PERS 2016

Permanent URI for this collectionhttps://ir.lib.pdn.ac.lk/handle/20.500.14444/199

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The causal relationship between interest rates and exchange rate in Sri Lanka
(University of Peradeniya, Sri Lanka, 2025-09-24) K. P. M. Chathurika; O. G. Dayaratna Banda
Introduction The exchange rate has (the Sri Lankan rupees against US dollar) depreciated from 1986 to 2013 in Sri Lanka (CBSL, 2013). It means the loss of value of Sri Lankan currency with respect to US dollar. The exchange rate is affected by many components including interest rate as one of those macroeconomic variables. According to the exchange rate channel indicated in Monetary Transmission Mechanism, it can work through either net exports or import prices. Increased money supply tends to lower the interest rate leading to a depreciation of the exchange rate. The depreciation of the exchange rate also raises import prices, which directly affect the several price levels, thus creating inflation (Amarasekara, 2005). The theoretical as well as empirical relationship between interest rates and exchange rates has been a debatable issue in economics literature. Dash (2004) found that call money rate has negatively and significantly influenced the exchange rate in India. In other words, declines in the value of the exchange rate have prompted monetary authorities to raise domestic interest rates. Another study by Wilson & Sheefeni (2014) found that for Namibia, there is no relationship between interest rates and exchange rates. Kisaka (2014) found that exists a long-run relationship between the foreign exchange rates and interest rates and there is unidirectional causality running from interest rates to foreign exchange rates in Kenya. Since the causation runs from interest rates to foreign exchange rates then authorities in the Kenyan financial markets use interest rates to stabilize the foreign exchange rates in Kenya. Tafa (2015) found that in the case of Albania, an increase in interest rates of deposits in ALL, caused the exchange rate of ALL/USD to increase, with USD becoming more expensive. While in the case of EUR/ALL exchange rate, it was found that when interest rate in ALL deposits increase, ALL was appreciating against Euro. Therefore, Lek (currecy of Albania) was becoming more expensive. Kayhan (2013) interest rate affects exchange rate in only China and this effect exist only in the long run. On the other hand, exchange rate shocks induce changes in interest rate in the shorter period. In Sri Lanka, although the causal relationship between inflation and exchange rate for instance, Perera (1997) found that even though Exchange Rate effect on Consumer price index, does not effect on wholesale price index in Sri Lanka. And also a dynamic relationship between activities of share market and short run interest rates has been attracted by previous researchers, there is lack of studies about the relationship between interest rate and exchange rates in Sri Lanka. On the other hand, previous researchers used only one interest rate for their research even though there are various different interest rates pertaining to diverse financial assets which are expected to have different relation with exchange rates. This study attempts to fill this void by examining the causal relationship between different interest rates and exchange rate in Sri Lanka.
Long-term impact of population ageing on Sri Lanka’s public finance
(University of Peradeniya, Sri Lanka, 2025-09-24) L. Weragoda; J. Nigel
Introduction Population ageing is a major socioeconomic challenge faced by Sri Lanka during recent years. The United Nations’ forecast of the age structure transition of Sri Lanka from 2015 to 2050 shows an increasing share of the aged population who are 60 years and above, from 13.9 per cent to 28.6 percent (United Nations, 2015). The old age dependency ratio would rise from 14.1 in 2015 to 37.7 in 2050. When compared to other countries in the region, Sri Lanka is foremost as a society with a rapidly ageing population (Siddhisena, 2004). Accordingly, policymakers are confronted with two conflicting objectives: to develop socioeconomic systems which provide economic security to the increasing elderly population, and to sustain economic growth in the long-run while coping with the ageing population. Success in achieving these objectives depends on right and effective policies implemented when required. The study focuses on the sustainability of public finances in Sri Lanka when increasing public expenditure due to elderly population. According to King and Jackson (2000), increases in elderly population do not lead to negative fiscal consequences. Visco (2001) examined the fiscal impact and sensitivity of age related expenses up to 2050. Similar to Jackson’s (2000), Visco’s study noted that ageing has an impact on public finances, but whether it would be fiscally sustainable had not been analyzed. Narayana (2012) has analyzed whether ageing of Indian population has a long-run bearing on public finances from 2005 through 2050 using Miller’s Budget Forecasting Model and National Transfer Accounts. He concluded that ageing population is not a huge burden on India’s public finances. The study by De Silva (2007) assessed long-term demographic dynamics of the Sri Lankan population from 2001-2081, and concluded that Sri Lankan population would face major changes in its age structure in the coming decades.
