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The devolution of power through the establishment of Provincial Councils in Sri Lanka is a highly debated subject, but hardly on economic grounds. The present research addressed the subject through the analysis of recurrent and capital expenditure patterns of the Provincial Councils in comparison to those of the National Government. The outcomes of the study clearly shows that the Provincial Council system is still overwhelmingly dependent on Government grants, even for its recurrent expenditure requirements, after 24 years of its existence. The study revealed that the Sri Lankan process of devolution has not been founded on any enabling economic justifications, and has not been able to produce any cost economics, generally expected through economically rational devolution of power. But, the study found that the process has resulted in negative economic implications, particularly by its apparent retarding effect on public investment, to the effect that over half-a-percent additional GDP growth push could be secured annually if the Provincial Council system could be abandoned. The devolution of Power through the Provincial Council system, brought about by the 13th amendment to the Constitution, cannot therefore be concluded as justifiable on economic grounds.

Economic effectiveness of the devolution of power to provincial councils in Sri Lanka: a resource-productivity analysis