked very much below Sri Lanka at the time of independence have graduated to the status of developed countries within a period of just three to four decades reducing their poverty levels from around 50% of the population in 1950s to below 5% by the turn of the century. The creation of “a super welfare state” in this manner without the backing of a proper resource base by Sri Lanka has been criticised by many as an unsound and unsustainable policy compared with that pursued by superperformers in the region.