The economic crisis in Sri Lanka is a serious matter and India is focusing on helping its neighbor, stated by EAM S Jaishankar.
The economic crisis in Sri Lanka is a “serious matter” and India is focused at the moment to help them, stated by S Jaishankar in a meeting. He continued that all efforts are being made by India to support “our neighbors in a manner that meets their basic requirements according to PM Modi’s ‘neighborhood first’ policy”.
Jaishankar postulated, Sri Lanka was earlier given a line of credit which kept essential commodities available to them for the past several months. “They are also provided with a line of credit for the purchase of fuel. This year alone, we have pledged $3.8 billion in support to Sri Lanka,” stated the minister.
In addition to this, he said there are several bigger issues in Sri Lanka in order to how one manages its finances and maintains a neutral fiscal policy also known as prudent fiscal policy.
Reports of sending troops to Sri Lanka denied by India
The reports of India sending troops to Sri Lanka, denied by The Indian High Commission in Colombo. The official handle of the commission tweeted, “Today, the spokesperson for India’s Ministry of External Affairs made it quite clear that India supports the Sri Lankan people in their efforts to realize their goals for wealth and growth.
What led to economic crisis in Sri Lanka?
The economic crisis faced by Sri Lanka currently is due to badly-timed tax sops, poor investment in projects and the restrictions induced by COVID. In the year 2019, Sri Lanka announced tax cuts for several services which led to a huge dip in Sri Lankan revenue.
The Current Economic situation of Sri Lanka
In 2019, the budget deficits rose from 9.6% of GDP to 11.1% in 2020 and 12.2% of GDP in 2021. The total government debt-to-GDP also hiked statically. Also, Sri Lankan foreign currency reserves have virtually dry run which plays a major role in economy of Sri Lanka.