[Model Answer QP2022 GS2]‘India is an age-old friend of Sri Lanka’. Discuss India’s role in the recent crisis in Sri Lanka in the light of the preceding statement.

The relationship between India and Sri Lanka is more than 2,500 years old. Both countries have a legacy of intellectual, cultural, religious and linguistic interaction. In recent years, the relationship has been marked by close contacts at all levels. 

Sri Lanka facing economic crisis:

  1. External shocks and official incompetence are to blame. For Instance, Sri Lankan Government’s faulty policy of introducing organic farming overnight by banning the import of chemical fertilisers in 2021 severely impacted agricultural production. 
  2. Inflation is running at more than 50%.
  3. The country doesn’t have enough fuel for essential services like buses, trains and medical vehicles.
  4. It doesn’t have enough foreign currency to import more.
  5. Schools have closed, and people have been asked to work from home to help conserve supplies.

Role of India in the recent crisis in Sri Lanka

  1. India’s bilateral assistance to Sri Lanka to deal with the economic crisis can be divided into two broad categories: 1) assistance to meet the immediate requirements and 2) assisting Sri Lanka in its effort to revive the sectors which got affected due to the global pandemic and foreign reserves crisis.
  2. To meet the immediate requirements, the Government of India has provided food, health and energy security packages as well as foreign reserves support amounting to more than US$ 3.5 billion including a concessional loan of US$ 1 billion to the Government of Sri Lanka.
  3.  A Line of Credit (LOC) of US$ 500 million for financing purchase of petroleum product such as diesel, petrol and aviation fuel.
  4. In order to support the dwindling foreign reserves, India has extended a currency swap facility of US$ 400 million under the SAARC Currency Swap Framework 2019-22.
  5. Furthermore, a large consignment of drugs and medical supplies was gifted to various hospitals in Sri Lanka responding to the urgent requirement for drugs.
  6.  India has committed to assist Sri Lanka in its effort to revive the tourism sector. The establishment of the air bubble arrangement between India and Sri Lanka in April 2021 and the inaugural flight from Sri Lanka to Kushinagar airport in October 2021 are significant developments in this regard.
  7. India must consider granting Sri Lanka a moratorium on debt repayment and/or the option of restructuring the debt owed to it. This will not only help Colombo better allocate its limited revenues toward meeting the immediate needs of the people such as food, medicine, and fuel but also go a long way in building some much-needed goodwill amongst its leadership.
  8. India has played a significant role in the IMF as well as in the regional and plurilateral organisations in encouraging other countries to support Sri Lanka in dealing with the post-COVID normalization of economic activity.
India’s assistance to Sri Lanka is in line with its policy of “neighbourhood first” and vision for “Security and Growth for All (SAGAR).” These twin principles underline India’s emphasis on emerging as a first respondent as well as working in collaboration with other countries to meet the requirements of neighbouring countries in the Region.
The Sri Lankan crisis is not just a domestic problem. It has a spill-over effect on India and other countries in the region too. Hence India has adopted a multi-pronged approach to the Sri Lankan crisis not just to provide immediate assistance, but also to help the country in reviving the economy and stability.

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