Abstract:
Undoubtedly Development requires a higher and sustainable growth rate. Considering the economic
development in third world the most important issue is not only how to make GNP grow but also to
make sure as to who would make it grow. In this regard change in increasing attention on small scale
manufacturing sector is vitally important since small sector has some unique characteristics to suit
needs of less developed countries. Present study is an attempt to inquire mainly on poverty
alleviation and secondly on income distribution by rural industries in the rural sector. Main
conclusions were made according to the extensive field surveys carried-out in two different districts
in Kalutara and Kurunegala at micro level.
The study has found that poverty could be eliminated with meaningful development of the small
industrial sector. This argument has been proved by almost all the indexes, which this study has used
to test poverty (namely the head count, the income gap the poverty gap, the squared poverty gap and
the Sen’s index) in the small sector. With regard to the income inequality in both the tested regions,
the Gini coefficient shows increasing income disparity among the poor households while positive
income distribution is in existence among the non-poor groups.