Satisfaction of tourists with public transport system in Sri Lanka
(University of Colombo, Sri Lanka., 2025-09-24) M. A. D. D. J. Sandaruwan; D. A. C. Silva
Introduction Tourism can be defined as voluntary short term movements of people through time and space, either, between home places and destination or within the destination. Transport system is an essential factor to maintain tourists’ mobility to reach their destinations. Various transportation systems including private and public transport modalities can be used for tourist transportation. However, the concept of sustainable tourism has been identified as a major concept of current tourism. It covers several aspects such as environmental protection, ecology protection and minimized air and land pollution. To achieve sustainable tourism, sustainable mobility of tourists is essentially needed to be achieved. Sustainable mobility can be attained with the use of public transportation systems which have less ecological damages than use of several private transportation methods which may collectively cause extra negative ecological externalities. According to Banister (2008) sustainable mobility is not only objective based transport planning system, but also it needs public acceptability. Public acceptance can be estimated via satisfaction on various elements of transportation systems. In developed countries, public transportation systems are more organized with variety of facilities than developing countries (Iles, 2005). As a developing country, Sri Lankas’ public passenger transport system has not yet well developed and remains highly criticized in terms of quality of the service (Sevenatha, 2002). Therefore, it is essential to evaluate presence of aforementioned objective based transport system with public acceptability in Sri Lanka in order to create positive future changes. After evaluation of tourists’ satisfaction on Sri Lankan public transport, we can evaluate the level of quality of public transport system as they usually answer by comparing the level of their transport experience in their countries. Thus, these feedbacks will help on future development of public transport systems in Sri Lanka. As a result, higher tourism satisfaction with public transport would lead to attract more tourists to public transport and to the country, making it a better centre for tourism. However, the satisfaction on tourists with public transport in Sri Lanka is remaining to be assessed. According to previous studies conducted in Sri Lanka, Sri Lankan passengers are not satisfied with public bus transport system (Kumarage, 2008). Further, according to Sevenatha (2002), some reasons for low passenger satisfaction regarding Sri Lanka bus service are lacks of punctuality, reliability, passenger information and properly planned bus halts. Nonetheless, there is no previous study, conducted which fully examined tourists’ opinion on Sri Lankan public transport. On this Study, tourist satisfaction on different aspects of public transport is assessed.
Social and economic disparities: A case study of post war period of Jaffna district in Sri Lanka
(South Asian University, New Delhi, India., 2025-09-24) N. Baskaran
Introduction The economic activities can be explained using economic anthropology or economic sociology. Economic activities are directly related with the land, labor and money. In Sri Lanka, the consequences of the three decades of the war is felt in every sphere of social and economic life. The northern and eastern regions have been the main victims of the war. There was a wide spread sense of insecurity and vulnerability among the population, a feeling of despair and hopelessness among young and erosion of political, legal and social right. According to Tamil community is determined by caste, gender relationship, minority or ethnic group identity (socio-economic, cultural and political background of past). Thus, another major change that come with the war and post war transformation is that the elite began claiming economic activities and common resource in many ways. However, the living conditions of those who were disadvantage group of people in the Tamil communities are suffering a lot. This study focus on stories about the ordinary lives of people and socio- economic disparities through different human and non- human symbols in post war Jaffna.
Impact of trade openness on economic growth in Sri Lanka
(University of Colombo, Sri Lanka, 2025-09-24) Naveen Wickremeratne
Introduction The long run linkage between trade openness and economic growth is a debatable economic phenomenon in development economics literature. In contrast, there is a greater acceptance among most of the economists, academicians and policy planners that trade openness potentially enhances economic growth. However, some economists believe that trade openness itself does not matter for economic growth since the level of institutional development determines how countries respond to the situation imposed by international competition (Stensnes, 2006). Sri Lanka is a lower middle income country in the region of South Asia which mostly followed protectionist trade policies in the initial phases of economic development due to the excessive protection of domestic industries, foreign competition and protective balance of payments movements. However, Sri Lanka liberalized its trade in 1977, being the first country to open up the economy in South Asia. In addition to that Sri Lanka started to move forward in the direction of intra-regional and international trade by liberalizing its trade policies to some extent. It is with this backdrop, this paper is an attempt to examine the relationship of trade openness and economic growth in Sri Lanka.
