Sri Lanka failed to show fiscal prudence, India’s help unprecedented: Jaishankar

Sri Lanka failed to show fiscal prudence, India’s help unprecedented: Jaishankar

Uproar at all-party meeting as Centre shows comparison of economic situation in Indian States

The Centre told the all-party meeting on the situation in Sri Lanka that “fiscal prudence and responsible governance” are the lessons the country has to learn from the crisis in the neighbouring country and that there should not be a “culture of freebies”.

Addressing the meeting on Tuesday, External Affairs Minister S. Jaishankar also clarified that India had not in any way “facilitated” former Sri Lankan President Gotabaya Rajapaksa’s exit from Sri Lanka to the Maldives and then to Singapore, saying that this was decided by those countries. However, he said that no other country has supported Sri Lanka as India has in terms of food, fuel, medicines and other essentials. Mr. Jaishankar also denied that any formal request had been made for help earlier, when asked about whether India’s assistance had been “too little too late”, referring to a report in The Hindu from Colombo 2020. In an interview to The Hindu, former Sri Lanka Prime Minister Mahinda Rajapaksa had said that he had requested India for a debt deferral during his meeting with Prime Minister Narendra Modi in February 2020.

While supporting the government’s moves to help Sri Lanka, the opposition took objection to a presentation by officials that sought to show a comparison of the economic situation in various Indian States.

Mr. Jaishankar said that the numbers had been shown without any “political intent” and to show any comparison of the crisis in Sri Lanka and India’s economic situation was part of a “misinformed campaign”, and this would “never happen” in India. However, members protested as they said the meeting had been called to discuss Sri Lanka, not India.

Telangana Rashtra Samithi (TRS) leader Nama Nageshwara Rao said the Centre should have spoken about its own fiscal health instead. “RBI data says the debt-GDP and borrowing-revenue ratio of the Centre is much worse than the States. The Centre was trying to score political brownie points even from a discussion on Sri Lanka,” Mr. Rao said. The Dravida Munnetra Kazhagam (DMK), Trinamool Congress (TMC), and Left parties too questioned the presentation.

When asked about whether the aid to Sri Lanka was being equitably distributed in the country’s northern areas as well, Mr. Jaishankar said that the government had been coordinating to ensure this. To other questions on whether India’s assistance to Sri Lanka had come too late, Mr. Jaishankar stressed that the government had warned the Rajapaksas about the economic slide on several occasions, but that Colombo had not been “fiscally prudent” or responsible in the crisis.

The DMK wanted to know about the provisions for migrants from Sri Lanka and about the position on Katchatheevu. The AIADMK too raised the issue and demanded the Centre’s intervention to save fishermen from Tamil Nadu. Asaduddin Owaisi, leader of the All India Majlis-e-Ittehadul Muslimeen (AIMIM), asked in the meeting about a renewable energy project in the island’s northern Mannar district that was given to the Adani Group after Mr. Modi “pressured” Mr. Gotabaya Rajapaksa. He also asked if India helped the Rajapaksas’ safe exit from their country. “They did not answer both the questions,” a leader said.

Ministers Purushottam Rupala, Pralhad Joshi, Anurag Thakur, and leaders such as Sharad Pawar, P. Chidambaram, Manickam Tagore, T. R. Baalu, Tiruchi Siva, N. K. Premachandran, M. Thambidurai and Binoy Vishwam participated in the meeting.

The government’s presentation on the crisis in Sri Lanka pointed to a four-pronged problem, including the political turbulence in the country due to protests, economic downturn, as well as a sharp decline in foreign reserves since 2019. Highlighting Sri Lanka’s debt to China of about $3.3 billion, which makes up about 10% of what the government called Sri Lanka’s total “unsustainable debt” of $34.6 billion, the government presentation said that Sri Lanka’s market borrowings made up nearly half of the total. 

Listing India’s assistance of about $3.8 billion since January 2022, Mr. Jaishankar said India had provided Sri Lanka with a currency swap of $400 million, a debt deferral of more than $1.5 billion, Lines of Credit totalling $1.55 billion for food, fuel, fertilizers and other essentials, and listed gifts from the Central government and the Tamil Nadu Government of medicines, kerosene, rice and milk powder. He said that the way out of the crisis for Sri Lanka would require both political stability, with a parliamentary vote for the next President to be held on Wednesday, as well as the need for debt restructuring by Sri Lankan lenders in order to allow for an economic recovery, once the government is in place.

“In our history, we haven’t taken such a proactive step for a neighbouring country,” Mr. Jaishankar told members, adding that no other country had done as much for Sri Lanka at this time .

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