could be continued to be realised on a long term basis. the project was a partnership among a number of stakeholders : government, banks, donors, community based organisations and beneficiaries. the project adopted a modified group lending mechanism with credit plus approach for delivering its services to the target beneficiaries, selected under a self - selection process by getting the target individuals to select their own group partners from among people of similar conditions. as such, individuals in elitist groups were kept out from becoming beneficiaries of the project, since they did not have incentives to move along with the poorest of the poor. this system ruled out political, bureaucratic or elitist intervention in the selection process and thereby ensured that only the deserving groups were mobilised to receive project benefits. by using a trained field officer network that functioned as change agents, the self selected beneficiaries were taken through a mandatory savings inculcation scheme and a social mobilisation cum leadership development programme. the mandatory savings scheme was intended to inculcate in the beneficiaries the value of thrift as an integral part of making any sustainable livelihood 18. this is because without learning how to save, an individual is unable to learn how to spend wisely. accordingly, each member of the group was required to save per week a minimum of rs. 5 19 in a group savings account which later served as an insurance against unexpected future eventualities such as family illnesses or crop or business failures. group members were encouraged to meet in rotation in one of the member houses at least once a week so as to ensure group cohesiveness and facilitate member education programme. at these meetings, they were encouraged, guided by the change agent, to discuss among themselves freely why they were poor, what skills they were lacking for gainful enterprise, the working of the free market system and how they could benefit by being integrated to the market system. these meetings also gave them vital training on how they could conduct meetings democratically and listen to each other without being offended or having to embarrass others when a disagreeable opinion is made. groups were chaired by a member who was also selected by rotation and records of group meetings were kept by a member who functioned as its secretary. once a group has completed about six months of mandatory savings and gone through the essential elements of social mobilisation, its members would be provided with an opportunity to acquire vocational skills as a prelude to preparing them to be future micro entrepreneurs. with

is ironical that sri lanka, being a country famous for its rich spices throughout history and three major commodities, viz., tea, rubber and coconut, in the last 150 years, has to think of setting a futures market in the country at this late stage, when all the other countries in the region have moved much ahead in that context. however, the initial work relating to the establishment of a futures exchange is presently being done with the initiative taken by the central bank. technical assistance for this purpose has been received from the futures commodities exchange in india and the exchange is to be set up within the next 2 year period. part iv summary and conclusions this paper examined the strategies adopted by sri lanka, with the initiative of the central bank of sri lanka, to introduce a sustainable socio - economic security system based on the principles of the market mechanism. despite the popular belief that the poor need subsidised in fact, the system was largely saved by the flexible approach of buyers when the market price was significantly higher than the contract price of a produce. to prevent farmers from resorting to out - selling for short - term price benefits, buyers on many occasions agreed to raise the contract price to assure them an uninterrupted supply line. however, it is encouraging to note that the established farmers could not be lured by these temporary gains and preferred to enjoy long - run relationships with buyers. credit and continuous government patronage to cross the poverty line and join the mainstream of the economy, the central bank ’ s isuru project, coupled with the forward sale contract system, has been able to establish a more effective poverty alleviation system through the market mechanism. the success of the isuru project in this respect is due to the following features unique to the project : • selection of beneficiaries was free from political or other elitist interference and done by the beneficiaries themselves through a self selection process. hence, undeserving elements were kept out of the project activities. • interest rates were deliberately set above the normal market rates so as to compel the borrowers to reckon the cost of funds in their project planning and avoid the misuse of funds. • lending was done on easy terms and procedures similar to the systems followed by informal money lenders. the objective was to eliminate money lenders competitively by providing a better service at a lower rate. • thrift and savings preceded lending to inculcate proper conservation habits among beneficiaries. the underlying rationale