Socio-economic determinants of household solid waste management in Kandy municipal area
(University of Peradeniya, Sri Lanka, 2025-09-24) R. M. S. S. Ranathunga; J. G. Sri Ranjith
Introduction Municipal Solid Waste (MSW) management is an important role of urban authorities and it is directly related with the protection of environmental wellbeing, human health and living standards of people. The recent literature shows that, the rapid increase in solid waste generation due to accelerated urban population growth, unplanned urbanization, and increasing economic activities, has become a crucial problem in all countries regardless of the development status of them (Kwetey, 2014). In fact, the services related to solid waste management are far from satisfactory level in many developing countries due to some financial and social problems (Wang, 2011). With the current phase of rapid urbanization, relevant authorities in Sri Lanka are also experiencing serious difficulties in addressing this problem. In 2005, the estimated average solid waste generation in Sri Lanka was 2838.46 tons/day and it has increased to approximately 7,250 tons/day by 2009. In 2005, the average per capita MSW generation was 0.62 kg/cap/day and it has been predicted to reach 1.0 kg/cap/day by 2025.3According to the database of MSW in Sri Lanka (2005), the gross weight of the solid waste, collected by the Kandy 3Database of Municipal solid waste in Sri Lanka, 2005 ( Ministry of environment and natural resources) Municipal Council (KMC) is 145.04 tons and per capita waste collection per day is 0.62kg.4 During the past few decades solid waste generation in Kandy area has also increased rapidly, thus KMC requires more efficient and effective solid waste management system. However, as KMC state, lack of funds is one of the major constraints for implementing such a service. To the best of our knowledge, no any systematic research has been conducted focusing this issue and consequences of not drawing attention to this problem may be aggravated in the future in many folds than it is today unless alternatives are designed to address it. Therefore by conducting a primary survey, this study mainly expects to achieve the following objectives.
The role of NGOs in poverty alleviation: A case study of Karachchi divisional secretariat division in Kilinochchi District
(University of Peradeniya, Sri Lanka, 2025-09-24) R. Sureka; T. Vinayagathasan
Introduction Poverty has been one of the major social and economic issues in many developing countries. Government of many developing countries attempts to overcome poverty by introducing various state funded poverty alleviation programmes. However, NGOs emerged as a better supplement to the state in reducing poverty. Therefore, a large number of NGOs has been operating in developing countries with the aim of reducing poverty. In some developing countries NGOs claim that they could reach the poorest of the poor and succeed in reducing the poverty. In this regard Sri Lankan government as well as local and foreign NGOs has perpetually attempted to address the problems of poverty even before the independence from British colonization. This poverty alleviation program becomes more serious in Kilinochchi district after 1983. There are several studies which examine the role of NGOs in poverty alleviation locally and internationally (Vinaygathasan and Pallegedara, 2014; Lawson et al., 2009; De Silva, 2008; Ullah and Routray, 2007; Ahsan, 2005; Tek Nath Dhahal, 2002; Kang Xiaong, 2001; Rodriguez and Smith, 1994). Many of these studies found that NGOs are succeeded in reducing the poverty. According to the Human Development Index (HDI) of 2015, Sri Lanka had gradually improved in human development reaching 0.757 in 2014 from 0.679 in 2000 while the world average in 2014 is 0.711 and South Asia averaged at 0.607. Even though poverty level of Sri Lanka has been decreased dramatically from 8.9 % to 4.5 % within five years starting from 2010 (Central Bank of Sri Lanka, 2015) still it is not clear the actual situation of poverty in war affected area in the country. However, according to visual observation, socio economic conditions of peoples of Kilinochchi district are very depraved. Further, beside the state funded many poverty alleviation activities NGOs also are working in this area for a long period in order to reduce the poverty level. However, the quantitative assessment of the effectiveness and contribution of NGOs on poverty alleviation activities are not examined so far in the context of Kilinochchi district.
