Successive governments of Sri Lanka since independence have adopted a Universal Free Education Policy aimed at providing free educational facilities to all school children from primary to university level. These policies were expected to provide the poor with opportunities to raise their social and economic status, and hence help them to move out of poverty over time. The free school textbooks programme for students of grade 1-11 is also a crucial step taken by the government to enhance the quality of the education and improve learning outcomes. In addition, the free school uniform program started in 1991, mid-day meal programme (1989-1995) and the provision of subsidized public transport for school children are some other programmes implemented to promote school enrolment and attendance among the children from low-income families. Despite these efforts taken by successive governments, there exist large disparities in the resources and facilities available for different schools in different areas. Evidence shows that many schools in rural areas do not have adequate resources, facilities and teachers. Poor infrastructure, health and sanitary facilities are some of the key obstacles to attract qualified teachers to schools in rural areas. Furthermore, it is argued that despite large spending by the government on incentive programmes such as free school text books, the benefits of these programmes are largely received by the students in urban or rich schools. Many remote rural schools often face a shortage of school text books for their students. Lack of teaching staff and other resources in rural schools often depletes interest for studies among the children, which in turn would lead to poor school attendance and high drop-out rates in these schools. The end result of this situation would be low educational attainment and low employability among these youth, which would lead to poverty among them. Therefore, it is crucial to provide sufficient resources and improve the quality of education in the rural schools, in order to break this ‘vicious circle’ and provide the rural poor with equal opportunities. The objectives of the study are: To analyze the availability of resources and facilities of schools and assess the extent of disparity in resources among schools in urban and rural areas. To examine how equitably the benefits of educational incentive programmes, such as the free school text book program, are distributed among rural and urban schools. To bring together the views, opinions and suggestions of various stakeholders in the education sector (Government officials, teachers, students and parents) to find out ways to improve the quality of education of schools in Sri Lanka.