India steps in to bail out Lanka

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Facing bankruptcy fears Sri Lanka gets India’s backing. External Affairs Minister, Dr. S Jaishankar says India would support the island nation in difficult times in affirmation of the Neighborhood First policy, reports Asian Lite News

“Good neighbourliness” and “neighbours first” have been the oft-quoted phrases in India’s foreign policy. This augurs well when a neighbour with strong socio-cultural tiles like Sri Lanka finds itself in a downward spiral with Beijing unleashing menacing designs.

The meltdown faced by the government, led by Gotabaya Rajapaksa, is loud and clear. According to a report by the Guardian, the “tear drop” island is likely to go bankrupt this year.

The reason for this is are many, the Covid-hit tourism industry has left the economy crippled, this has been compounded by high government spending and tax cuts eroding state revenues, vast debt repayments to China and foreign exchange reserves at their lowest levels in a decade.

The World Bank estimates 500,000 people have fallen below the poverty line since the beginning of the pandemic, the equivalent of five years’ progress in fighting poverty.

In the backdrop of such mounting pressures, Colombo’s all-weather ally New Delhi has offered relief.

Sri Lanka.

India has assured Sri Lanka of its support to tide over “difficult times” even as it welcomed the Trincomalee tank farms project saying it will augment bilateral energy security.

External Affairs Ministry Spokesperson Arindam Bagchi, when asked at a media briefing on the possibility of India extending the credit line to help Sri Lanka overcome its economic crisis, said it has always stood by the people of that country.

After a telephonic conversation with his Sri Lankan counterpart, External Affairs Minister S Jaishankar said India will support Sri Lanka in “these difficult times”.

“Greeted FM G.L. Peiris of Sri Lanka in the New Year. A reliable friend, India will support Sri Lanka in these difficult times. Agreed to remain in close touch,” Jaishankar tweeted.

On the query on extending the credit line by India, Bagchi referred to the visit to New Delhi by Sri Lankan Finance Minister Basil Rajapaksa last month.

“He briefed the Indian side on the economic situation in Sri Lanka and his government’s approach in addressing these challenges. India has always stood by the Sri Lankan people and Sri Lanka is an important part of our neighbourhood first policy,” Bagchi said.

Neighborhood First policy

In line with the priority placed by Indian Prime Minister Narendra Modi on ties with Sri Lanka in line with the Neighborhood First policy, an intercity train service, using recently given Full AC Diesel Multiple Units (AC DMUs) under Indian loan facility, was launched from Colombo on Sunday.

The train is to run from Colombo (Mount Lavinia) to Kankesanthurai, on the tip of the Northern Peninsula, where a majority of the Tamil community lives.

Participating at the event in Colombo, in the presence of the island nation’s Transport Minister Pavithra Wanniarachchi, Indian Deputy High Commissioner, Vinod K. Jacob, recalled the recent statement of Indian External Affairs Minister, Dr. S Jaishankar that “India would support Sri Lanka in difficult times” is an affirmation of the Neighborhood First policy in the current context.

He also reiterated High Commissioner Gopal Baglay’s emphasis on mutually beneficial cooperation that facilitates people to people exchanges.

The launch at Colombo’s main railway station took place while elsewhere in the capital, Chinese Foreign Minister and State Councillor Wang Yi met President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa and assured: “China will continue to do its best to provide all the necessary help and support to Sri Lanka”.

He was visiting Sri Lanka to mark the 65th anniversary of bilateral ties between the two nations. Colombo was Wang’s last destination of his visit to five strategic cities in the Belt and Road Initiative (BRI) from Africa to Asia.

At the train launch, the Transport Minister thanked India for steadfast support to Sri Lanka over the years, including during the ongoing Covid-19 pandemic.

Sri Lankan President Gotabaya Rajapaksa and Indian Prime Minister Narendra Modi

An Indian High Commission statement said Deputy High Commissioner Jacob also has reiterated that during the current year, the Indian side is “keen to upgrade the bilateral engagement”.

It said the AC DMUs supplied under an Indian Line of Credit by Rail India Technical and Economic Service (RITES) would help facilitate quicker travel between the Western Province and the Northern Province.

“The supply of AC DMUs is just one of the many Railway projects being undertaken by India in Sri Lanka. There are also other ongoing projects, which include supply of passenger coaches byRITES under an Indian Line of Credit. RITES has already supplied 120 of the 160 coaches under this project. Another Indian Company, IRCON is executing a project for Up-gradation of railway tracks between Maho-Anuradhapura-Omanthai,” it said.

Severely affected by the dollar crunch and debt burden, Sri Lanka is awaiting financial support of around $1.9 billion from India. The total financial support included $400 million swap, a $500 million line of credit for the purchase of oil, and a $1 billion credit line for purchases of essential commodities including food and medicine.

“India’s total development portfolio in Sri Lanka is over $3.5 billion, of which around $570 million are purely grant projects. Modernisation of railways and creation of new railway infrastructure have been important sectors of focus under the Indian government’s development portfolio in Sri Lanka, in line with the priority of the government and people of Sri Lanka,” the Indian HC statement said.

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