When the Portuguese began to trade extensively with South Asia, they quickly noticed a fundamental difference between South Asian societies and those of other world areas. In India and Sri Lanka, societies are broken up into a large number of groups who do not intermarry, who are ranked in relation to each other, and whose interactions are governed by a multitude of ritualized behaviors. The Portuguese called these groups casta , from which the English term caste is derived.
There has been a strong tendency to link the position of different castes in the social hierarchy to their occupations. Groups who wash clothes or who process waste, thus coming in contact with undesirable substances from many persons, are typically given low status. In many cases, however, the labeling of an occupational group as a caste with a particular status has depended on historical developments rather than theories of purity. Many poor agricultural laborers in Sri Lanka remain members of low castes as well. Other immigrant groups came to Sri Lanka, fit into particular occupational niches, and became known as castes with ranks linked to their primary occupations. Castes with members who accumulated wealth and power have tended to rise gradually in their relative positions, and it is not uncommon for members of rising caste groups to adopt vegetarianism or patronize religious institutions in an attempt to raise their public ritual status.
The majority caste among the Singhalese population is the Goyigama. Although the government keeps no official statistics on caste, it appears that the Goyigama comprise at least half the Singhalese population. The traditional occupation of this caste is agriculture, and most members are still peasant farmers in villages almost everywhere in Sri Lanka. In the Central Highlands, some traditions of the Kingdom of Kandy survived after its collapse in 1818, preserved in unique forms of the caste system until the post independence period.
There are still major differences between the caste structures of the highlands and those of the low country, although some service groups are common to both. The southwest coast is home to three major castes whose ancestors may have immigrated but who have become important actors in the Sinhalese social system. They are the Karava, the Durava, and the Salagama. Of them the Karava origins (also known as Kaurava/Kshatriya) can be traced to the Kuru Dynasty mentioned in the 'Mahabharata'. The Karava with their maritime, navigation and trading experience were well placed to exploit the emerging economic opportunities in the colonial periods. By the twentieth century, members of this caste had moved to all parts of the country, occupied high business and academic positions, and were generally accorded a high caste rank..
The highland interior is home to the Vahumpura, or traditional makers of jaggery (a sugar made from palm sap), who have spread throughout the country in a wide variety of occupations, especially agriculture. In the Kandy District of the highlands live the Batgam (or Padu), a low caste of agricultural laborers, and the Kinnara, who were traditionally segregated from other groups because of their menial status. Living in all areas are service groups, such as the Hena (Rada), traditional washermen who still dominate the laundry trade; the Berava, traditional temple drummers who work as cultivators in many villages; and the Navandanna (Acari), traditional artisans. In rural environments, the village blacksmith or washerman may still belong to the old occupational caste groups, but accelerating social mobility and the growing obsolescence of the old services are slowly eroding the link between caste and occupation.
The caste system of the Sri Lankan Tamils resembles the system of the Sinhalese, but the individual Tamil castes differ from the Sinhalese castes. The majority Tamil caste, constituting well over 50 percent of the Tamil population, are the Vellala. Like the Goyigama, members are primarily cultivators. Today the Vellala still comprised a large portion of the Tamil urban middle class, although many well-off families retain interests in agricultural land. High in the Tamil caste system, are the Karaiya. Like the Sinhalese Karava, they branched out into commercial ventures, raising their economic and ritual position during the nineteenth century. The Chetti, a group of merchant castes, also have a high ritual position. In the middle of the caste hierarchy is a group of numerically small artisan castes, and at the bottom of the system are more numerous laboring castes, including the Palla, associated with agricultural work.