Disheartened by Sri Lanka’s stance towards China in awarding strategic development projects, India is delaying its offering of a fiscal package on an urgent basis to assist the island nation, several foreign and current affairs analysts claimed.
This package is focused on measures to tackle an economic crisis that the country is facing in which India is expected to extend food and health security aid to Sri Lanka on an urgent basis, along with an energy security package and currency swap, and also promote its investments.
The food and health security package would envisage the extension of a line of credit to cover the import of food, medicines and other essential items from India.
In return for this gesture India is expecting Sri Lnka to fulfill certain conditions till then the future of the fiscal package including one billion dollar emergency loan from India seems uncertain, analyst said.
India has called for a road map from Sri Lanka on how it is going to overcome its economic crisis in the long term as well as to clear the decks for a long list of its economic cum strategic demands for implementation in the North and the East of Sri Lanka..
Finance Minister Basil Rajapaksa’had to postpone his visit to India twice after securing a US$ 500 million loan in December last year to clinch a further one billion dollar loan for emergency supplies of food, fuel and medicines to overcome the country’s ongoing economic crisis.
The Indian conditions for the granting of this loan package included several maritime security agreements that will strengthen India’s strategic interests, particularly around the eastern Trincomalee harbour.
These include Donier surveillance aircraft for the Sri Lanka Air Force, a ship repair dock for the Sri Lanka Navy in Trincomalee and posting of a Sri Lankan Navy officer at the Intelligence Fusion Centre, a Bahrain-based intelligence sharing office which is a US Navy initiative to combat international terrorism, the narcotics trade and ensure safe maritime passage for commercial vessels in the region.
One of the key pressure-points from the Indian Government is to start a renewable energy (solar power) project in and around Sampur near Trincomalee.
An earlier plan by India to begin a coal power project in joint partnership with Japan has now been abandoned as Sri Lanka announced a move away from coal plants as part of its futuristic energy policy.
The reopening of the Palay airport for commercial operations and several cultural projects in the Jaffna peninsula are also among items on the list already made public.
The Indian Government also wants to enter into the renewable energy field in the Delft islet after it scuttled a Chinese company securing the project following an Asian Development Bank ((ADB) tender procedure.
Assistance from India in the last six months have come in the form of;1. $ 500 million oil line of credit, $ 1 billion line of credit for essentials to be imported from India under negotiation,. Currencies swap $ 400 million, deferral of $ 515 million under Asian Clearance Union,. 40,000 MT of fuel on credit , 100,000 Rapid Antigen Test kits and. Supply of 1,000 tons of liquid medical oxygen.