Evaluating financial and social efficiency of microfinance institutions in Afghanistan: A two stage data envelopment analysis
(Indian Institute of Management Kashipur, India, 2025-09-24) Rasuldad Danish; Manab Chakraborty
Introduction Although Afghanistan witnessed exponential growth in its economy since 2002, it remains one of the world’s poorest countrie. It was ranked 169 out of 187 countries in the Human Development Index in 2013, and it is estimated that 36 percent of its population lives below the national poverty line. The country’s financial sector is largely underserved, with only 9 percent of adults holding an account at a formal financial institution and 7 percent having a loan. On the other hand, microfinance is found to be a promising means of poverty alleviation and economic development as such. In this paper, we have attempted to evaluate the financial and social performance of MFIs in Afghanistan using a two stage Data Envelop Approach (DEA). In the existing literature DEA is applied under both production and intermediation approach assuming either CRS or VRS assumptions. Bassem (2008) by analyzing the performance of MFIs in the Mediterranean zone applying DEA found that a few Non-Bank Financial Institutions (NBFIs) should reduce the size of their operation but some NGOs are required to increase the extent of their operations to operate more efficiently. Haq et al., (2010) evaluated the cost efficiency microfinance institutions across Africa, Asia and the Latin America using DEA. They found that NGOs are the most efficient MFIs specifically under production approach. Kipesha (2012) examined the performance of MFIs in five East African countries by employing DEA. Input oriented production approach under both assumptions of CRS and VRS have been used. The result of the study implies that main source of efficiency is TE and it further implies that banks are more efficient than nonbank MFIs. Jayamaha (2012) analyzed the efficiency of small financial institutions (SFIs) in Sri Lanka using DEA. The study reveals that there is difference in efficiency scores by geographical locations and the size and the efficiency are positively correlated. Singh et. al. (2013) studied the efficiency of MFIs in India by undertaking a two stage DEA approach using both intermediation and production approach. The study concluded that two MFIs are efficient under CRS and three MFIs under VRS and there is a regional variation in efficiency score too. Ahmad et.al (2014) evaluated the efficiency of MFIs in south Asia including 14 MFIs from Afghanistan. The study implies that Non-Bank Financial Institutions (NBFI) and credit union of large size should cut down the size of their activity in order to improve efficiency. NGO should increase the size of operation whereas rural bank should increase accessibility and loan size for the clients in pursuit of attainment of dual objectives.
Export and economic growth nexus in Sri Lanka: A time series analysis
(University of Colombo, Sri Lanka, 2025-09-24) S. J. Francis
Introduction The nature of the relationship between exports and national output growth has been one of the most debated in the recent past. However, still a little consensus in the theoretical and empirical literature in international trade and development economics can be seen. Central to this debate is the question of whether strong economic performance is export-led or growth-driven. This question is important because the determination of the causal pattern between export and growth has important implications for policy-makers' decisions about the appropriate growth and development strategies and policies to adopt. Aiming at a rapid economic growth, governments of the developing world have pursued export promotion strategies, with the belief that export might overcome natural limits and constraints to economic growth which exists in their domestic economies. Sri Lanka is not an exception to this case, which implemented export oriented strategies, particularly after opening up the economy in 1977. The Export-Led Growth (ELG) hypothesis suggests that there is a strong positive linear relationship between a country’s exports and economic growth. This interesting question has been the subject for a number of research works in the recent past. Many econometric analyses have been performed to identify the export causality towards economic growth with varying degree of results.
An economic analysis on water pollution impact of fossil fuel power station on agriculture: A case of onion cultivation in Sri Lanka
(University of Peradeniya, Sri Lanka, 2025-09-24) S. Priyatharsiny; S. Vijesandiran
Introduction Economic liberalization creates higher demand for electricity through industrial expansion, urbanization and improved life style of people. Increased demand over electricity could not only fulfill by renewable resources (such as water, solar radiation, biomass, wind and waves) based power generation, instead many countries established fossil fuel power plants where generally coal, gasoline, diesel, crude oil, nuclear and natural gases have been highly used to generate power which emit harmful emissions like chemicals, oil to the environment and create various negative impacts on nature, society and economy. According to Shamshad et al. (2012) and Kumar et al. (2013) such power plants have serious negative impact on land, soil, air, water and on human health as well as leads to various social consequences. Emission of oil and crease wastes into the water sources by fossil fuel power stations is one of the major environmental and economic issue, which leads to water and land pollution that results in loss of biodiversity, increasing human health hazards, decreasing agricultural cultivation and deprivation of livelihood avenues of poor families and also caused to indirect impacts on income, unemployment and poverty. A study by the World Bank (2007) estimated that water pollution caused by power stations leads to loss of 12 percent yield reduction in agriculture. Khai & Yabe (2012) analyzed the impact of industrial water pollution on rice production in Vietnam and identified yield loss in rice production, and which is about 0.67 tons/hectare/crop and the profit loss is about 26 percent. Khait et al. (2014) analyzed quality of surface and ground water around the thermal power plants and found that the people living in surrounding villages have impact on their health and local biota. With the end of civil war in 2009 in Sri Lanka, resettlement process and rehabilitation of economic activities in the Northern and Eastern provinces induced higher industrial and domestic demand for electricity which leads to expansion of fossil fuel power stations in the region. Over one third of the families living in Jaffna district (about 63,280 families) have been depended on agriculture for their livelihood and income. Hence, establishment of the fossil fuel power plants closer to the agricultural firms in the Jaffna district has been experiencing heavy emissions of oil and crease wastes into the inland water source which create water and land pollution finally have negative impacts on agricultural cultivation, human health and biodiversity Central Environmental Authority (2014). While there has been many studies such as Effects of thermal power plant on Environmental Pokala (2011), Environmental Impact of Thermal Power Plant for Sustainable Development Kumar et al (2013) and Quality Assessment of Surface and Ground Water around Thermal Power Plants Khati et al (2014) conducted to estimate statistically the impact of power station caused water pollution on agricultural in many countries, such effort is lacking in Sri Lanka and the researchers, government policy makers still pay less attention in this area. Especially, the economic aspects on impact of fossil fuel power station caused water pollution on agricultural cultivation in the Jaffna district is not yet adequately explored.
