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Approach:

  1. Introduction stating the spiraling crisis in Sri Lanka.
  2. Mention pointwise what India can do.
  3. Conclusion – highlighting what India has done till now.

Sri Lanka is grappled in an ongoing political crisis due to the power struggle between President Gotabaya Rajapaksa and the Sri Lankan parliament. This political crisis has spiralled into a deepening economic crisis, with severe forex shortage. In this scenario, as a friendly neighbor, India has multiple roles for Sri Lanka’s political stability, economic recovery and strategic security, so that Sri Lanka does not end up with a ‘failed state’ tag as many had branded Pakistan in the neighborhood.

What can be the role for India ?:

  • Sri Lanka’s local village-based diary industry has been dismantled due to the imported dairy products from New Zealand & Australia. India has the successful ‘Anand’ model that can help recreate Sri Lankan dairy industry. This can restore confidence of the rural population, by making them financially stable. Also, India had an agreement for bi-annual gifting of 25,000 cattle to ‘Estate’ Tamils, which it may consider to extend to all parts of Sri Lanka.
  • Tea is another export commodity that has been badly hit by Gotabaya’s ‘organic fertilizer scheme’. With no forex reserve to import cloth from SE Asia, Sri Lanka’s value-added textile exports has also been hit. In this, New Delhi has the option to work with its industries to see if the re-routed global trade does not adversely impact the Lankan economy. This requires grassroots level discussions & multiple-level adjustments.
  • Tourism is the major Sri Lankan forex earner, which stands most hit beginning with the 2019 Easter serial blasts, followed by Covid-19, and now the current phase of political instability. The food & fuel shortage, resulting from forex shortage, has worsened the hospitality & transport sector. The Indian industry can be encouraged to build the tourist-hub model to ensure that the tourist supply chain, most critically transport & food platforms in the hospitality sector, are seamlessly integrated to revive the industry.
  • India can also consider a joint IT sector development along with handholding in the agronomics sector. Sri Lanka had invited reputed Indian agronomists & IT leaders to create an industry for local & export markets.
  • India needs to play the role of a facilitator in helping Sri Lankans resolve the current political impasse based on an understanding of the nation’s history, social-political cultures and ethnic differences. However, given the added complexities of the hour, India should refrain from meddling into the decades-old ethnic crisis, as it had burnt its fingers in the past.

Following the ‘Neighborhood First Policy’, India has extended assistance of $ 2.5 billion, including credit facilities for fuel & food. Since mid-March, over 270,000 MT of diesel and petrol have been delivered to Sri Lanka. $ 500 billion was given as a short-term loan to help it purchase petroleum products. Over 40,000 tons of rice have been supplied under the recently extended $ 1 billion credit, which will help Lanka in shoring up its sinking economy. India has also given 100 tonnes of nano liquid Nitrogen fertilizer, besides extending a currency swap of $ 400 million and deferring debt payments worth several hundred million dollars. India has sent ships with sugar, rice, wheat amid the soaring inflation rates of essential items in Sri Lanka.

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