made it necessary for opening new employment avenues for such youth. an additional factor has been the natural limitation for growth of agriculture due both to the slow growth in demand for agricultural products and the supply constraints of land for further extensive cultivation practices. hence, in the beginning, agriculture may be the growth promoter, but later, its growth would slow down due to the above limitations. the global experience has been that the average rate of growth in agriculture has been less than 2 percent per annum during the last 100 years. with higher and higher numbers being added to the job market every year, agriculture has, therefore, a limitation for providing jobs for all. sri lanka ’ s agriculture sector has made its utmost contribution to create wealth and employment in the past. its current ability to do so has been a matter for debate. with employment in agriculture being seasonal and the concentration of a large farm - based work - force on a limited extent of cultivable land, underemployment has been the natural corollary in sri lanka. the new evidence shows that the under - employment in agriculture in sri lanka is not only the highest but also on the increase. according to the consumer finances and socio - economic survey of the central bank 6, the underemployment in the agriculture sector in 1996 / 97 stood at 31 percent of the employed. this rose to 36 percent by 2003 / 04. in contrast, the underemployment in the services sector fell from 20 percent to 18 percent between the two reference periods, while that in the industry remained unchanged at 20 percent. the message conveyed by this unfavorable development is clear : remove a greater part of those employed in the agriculture sector in order to raise its efficiency and future sustainability. hence, the appropriate policy strategy should be to raise productivity in agriculture through intensification of farming with high - yielding varieties by employing a lesser number of work - force. agriculture has a further limitation in the form of low productivity and low contribution to gdp. since about a one third of the labor force is engaged in agriculture, its total output is distributed among a large number of workers. according to the world bank data 7, the agricultural value added per agricultural worker in sri lanka, measured in 2000 dollars, has been $ 696 for 1989 – 91. this rose marginally to $ 737 in 2001 – 03. the comparable figures for other countries have been much higher than this : usa $ 26, 105 and $ 47, 566 ; australia $ 26

computation of the capital charge introduced in march 2006 will continue. the preparatory work in this area and parallel calculations are at a satisfactory level and we hope that banks will be fully ready by the beginning of 2008 to implement the processes they have already put in place. however, the implementation process does not stop there. the essence of basel ii is to move towards more advanced approaches which will require advanced risk management techniques and improved corporate governance. adoption of advanced approaches for pillar i, cbsl will consider permitting those banks which wish to adopt the more advanced measurement approaches such as the internal ratings based ( irb ) approaches at a later stage, when the capabilities at both the supervisory level and at the banks have improved and the necessary infrastructure is in place. as a general principle, for the time being, cbsl will not mandate any of the licensed banks to adopt the irb approaches. the banks themselves should conduct their own feasibility studies and analyze associated costs and benefits in order to decide whether to use the irb approach. the adoption of irb approach would entail significant changes to their existing systems, the collection of extensive data as well as the fulfillment of many other qualitative and quantitative requirements. such banks are advised to start building up the necessary data systems now itself in order to be able to qualify for the advanced approaches and to plan the application of the ratings for their credit management. the irb approach will permit the banks to use their own estimates for the measurement of credit risk with regard to certain parameters. cbsl will stipulate the minimum qualifying criteria regarding the comprehensiveness and integrity of the rating systems, including the ability for those systems to produce reasonably accurate and consistent estimates of risk. this will be done in consultation with the industry and by announcing a timeframe for permitting the foundation irb approach and the submission of applications in 2007. irrespective of whether the advanced approaches are used or not, the central bank encourages all banks to study carefully the more advanced risk management concepts and practices embodied in basel ii and consider adopting those relevant to their risk management purposes, even though they may not use them for capital allocation as such. pillar ii – supervisory review process this is a critical and integral part of basel ii which aims at ensuring that banks have sufficient capital to support the risks in their business activities, encourage banks to develop and use better risk management techniques, and foster an active dialog between the banks and supervisors regarding capital adequacy and risk management standards. in this regard, banks are expected