This volume contains chapters 3 and 4 of the publication that focuses on ‘Distribution and Poverty’ and ‘Overcoming poverty’ in Sri Lanka. Using data from surveys conducted in 1985/86, 1990/91 and 1995/96 by the Department of Census and Statistics, and the 1996/97 survey conducted by the Central Bank, the study examines the prevailing trends in absolute and relative poverty, interprets them and reveals poor people’s perceptions on poverty. Furthermore, it explores strategic components in which economic growth and poverty reduction can be achieved simultaneously – such as strengthening the social protection system, empowering and mobilizing the poor, institutional reforms, innovative environmental management, improving human resources and labour markets, and urbanization.