[Answered] In the light of the present crisis going on in Sri Lanka, there is enormous scope for India to engage in a constructive way with it. Comment.

Recently, Sri Lanka has caught in a severe economic crisis. A severe shortage of foreign currency has left government unable to pay for essential imports, including fuel, leading to debilitating power cuts etc. The crisis has been caused by mismanaged government finances and ill-timed tax cuts, besides the impact of the COVID-19 pandemic.

Sri Lanka crisis:

• Twin deficit: Sri Lanka is facing a budget shortfall alongside a current account deficit.  Capital-intensive projects (e.g., Hambantota port) did not deliver the expected returns. BOP crisis led to the devaluation of Sri Lankan currency hitting payments for essential items and debt servicing.
• Decline in foreign exchange reserve:It gave rise to high uncertainty among people regarding the nation’s economic stability in the coming time.
• Spiralling debt: Sri Lanka has borrowed repeatedly since 2007 leading to $11.8 billion worth of debt which makes up 36.4% of its external debt.

India to engage in a constructive way:

• It could include sharing technical expertise, or helping the country upgrade skills in different areas of economic activity or providing liberal loans.
• In Sri Lanka, agriculture and allied activities are the priority areas where India can make a difference. E.g., in developing its dairy sector and poultry sector to increase both production and productivity.
• Agricultural machinery is another area where Sri Lanka needs a helping hand.
• India’s participation in energy projects will be desirable.
• India’s programmes including the ‘Digital MSME’ and ‘RAMP’ (Raising and Accelerating MSME Performance) can provide leads to the MSME sector of Srilanka.
• India can expand its scheme of establishing smart classrooms and modern computer labs for the underprivileged sections in Sri Lankan society.
• Indian universities can consider setting up satellite campuses in Sri Lanka.
• India can arrange for greater numbers of Buddhist monks to visit places of religious importance here.

How will it improve India- Sri Lanka relations?

• These measures will help in countering China’s increasing presence in Sri Lanka.
• India’s help would put a special attention to the Northern and Eastern Provinces, where the Tamil and Muslim ethnic minorities live, and which were badly hit by the civil war 1970-80.
• Sri Lanka’s political class and civil society would facilitate the success of these programmes, as assistance is much needed at present. This would discourage the anti-India rhetoric pushed forward by few groups.

As both countries have a democratic setup there is scope for broadening and deepening the ties. India and Sri Lanka are also maritime neighbours. Any instability in Sri Lanka will have a spill-over effect on India. So, a politically and economically stable Sri Lanka will be in India’s interest too.