India will continue to assist Sri Lanka that is in the midst of its worst economic crisis to recover from the difficulties in line with its ‘Neighbourhood First’ policy, the Indian government said on Thursday.
India’s Ministry of External Affairs (MEA) spokesperson Arindam Bagchi said Sri Lanka is a neighbour and close friend and the Indian government is closely watching the developments in the island nation.
While India in January facilitated a $400 million currency swap with Sri Lanka and deferred $500 million that was due for settlement to the Asian Clearing Union (ACU), it could also increase foreign direct investment and ODA to Sri Lanka.
After China, India is a major FDI contributor in Sri Lanka, investing $1.7 billion from 2005 to 2019 in the areas of oil and gas, tourism, real estate, and financial services.
According to the High Commission of India, the government has committed $2.6 billion to Sri Lanka, of which $436 million came in the form of grant assistance and $2.17 billion as lines of credit.
Indian assistance has been focused on capacity-building, human resources development, and infrastructure development. Additional ODA could be viewed in the context of near-term humanitarian assistance, agricultural development, and financial management.
There have been evolving economic situations as well as other developments in Sri Lanka. In order to help mitigate the economic situation, we have extended assistance worth $ 2.5 billion in the past two to three months which includes credit facilities for fuel and food,” Bagchi said, while replying to a question regarding current developments in Sri Lanka.
Referring to India’s overall ties with Sri Lanka, he said the relationship is rooted in shared civilisational values and aspirations of the two peoples.
“Our cooperation, based on commonality and interests, has been strengthened in recent months. We see the recent developments in this perspective and stand ready to continue working with Sri Lanka for rapid post-Covid economic recovery in line with India’s ‘Neighbourhood First’ policy,” Bagchi said.
“As a neighbour and close friend, India has been keenly following the evolving economic situation and other developments in Sri Lanka,” he added.
Sri Lanka is witnessing massive protests over its worsening economic situation, being said to be the worst in decades. People have taken to the streets to protest over the shortage of fuel and other essentials.
Amid growing public outrage, many cabinet ministers quit the government a few days ago and left Gotabaya Rajapaksa-led government in minority. He has, however, rejected demands for his resignation.
The crisis has stretched the ability of policymakers to pay for essential public services as the treasuries have been drained. Coupled with a severe shortage of foreign currency, vital to the payment of tremendous amounts of Chinese-funded debt, the government had little choice but to ban critical imports leaving many with a shortage of everyday essential items.
