India promises Sri Lanka ‘fullest support’

What is the News?

India has assured Sri Lanka of its “fullest support” to help the island nation tide over its unprecedented economic crisis.

How serious is the Sri Lankan economic crisis?

The Sri Lankan Government owes $51 billion and is unable to make interest payments on its loans.

Tourism, an important engine of economic growth, has been impacted because of the pandemic.

Sri Lankan currency has collapsed by 80% making imports more expensive and worsening inflation that is already out of control with food costs rising 57%.

The UN World Food Programme says nearly nine of 10 families are skipping meals or otherwise skimping to stretch out their food, while three million are receiving emergency humanitarian aid.

How is India providing assistance to Sri Lanka?

​​India has so far provided economic and humanitarian aid worth more than $3.5 billion to Sri Lanka since January 2022. The assistance has been provided in the form of currency swaps, loan deferments and credit lines for essential imports. Sri Lanka has sought a further $500 million from India to import fuel.

India-Sri Lanka Cooperation

India has signed an agreement with Sri Lanka to jointly develop the Trincomalee Oil Tank Farm. India will set up a solar power plant in Sampur, Trincomalee.

India’s Adani Group has signed an agreement to execute projects in Mannar and Pooneryn in the Northern Province of Sri Lanka.

Sri Lanka will resume flights from the northern Jaffna peninsula to India next month in a move that Sri Lanka hopes would support the country’s tourism sector

.Source: The post is based on the article “India promises Sri Lanka ‘fullest support’” published in The Hindu on 24th June 2022.