Influence of supply gaps of utility services on livelihood sustenance of rural sector: Lessons from the case of Kalyanipura, Weli-Oya in northern Sri Lanka
(University of Colombo, Sri Lanka, 2025-09-25) T. Lalithasiri Gunaruwan; M. H. S. Dilrukshi
Introduction In the present day context, sustaining livelihood in rural village setting has become a challenge. Providing basic utility services such as water (both for drinking purposes and for farming), electricity and motorized mobility to remote villages is capital intensive. Non-availability of access to such services could make rural life uneasy and unattractive, and could lead to unsustainability of such villages. Kalyanipura in Weli-Oya is such a deep rural enclave in the Mullaitivu District where the villagers face immense hardships in meeting their basic utility requirements. The village, formerly known as “Dollar Farm”, a Sinhala village which was brutally destroyed by the LTTE terrorists in 1984, was re-settled in the aftermath of the defeat of terrorism in 2009, together with six other villages. Over 200 families were given two acres of paddy land and another two-and-a-half acres of land for a house, under the supervision of Mahaweli Authority. Kalyanipura is one of the few Sinhala villages currently existing within the Northern Province. The village has neither motorized transport access, nor has it got electricity grid connectivity. Though farming appears to be the intended main livelihood of the villagers (as reflected by the land provided when re-settled), there is no irrigation system, and the farmers have to depend either on well water or on rain for irrigation purposes. Well is the only source of potable water, in close proximity to an area where Chronic Kidney Disease of unknown etiology (CKDu) is quite frequent. A significant utility service supply problem is therefore evident. No surprise that nearly three fourths of the number of families settled after 2009 have already left the village, and only 43 families continue to live there. The paradigm of providing rural access to utility services is different to that in urban settings, and involves construction of utility infrastructure over longer distances. With regard to electricity, for instance, rural electrification calls for bringing electricity to distant villages Galindo (2014) and supplying through the grid might involve heavy energy losses on the one hand and inadequate economies of scale on the other. According to Brookshire and Wittington (2010) significant share of population in developing countries does not have access to satisfactory water supply; the problem is particularly acute in the rural areas. Inadequate quantity or quality of water supply can be a limiting factor in poverty alleviation and economic recovery, resulting in poor health and low productivity, food insecurity and constrained economic development Gbadegesin and Olorunfemim (2007). Even though the strategic importance of water resources management is now recognised because of increasing demands and rising costs, coupled with diminishing supplies Sharma et. al. (1996), the efforts of solving the problems faced by people, particularly those living in the rural areas, have not been successful. The planning process has routinely failed to lead to successful development projects. Often, the projects do not pass the simplest of benefit-cost analyses, and the institutional frameworks developed for the administration of such projects are found flawed. Any weaker supply of utilities and their quality would make village life cumbersome and unpleasant, thus could push residents to abandon such villages, leading to lesser and lesser number of villagers remaining and causing further diseconomies of supply. This creates a negative cycle of causes and effects, and becomes a development dilemma. Rural access toutilities thus deserves special reflection; the parameters may vary from one country to another and one locality to another, leading to different policy outcomes, and directly affecting design, implementation and evaluation parameters of utility supply programmes Galindo (2014).
