Billions of Dollars of Credit Line, Food & Fuel Supplies: How India Has Come to the Rescue of Beleaguered Sri Lanka

Crisis-hit Sri Lanka is reeling under massive debt and has run out of money to pay for food and fuel. Already defaulting on its debt, the island nation has sought help from its neighbours India and China and International Monetary Fund to stay afloat.

After political corruption and collapse of the government machinery, angry protesters stormed the presidential palace and Sri Lankan Prime Minister’s “Temple Trees” official residence and refuse to leave. President Gotabaya Rajapaksa has offered to resign amidst mounting pressure but his whereabouts are not known. Even PM Ranil Wickremesinghe has announced his willingness to step down if consensus is reached on forming the government.

According to official data, Sri Lanka’s currency has collapsed by 80%, making commodities expensive and food costs rising by nearly 60%. The government currently owes $51 billion.

External affairs minister S Jaishankar has assured Sri Lanka of support during its worst economic crisis, and said India’s focus at the moment is on helping the country.

Here’s how India has provided support to Sri Lanka:

• India has extended a support of $3.8 billion for “ameliorating serious economic situation in Sri Lanka”. The ministry of external affairs has said India is closely “following the recent developments in Sri Lanka”.

• A $400-million currency swap with the Reserve Bank of India was extended by three months in April

• India has given 400 metric tonnes of urea under the credit line to support farmers of crisis-hit island nation and strengthen bilateral ties.

• The government has handed a total of 3.3 tonnes of essential medical supplies to Sri Lanka. In line with PM Narendra Modi’s ‘Neighbourhood First’ policy, more than 25 tonnes of drugs and medical supplies worth SLR 370 million were donated by the government and Indian people to Sri Lanka. Around 1,600 MT of rice has been supplied by India so far.

• Also, 400,000 million tonne of fuel has been delivered to Sri Lanka through a $500 million credit facility, the Indian High Commission in Colombo said.

• India may provide food and medical aid to Colombo, according to sources. New Delhi has assured Colombo of taking part in a proposed aid consortium being planned by Sri Lanka, India, Japan and China, according to a report in Moneycontrol.

• According to a report in ThePrint, India has lined a “slew of projects” to ramp up trade and connectivity with Sri Lanka, including its presence in petroleum retail in the island nation

How Deep is Sri Lanka’s Crisis?

People are going hungry and many are seeking passports to go overseas. According to the UN World Food Programme, nearly nine of 10 families are skipping meals while 3 million are receiving humanitarian aid.

The 2019 Easter bombings, in which nearly 260 people were killed, have devastated the tourism sector, which was the key engine for economy.

The Sri Lankan rupee has nosedived to about 360 against US dollar, which has made imports expensive and unaffordable. The country has suspended repayment of about $7 billion in foreign loans due this year out of $25 billion to be repaid by 2026.

With inputs from Agencies

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