Friday, 17 May, 2024
By: Anshul Vipat
Over the years, China has been increasing its control in the region and the possibility of it growing as a result of the crisis is for very intuitive reasons extremely dangerous for India.
Sri Lanka, currently, is in the midst of a severe economic crisis, which many are saying is the worst one since the country’s independence. A myriad of things have been happening like there being a shortage of necessary items like food, medicines, fuel, constant power cuts, the inflation rate touching the roof and above all of it, the Prime Minister resigning. The drastic fall in tourism post the pandemic has also affected the country in the worst way. Sri Lanka is in a mountain of debt with its reserves plummeting rapidly. The following chart shows how the debt of Sri Lanka as a percentage of the GDP has been rising exponentially since Jan, 2020.
Additionally, the inflation rate has reached an all-time high of 39.1% in May 2022. The following chart shows the steep rise of the inflation rate in Sri Lanka.
Amidst this crisis, India has been actively extending support to Sri Lanka. India has assisted with loans amounting to over $3 billion to Sri Lanka. Prime Minister Ranil Wickremesinghe recently also underlined that India was the only nation assisting Sri Lanka with the means to buy fuel. Apart from this, India has also been assisting Sri Lanka with food and medical supplies. Additionally, the QUAD (India, Japan, Australia and US) have decided to support the country in this crisis which is a move not rejoiced by China as Xi Jingping very obviously isn’t very much in favour of the “Asian NATO”.
Here, it is important to review how China’s angle is pertinent behind India’s motivations to assist Sri Lanka. Sri Lanka, although might not be the most important country for India when it comes to factors like trade, nevertheless, it is strategically a major nation and holds great importance from the geopolitical point of view, especially in regards to the growing influence China has in the country.
China is one of the biggest sources of FDI for Sri Lanka. It is also said that China has been executing what is called debt trap diplomacy in the country which simply means lending in such amounts and on such terms that the country is bound to default which leads to a country’s loss of sovereignty and hence far greater influence of the lender country domestically. One such example was the case of the Hambantota port. What basically happened was that Sri Lanka was unable to pay the loan it had taken from China (a 99-year lease) to build the port in the first place. The port is built on one of the busiest marine routes which is of a huge benefit to China. Hence, over the years, China has been increasing its control in the region and the possibility of it growing as a result of the crisis is for very intuitive reasons extremely dangerous for India. Hence, India finds it in its own interest as well to help the country retain its autonomy. Needless to say, helping in such difficult times is bound to deepen the relations between the two countries and in one way or the other will benefit India in the long term.