Technical efficiency gap between bank of ceylon and commercial bank in Sri Lanka: A data envelopment analysis
(South Asian University, New Delhi, India, 2025-09-25) T. Selvamalai
Introduction Data Envelopment Analysis (DEA) is a non-parametric technique for measuring the relative efficiency of a set of similar units, usually referred to as decision-making units (DMUs). It was initially used to assess the relative efficiency of not-for-profit organizations. However, gradually its application has been extended to cover for-profit organizations as well. Its first application in banking industry appeared with the work of Sherman and Gold (1985). The technical efficiency relates to the productivity of inputs (Sathye, 2001). A bank is said to be technically inefficient if it operates below the frontier. A measure of technical efficiency under the assumption of Constant Returns-to-Scale (CRS) is known as Overall Technical Efficiency (OTE). In Sri Lanka, variables such as operational risk, inflation and market capitalization had a positive effect on Technical Efficiency (TE) in asset transformation of banks (Seelanatha, 2012). Fernando et al (2014) found that mean technical efficiency score of the Sri Lankan banking industry was 83 percent and the highest efficiency was recorded in the year 2011. However, none of the empirical studies in the existing literature have considered the efficiency gap between Bank of Ceylon and Commercial Bank in Sri Lanka. The Bank of Ceylon (BOC) and Commercial Bank are famous commercial banks in Sri Lanka. The Bank of Ceylon is a government bank but Commercial Bank is a private bank in Sri Lanka. By measuring the level of technical efficiency, this study compares the technical efficiency of the both banks.
The impact of food and non-food inflation on poverty: A case study of Sri Lanka
(University of Peradeniya, Sri Lanka, 2025-09-25) T. Vinayagathasan; S. Priyatharsiny
Introduction Poverty has become a major concern among the economists and policy makers as it limits the access to basic needs of poor. Since poor people have lack of power in the political and the decision making process, they are generally exposed to misuse by society and state. Poor people often suffer by economic shocks, especially from unpredicted rise in rate of inflation. Therefore, if there is any crisis in the economy, poorer has to pay higher prices than the richest people, whereas they gain generally less compared to rich during the economic booms. In this background, some people prefer inflation than the deflation while other people prefer very low inflation or even deflation. Inflation tends to smash poorest in the society while it badly affects the savings of middle class. In general, a moderate inflation does not necessarily increase poverty but higher inflation will lead to increase it. Chani et al. (2011) identified a positive and significant relationship between inflation and poverty in the long run and the short run for Pakistan. Choi et al. (1996) confirmed that inflation hits more harshly to poor than the rich and higher income people. Bruno and Easterly (1998) also invented that poor household get more benefits than the rich when there is stabilization policies to control inflation. Gylfason (1998) and Easterly (1993) found that high economic growth and low inflation tend to decrease poverty. Using the Philippines data, Fuji (2011) showed that poor are vulnerable to the food inflation. When we look at the Sri Lankan context, there is a lack of quantitative studies in the area that investigate the relationship between rate of inflation and poverty. This motivated us to do the quantitative assessment between these variables. In this study, we partition inflation rate into two namely food and non food inflation to address above issues.
The impact of non-tariff barriers for the success of Indo – Sri Lanka free trade agreement
(University of Colombo, Sri Lanka, 2025-09-25) Umesh Moramudali
Introduction The Indo – Sri Lanka Free Trade Agreement (ISFTA) was signed in 1998 with the aim of expanding the trade between the two countries. The ISFTA came into effect from 2000 (Hand Book of ISFTA, 2013). There have been suggestions to expand the ISFTA and include more service exchange between two countries and it was proposed to sign Economic and Technology Corporation Agreement (ETCA). According to the initial agreement, if any product is to be considered under the ISFTA, at least 35 % of the value addition should take place in the country of origin. Accordingly, ISFTA facilitates more than 70 % of the exports to India. However, only less than 30 % is exported from India to Sri Lanka through the ISFTA. When the ISFTA was initially signed, Sri Lanka was allowed a larger negative list (1,180 tariff lines) than India (429 tariff lines). However, in 2003, the duty exempted items for Sri Lanka was increased from 1,351 to 4,150 (Kelegama, 2003). It was evident that the removal of tariff barriers has resulted in increasing the existence of NTBs. ISFTA, too had been subjected to the NTBs which had hindered the possibilities of expanding the bi-lateral trade. Many research conducted to evaluate the success of ISFTA and to identify shortcomings of it. Ever since the ISFTA came into effect, certain exporters are facing NTBs which are not easily comprehended or foreseen until someone faces the situation. It was evident that during last decade, the trade with India had not grown sufficiently in spite of the existence of ISFTA. Literature identifies that NTBs has been acting as obstacles to trade in contrast to tariff barriers which has been reduced by a large margin. At this moment, it is very vital to identify the NTBs exist in trading with India. Therefore, it is an utmost need to identify the existing barriers prior to expansion of the ISFTA.
