EAM ON A VISIT TO SRI-LANKA
Recently, India’s External Affairs Minister visited Sri Lanka. The visit finalized an MoU that provided India to set up hybrid power projects in three Islands (Nainativu , Delft or Neduntheevu, and Analaitivu) off Jaffna. In this Project, India will effectively replace the Chinese venture. It is the third Indian energy project coming up in Sri Lanka’s north and east. Earlier, India extended a USD1-billion short-term concessional loan to Sri Lanka to help the island nation cope with one of the worst economic crises in decades.
WHAT ARE THE HIGHLIGHTS OF THE VISIT?
- Fending Off Chinese Threat: In January 2021, Sri Lanka’s Cabinet decided to award renewable energy projects in Nainativu, Delft or Neduntheevu, and Analaitivu islands to Chinese company SinosoarEtechwin, following an Asia Development Bank-backed competitive bid. India was quick to express concern to the Sri Lankan side over the Chinese project coming up in the Palk Bay, barely 50 km off Tamil Nadu. Thus, India offered to execute the same project with a grant rather than a loan.
- MRCC: Further, India and Sri Lanka have also agreed to set up a Maritime Rescue Coordination Center (MRCC), signaling greater defence sector collaboration between the neighbours. MRCCs are part of an international network under the UN’s International Maritime Organisation to monitor the sea lanes with the objective of swift response to emergencies, such as vessels in distress, rescue and evacuation of people, and prevention of and containing environmental disasters such as oil spills. The agreement appears to be part of India’s SAGAR (Security and Growth for all in the Region) initiative in the Indian Ocean, which has also seen India, Sri Lanka and Maldives give a new push to their 2011 Colombo Security Conclave that now includes Mauritius.
- Fisheries Harbours: India will also help develop fisheries harbours in Point Pedro, Pesalai, and Gurunagar in the Northern Province, and Balapitiya, south of capital Colombo.
- Capacity Building: India also assured supporting education, extending a grant for Sri Lanka’s Unique Digital Identity project, and collaborating in diplomatic training.
- Resolution of Tamil Question: On developments in regard to Sri Lanka’s long-pending Tamil question, India has welcomed the recent talks between President Gotabaya Rajapaksa and the Tamil National Alliance (TNA) representing war-affected Tamils of the north and east.
WHAT ARE THE RECENT ISSUES IN INDIA- SRI LANKA RELATIONS?
Killing of Fishermen: Killing of Indian fishermen by the Sri Lankan Navy is a lingering issue between these two nations. In 2019 and 2020, a total of 284 Indian fishermen were arrested and a total of 53 Indian boats were confiscated by the Sri Lankan authorities.
Influence of China: China’s rapidly growing economic footprint (and political clout as a corollary) in Sri Lanka is straining India-Sri Lanka relations. China is already the largest investor in Sri Lanka, accounting for 23.6% of the total Foreign Direct Investment (FDI) during 2010-2019 as against 10.4% from India. China is also one of the largest export destinations for Sri Lankan goods and holds over 10% of its external debt.
13th Amendment of the Sri Lankan Constitution: It envisages devolution of necessary powers to the provincial councils to address the just demand of the Tamil people for equality, justice, peace, and respect within a united Sri Lanka. India supports its implementation.
SIGNIFICANCE OF SAGAR VISION
SAGAR provides a mechanism for India to expand strategic partnerships with other IOR littorals in Asia and Africa. SAGAR indicates the leadership role and responsibilities India is ready to play in the region on a long term basis in a transparent manner through its capacity building and capability enhancement programs. The key relevance of SAGAR emerges when seen in conjunction with India’s other policies impacting the maritime domain like Act East Policy, Project Sagarmala, Project Mausam, India as ‘net security provider’, focus on Blue Economy etc. This symbolises India’s maritime resurgence, as maritime issues are now centre of India’s foreign policy. With effective implementation of all these policies, India can act as an enabler to create a positive environment in the IOR.
