India’s cooperation plan for Sri Lanka – UPSC GS2

India and Sri Lanka have agreed to a four-pronged package to help mitigate Sri Lanka’s economic crisis.
Four-pronged package:
  • Urgent food and health security package that includes an extension of a line of credit to cover the import of food, medicines and other essential items from India to Sri Lanka
  • Energy security package that includes a line of credit to cover the import of fuel from India, and early modernisation of the Trincomalee Tank Farm;
  • Offer of a currency swap to help Sri Lanka address its balance of payment issues;
  • Facilitation of Indian investments in different sectors that would contribute to growth and expand employment
Recent economic issues between India and Sri Lanka:
  • Trincomalee project to develop oil infrastructure languishing as Rajapaksa government favouring China.
  • Sri Lanka’s request for a $1 billion swap has not yet materialised.
  • India has also delayed a decision on a request for a debt moratorium waiver to help Sri Lanka tide over its economic problems during the pandemic.
  • Sri Lanka cancelled an MoU signed with India and Japan for the East Coast Terminal project. India protested the cancellation though it later agreed to the West Coast Terminal being developed by the Adani group.

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