Effect of price changes on electricity conservation: An empirical study
(University of Peradeniya, Sri Lanka., 2025-09-23) A. H. M. N. D. Aberathna; Anuruddha Kankanamge
Introduction Electricity generation in Sri Lanka mainly depends on coal with 12 %, hydro power with 57 % and oil with 27 % (CEB, 2013) contributions. Accordingly 39 % of Sri Lanka’s electricity is generated using imported resources such as coal and oil. This dependence on imported resources to generate electricity is likely to go up in the future with the increasing use of coal in power generation. Thus electricity conservation is so vital to Sri Lanka to reduce this dependence as well as to save foreign exchange that will be spent on importing those resources. At the global scale electricity conservation is a part of broader energy conservation. Given the declining trends in non renewable fossil fuel resources such as coal and oil, energy conservation has drawn attention of many countries. Energy conservation is considered as a reduction in the energy consumption from the existing level. However, every year what we observe is an increase in the overall energy consumption and electricity is no exception. The governments can use various policy tools for energy conservation such as, implementation of awareness programs, raising prices...etc. In this study we examine whether the price can be effectively used to achieve electricity conservation objectives. Electricity prices in Sri Lanka are determined by the Public Utilities Commission of Sri Lanka (PUCSL). The Sri Lankan government has reduced electricity prices in 2014 by 25 %. However, this price reduction in electricity that is considered in this study has done with the aim of easing the burden on consumers and not for conservation. We empirically investigate the response of the consumers to this price change using primary as well as secondary data.
Trend analysis of budgetary allocation to agricultural sector in Nigeria
(University of Peradeniya, Sri Lanka, 2025-09-23) Adamu Jibir; D. I. J. Samaranayake
Introduction Agriculture continues to dominate the economy of Nigeria in terms of contribution to gross domestic product, job creation, poverty reduction and provision of raw materials. A large proportion of agricultural labour force in Nigeria engaged in subsistence farming rather than modern agriculture. It has greater capacity for absorbing large number of unemployed youth and covers way for overall growth and development (Ajakaiye, 2016). Both theoretical and empirical studies have shown that public spending to agriculture has a significant impact on output and the general performance of the economy (Ahungwa et. al, 2014; Olomola et al. 2014). Therefore, government continue to allocate a significant amount of resources to this sector through lending, subsidies and financing of various programs and policies under numerous sub-sectors aimed at transforming the agricultural sector. However, the sector has not yielded up to the level of expectations. According to Ita et al. (2013), there was instability in the way budgets were allocated to the agricultural sector. Oyinbo et. al (2013) conclude that the relationship between agricultural budgetary allocation and economic growth in Nigeria is positive but not significant in the long run. Therefore, it is vital to examine the nature of trend of budgetary allocation to agricultural sector in Nigeria.
Structural relationship between under-employment and shadow economy: A theoretical investigation
(University of Peradeniya, Sri Lanka, 2025-09-23) D. I. J. Samaranayake
Introduction: Shadow economy reflects a part of economic activities involving goods and services which are paid by cash but not declared for tax. The affiliation between shadow economy and labour force is vastly discussed upon the relationship with the rate of unemployment and shadow economy (Dell’Anno and Solomon, 2008, Schneider et.al, 2010, Davidescu and Dobre, 2012). However, as mentioned by Sengenberger (2011) “unemployment statistics are often criticized in developed and in developing countries alike - for failing to reflect the ‘true’ extent of the employment problem”, unemployment seems not a border challenge for emerging economies when compared to new challenges occur with underutilization and inefficiency matters of contemporary labor market. The degree of impact from underutilization of labour force to the growth of shadow economy can vary according to the type of economy. Within under developed economies, majority of people who employed are not usually having a wage rate which can fulfill their all needs. Therefore, this may worse with under-employed people. In addition to that people may underemployed within such economies due to lack of job opportunities and vocational skills. Then people with higher educational qualifications also engaged with low grade jobs with lower salaries. This may provide incentives for them to engage in shadow economic activities to earn more. As a result of that study attempts to develop a structural relationship between under-employment and shadow economy. Under-employment reflects a situation where employee works, but not belongs to their actual or exact capacity. Here this ‘capacity’ will identify in different prospects such as underutilization, underestimate or undermine the employee skills and capabilities LFS-Annual report (2014); Walling and Clancy (2010); ADB (2005).