ECONOMIC CRISIS IN SRI LANKA
The Sri Lankan economy has been facing a crisis owing to a serious Balance of Payments (BoP) problem. Its foreign exchange reserves are depleting rapidly and it is becoming increasingly difficult for the country to import essential consumption goods. The current Sri Lankan economic crisis is the product of the historical imbalances in the economic structure, the International Monetary Fund (IMF)’s loan-related conditionalities and the misguided policies of authoritarian rulers.
WHY IS SRI LANKA SUFFERING FROM CRISIS?
Background: When Sri Lanka emerged from a 26-year long civil war in 2009, its post-war GDP growth was reasonably high at 8-9% per annum till 2012. However, its average GDP growth rate almost halved after 2013 as global commodity prices fell, exports slowed down and imports rose. Sri Lanka’s budget deficits were high during the war and the global financial crisis of 2008 drained its forex reserves which led to the country borrowing a $2.6 billion loan from the IMF in 2009. It again approached the IMF in 2016 for another US$1.5 billion loan, however the conditionalities of the IMF further deteriorated Sri Lanka’s economic health.
Recent Economic Shocks: The Easter bomb blasts of April 2019 in churches in Colombo resulting in 253 casualties, consequently, dropped the number of tourists sharply leading to a decline in foreign exchange reserves. The newly led government by Gotabaya Rajapaksa in 2019 promised lower tax rates and wide-ranging SoPs for farmers during their campaign. The quick implementation of these ill-advised promises further exacerbated the problem. The Covid-19 pandemic in 2020 made the bad situation worse - Exports of tea, rubber, spices and garments suffered.
Tourism arrivals and revenues fell further: Due to a rise in government expenditures, the fiscal deficit exceeded 10% in 2020-21, and the debt to GDP ratio rose from 94% in 2019 to 119% in 2021.
Sri Lanka’s Fertiliser Ban: In 2021, all fertiliser imports were completely banned and it was declared that Sri Lanka would become a 100% organic farming nation overnight. This overnight shift to organic fertilisers heavily impacted food production. Consequently, the Sri Lankan President declared an economic emergency to contain rising food prices, a depreciating currency, and rapidly depleting forex reserves. The lack of foreign currency, coupled with the disastrous overnight ban on chemical fertilisers and pesticides, has sent food prices soaring. Inflation is currently over 15% and is forecast to average 17.5%, pushing millions of poorer Sri Lankans to the brink.
TEST YOURSELF
Q.1 From the given options, which of the following is the incumbent President of Sri Lanka?
- Ranil Wickremesinghe
- Gotabaya Rajapaksa: ANSWER
- Maithripala Sirisena
- None of the above mentioned
Q.2 Consider the given statements & state which of the following is/are correct in the reference to the EAM's visit to Sri Lanka?
- The visit finalized an MoU that provided India to set up hybrid power projects in three Islands (Nainativu , Delft or Neduntheevu, and Analaitivu) off Jaffna.
- India and Sri Lanka have also agreed to set up a Maritime Rescue Coordination Center (MRCC), signaling greater defence sector collaboration between the neighbours.
- Only I follows
- Only II follows
- Both I & II follows: ANSWER
- None of the above
Q.3 Recently, India achieved 5th global position in the world in solar power deployment by surpassing which of the following countries?
- United Arab Emirates
- Italy: ANSWER
- Saudi Arabia
- None of the above
Q.4 With the reference to the Security and Growth for All in the Region (SAGAR) vision, which of the following statements is/are incorrect?
- Security and Growth for All in the Region (SAGAR) was launched in 2020 which is India’s strategic vision for the Indian Ocean Region (IOR).
- Through SAGAR, India seeks to deepen economic and security cooperation with its maritime neighbours and assist in building their maritime security capabilities.
- Under ‘Mission Sagar’, the Indian Navy has been deploying its ships to send medical and humanitarian aid to the counties in the Indian Ocean Region (IOR) and beyond.
- I & III is incorrect
- Only I is incorrect: ANSWER
- All of the above is incorrect
- None of the above
Q.5 Both India & Sri Lanka have many common interests & they are the members of the same Organisation. Which of the following is not one of them?
- Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC)
- South Asian Association for Regional Cooperation (SAARC)
- Association of South-East Asian Nations (ASEAN): ANSWER
- None of the above
