Mahinda Rajapaksa Resigns- Relevance for UPSC Exam
- GS Paper 2: International relations- Effect of policies and politics of developed and developing countries on India’s interests.
Sri Lankan PM Resigns in News
- Recently, the Sri Lanka’s Prime Minister Mahinda Rajapaksa resigned from the office.
- Previously, his supporters brutally assaulted peaceful anti-government protesters amid a worsening economic crisis in the island.
- The resignation of the Sri Lankan Prime Minister was accepted, according to a gazette notification.
- Consequently, the Sri Lankan Cabinet stands dissolved as per the Sri Lankan Constitution.
Protest in Sri Lanka
- Ongoing economic and political crisis has deepened in Sri Lanka. A large number of Sri Lankan citizens are protesting in Colombo against the government.
- Three persons died outside the capital in ensuing clashes, while at least 150 were injured in Colombo.
- Government MP Amarakeerthi Athukorala reportedly shot two persons and then himself after being surrounded by a mob in the neighbouring Gampaha district.
- The President removed his brother and Finance Minister Basil Rajapaksa from his post.
Analysis Of Sansad TV Discussion: ”The Economic Crisis in Sri Lanka”
Economic Crisis in Sri Lanka
- Sri Lanka is passing through an acute economic crisisdue to depletion in foreign reserves which in turn has resulted in shortages of fuel, food, medicines, cement and other essential items in the country.
- With long lines for fuel, cooking gas, essentials in short supply and long hours of power cuts, the public has been suffering for months.
- The raging public anger in Sri Lanka last week led to nationwide protests and a subsequent declaration of public emergency in the island nation by President Gotabaya Rajapaksa.
Sri Lanka Economic Emergency
Key Reasons Behind Sri Lanka’s Economic Crisis
Shortage of foreign reserves
- The economic mismanagement of successive governments has depleted 70 per cent of Sri Lanka’s foreign reserves with only $2.31 billion left with debt repayment of over $4 billion.
- Sri Lanka’s high dependency on imports for essential items like sugar, pulses, and cereals adds fuel to the economic meltdown as the island nation lacks foreign reserves to pay for its import bills.
The pandemic effect
- The island nation’s huge dependence on tourism and foreign remittances was sapped by the COVID-19 pandemic that set the pretext for the current crisis.
- Tourism, which accounts for over 10 per cent of the Sri Lankan GDP, was hurt after it lost visitors from three key countries: India, Russia and the UK.
Russia-Ukraine war-induced inflation
- The ongoing Russia-Ukraine war resulted in steep price inflation of crude oil, sunflower oil and wheat.
- Crude oil prices hit a record high in 14 years with prices soaring over $125/barrel at the height of the crisis.
- India had to step in by supplying 40,000 MT of diesel under a promised $500 million line of credit. India has so far supplied over 2,00,000 MT of fuel in the last 50 days.
Agri sector crisis
- The Rajapaksa government’s decision to ban all chemical fertilizers last year to make agriculture 100 per cent organic severely hit the country’s farm production, especially in rice and sugar production forcing the reversal of this decision.
Sharp fall in FDI
- According to government data, FDI stood at $548 million in 2020 compared to $793 million and $1.6 billion in 2019 and 2018, respectively.
The Editorial Analysis: Sri Lankan Lessons for India
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