Economic determinants of budget deficit in Sri Lanka
(University of Peradeniya, Sri Lanka, 2025-09-23) E. M. G. P. Ekenayake; J. G. Sri Ranjith
Introduction Deficit budget was adopted in both developing and developed countries to adjust macroeconomics policies in 1980s. When considering about Sri Lankan situation, data shows that budget deficit varies between 5 to 10 % of GDP over the last few decades (Central Bank Report, 2014). According to the economic theory, if budget deficit exceeds around 8 % of GDP, it is not a favorable condition for the economy as it creates adverse effects such as reduces national savings, increases borrowings, crowding out and inflation. Therefore, it is worthwhile to understand the reasons behind the budget deficit. Among the empirical studies, Chihi and Normandin (1960) found that there is a positive co-movement between external trade and budget deficits. Chowdhury and Saleh (2007) explained that current account deficit, savings–investment balance and budget deficit have positive long run relationship. Anojan (2014) concluded that direct tax revenue significantly affect to the budget deficit in Sri Lanka. Given this background it is important to identify the important determinants of budget deficit in Sri Lanka.
A comparative study on financial performance of foreign and domestic commercial banks in Sri Lanka: An application of CAMEL rating system
(University of Peradeniya, 2025-09-23) I. G. S. Kumari
Introduction Banks are playing a major role of the financial system of all countries as well as in Sri Lanka. Sri Lankan banking system can be divided into two as commercial banks and special purpose banks. This study arms to find the performance of the foreign commercial banks in Sri Lankan economy and compare it with domestic commercial banks. To provide a satisfactory service to the customers, each institute should aware of their turning points. In the view of customers, it is very important that the awareness of the possibility of negotiation with the institutions. This study considers performance of those banks by using various indicators which is not focused in the previous literature. There are a number of studies in this area. They have focused different aspects of the banking sector. A comparative study on state and private sector commercial banks in Sri Lanka for the time period of 2008-2012 has been conducted by applying CAMEL rating system (Anojan and Nimalathasan, 2014). In the study they have stated that private sector banks are better than state banks in the performance of capital, earning to the asset quality and management soundness of the banks in Sri Lanka.
Trend of dengue cases in Sri Lanka: An empirical investigation in Doluwa area in Kandy district
(Kalugamuwa, Peradeniya, Sri Lanka, 2025-09-23) Janaka Lakshman Pallewela
Introduction: Dengue Fever (DF) is an infectious tropical disease caused by the dengue virus. As there is no commercially available vaccine, prevention is sought by reducing the habitat thus resulting a decrease in the number of mosquitoes and limiting exposure to bites. According to the WHO report (2012) approximately 2.5 billion people, two fifths of the world's population is now at risk of dengue and estimates that there may be 50 million cases of dengue infection worldwide every year. The disease is now endemic in more than 100 countries. The cases of dengue related diseases have dramatically increased in Sri Lanka over the last few decades, and also there was an explosive increase in geographic distribution of dengue after 1950s in the country. Reasons such as uncontrolled urbanization, rapid population movement, inadequate water, bad waste management as well as unsustainable vector control programs have already been identified. Sri Lanka is classified as a “Category A” country by W.H.O. which means dengue fever is a leading cause of hospitalization and death. Limited researches have been done to estimate the cost in prevention and treatment for dengue in Sri Lanka and there is no research done to estimate the cost in prevention and treatment dengue in Kandy district. Estimation of the costs of dengue has many dimensions which include information on the economic benefits of dengue control, prevention intervention and information on cost-effectiveness and budget impact analysis. A number of studies have been already undertaken to investigate various aspects of the spread of dengue fever and cost of prevention and treat dengue in different countries (Kovats et al. 2001; Lafferty, 2009). Then cost elements were examined to identify variables and fixed costs pertaining to each activity within each element. Health cost of dengue prevention activities in Colombo district reached a total of LKR 127 million. The review of the previous studies shows that most studies have considered the different aspects on spreading of dengue in different countries and estimates the cost for dengue. However, these studies have only provided limited information on these links. Accordingly, it is obvious that more conceptual and theoretical work is needed to develop a better understanding of this relationship. This study will fill this void in the literature.

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