Is India planning on intervening in the Sri Lanka crisis?
Sri Lanka is facing its worst economic crisis in seven decades. (Reuters)
The Centre will hold an all-party meeting over the Sri Lanka crisis on Tuesday. The meeting will be chaired by Union Finance Minister Nirmala Sitharaman and Minister of External Affairs S Jaishankar.
During a meeting of all parties ahead of the Monsoon Session of Parliament, DMK and AIADMK demanded that India should intervene in the crisis surrounding the Island nation.
Sri Lanka is facing its worst economic crisis in seven decades, with a severe foreign exchange shortage hampering the import of essentials like food, fuel and medicines.
On July 13, President Gotabaya Rajapaksa fled to the Maldives before landing in Singapore from where he sent his resignation letter. Earlier, protesters had stormed into many iconic buildings in the country, including the President and the Prime Minister's residences.
India's help to Sri Lanka
- India has assured Sri Lanka that it will continue to support democracy, stability and economic recovery in the country.The assurance was given to Sri Lankan Parliament Speaker Mahinda Yapa Abeywardena by India's High Commissioner Gopal Baglay when he called on the Sri Lankan leader on Saturday, reported PTI.
- Sri Lanka needs about USD 5 billion in the next six months to cover basic necessities for its 22 million people. So far, India has been the main source of foreign assistance to Sri Lanka.
- India has been helping Sri Lanka with fuel and ration supplies and has also handed over 44,000 metric tonnes of urea under a credit line extended to help Sri Lankan farmers. Last week, Jaishankar said India had committed USD 3.8 billion for Sri Lanka.
Sri Lanka thanks India: Touted to be Sri Lanka's next President, Sajith Premadasa, thanked India for financial aid amid the crisis in the country. “We are extremely grateful to India for having shown such generosity in terms of providing assistance and support. That is undoubted. That is a fact," he told India Today TV in an exclusive interview.
“I would like to take this opportunity to thank Prime Minister Narendra Modi and the government of India, the Finance Minister of India and the people of India for the huge financial support they have been providing," he said.
What led to the crisis in Sri lanka
- First the Covid-19 crisis hammered Sri Lanka's vital income from tourism. This starved the country of foreign currency needed to pay off its debt.The government was forced to ban many imports, which led to inflation, severe shortages and power blackouts. In April, the Sri Lanka government announced that it was defaulting on its USD 51 billion foreign debt, reported AFP.
- According to a report in Reuters, critics say that the roots of the crisis lie in economic mismanagement by successive governments that created and sustained a twin deficit - a budget shortfall alongside a current account deficit.
- After winning the elections in 2019, President Gotabaya Rajapaksa announced deep tax cuts. The sweeping tax cuts led to credit rating agencies downgrading Sri Lanka in 2020. This meant the country had no access to international financial markets.
- Sri Lanka started using its foreign reserves resulting in plummeting of foreign reserves. As of February 2022, the country was left with only USD 2.31 billion in its reserves but faced debt repayments of around USD 4 billion in 2022, reported Reuters.
VIDEO: The resignation of Sri Lanka’s president Gotabaya Rajapaksa comes after months of protests blaming his government for the mismanagement of the island nation's economy, with a foreign exchange crisis leading to severe hardships for its 22 million people. pic.twitter.com/Z5ZwdthwzA
— AFP News Agency (@AFP) July 16, 2022
Will India intervene?
India has been the biggest help for Sri lanka amid the crisis in the country. And one of the main reasons for it is the fact that India wants peace in the region and to have good relations with Sri Lanka. By helping the island nation during this tough time, India has also given a message that unlike China, its help is not a debt trap and that it will always be there in times of crises.
Having said that, India may opt to not intervene in Sri Lanka's politics after the all-party meeting on Tuesday. Giving financial aid and making political intervention are two completely different things. And in the past, during the civil war in Sri Lanka, India's intervention led to a lot of controversy.