The Editorial Analysis: In Srilankan Crisis, a Window of Economic Opportunity

India and Srilanka relations UPSC: Relevance

• GS 2: Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.

Srilanka economic crisis: Context

• Recently, in an interview the Sri Lankan Prime Minister, Ranil Wickremesinghe, touched upon a significant aspect of India-Sri Lanka relations — the commonality between Sri Lanka and the southern parts of India.

India and Srilanka relations UPSC: Key points

• The PM called for the development of the south India-Sri Lanka sub-region as a single market that would provide more opportunities for the economic growth of both countries.
• In 2016, he highlighted the fact that the five Indian southern States had a combined gross state domestic product of nearly $450 billion.
• When we add Sri Lanka’s $80 billion GDP, the sub-region would have a $500 billion economy, having an aggregate population of around 270 million.

Economic crisis in Sri Lanka

• The present economic crisis in Sri Lanka has pushed it closer to India for immediate relief.
• For the last few months, the Indian media’s regular coverage of the crisis has led to better understanding and even created a sense of empathy in India about the plight of the neighbouring country.
• India, as part of its ‘Neighbourhood First’ policy, has extended support to the people of Sri Lanka in the form of aid (close to $3.5 billion) to help secure Sri Lanka’s food, health and energy security by supplying it essential items such as food, medicines, fuel and kerosene.
• Signing of an agreement on June 10 between the Government of Sri Lanka and the Export-Import Bank of India for a $55-million short term Line of Credit to facilitate the procurement of urea for paddy crop.

India and Srilanka: Historical baggage

• The Sinhalese perception is that India is a threat to Sri Lanka. Moreover, in the aftermath of the 1983 anti-Tamil pogrom, the support provided by the Indian government to Tamil rebels only strengthened this perception.
• Scrapping a tripartite agreement by Sri Lanka signed in 2019 with India and Japan for the development of Colombo’s East Container Terminal was a reflection of the historical baggage.
• Another project, a collaboration between NTPC Limited and the Ceylon Electricity Board, was cancelled just when bids were to be floated for the coal-fired 500-megawatt project.
• The project of building a sea bridge and tunnel, connecting Rameshwaram to Talaimannar, remains on paper.

India and Srilanka relations: Potential

• There is enormous scope for collaboration between the two countries in the area of infrastructure development.
• The economic crisis has revived talk of linking Sri Lanka’s electricity grid with that of India.
• India’s interests would also be served by developing the east coast of Sri Lanka, especially the Trincomalee-Batticaloa belt, whose potential for tourism, commerce, trade and industry is well known.
• Much more will have to be done but the opportunity created by the current circumstances should be utilised to bring Indian and Sri Lankan societies closer.

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