India Sri Lanka Economic Ties – Union Finance Minister Nirmala Sitharaman’s 3-Day Sri Lanka Visit

GS Paper II International Relations

Context:

The Indian Finance Minister is on a three-day visit to Sri Lanka, which is struggling to come out of the financial crisis that hit the island nation last year.

The ‘NAAM 200’ was organized by the Government of Sri Lanka to commemorate the 200th anniversary of the arrival of Indian Origin Tamils (IOTs).
During the event, India assured Sri Lanka that it will continue to work closely with it on debt restructuring discussions and will extend support for the economic recovery.
The Memorandum of Understanding(MoU) for Solar Electrification of Religious Places in Sri Lanka was exchanged between both countries.
Under the MoU, India will allocate Rs 82.40 crore out of the Government of India’s total grant of Rs 107.47 crore earmarked for the promotion of Buddhist ties.
India Sri Lanka negotiated on the proposed Economic and Technology Cooperation Agreement.
The Unified Payments Interface (UPI) payment system will soon be launched in Sri Lanka.

In line with India’s ‘Neighbourhood First’ policy, India extended assistance of about USD 4 billion to it last year through multiple credit lines and currency support.
India was the first bilateral creditor to convey financing assurance to the International Monetary Fund that paved the way for others to provide similar assurances that formalized the IMF programme for Sri Lanka.
India released a vision document for economic partnership outlining specific areas of cooperation for a sustainable economic development and prosperity.
India is part of an official creditor’s committee, with Japan and other Paris Club members, and is currently negotiating a debt treatment plan with Sri Lanka.
During the visit of President Ranil Wickremesinghe to India, India announced a special grant package of SLR 3 billion (INR 75 crore) for multi-faceted projects for the IOT community.
- Under this India committed to undertake projects focusing on education and skill development, livelihood assistance, infrastructure development, and food security.