India Provides Assistance Worth 3.9 Billion Dollars to Sri Lanka to Overcome Economic Crisis

In February 2022, India signed an agreement for the supply of petroleum products worth USD 500 million from the Indian Oil Company via a credit line to assist Sri Lanka in overcoming its fuel shortage. In April 2022, this was increased by USD 200 million in petroleum products.

For the import of essential commodities, India's EXIM bank and the State Bank of India extended export credit facilities worth USD 1,500 million to Sri Lanka.

India also reached a USD 400 million agreement with Sri Lanka to assist in the preservation of the country's foreign reserves. Sri Lanka has been granted a USD 1 billion credit line for essential goods, a USD 500 million credit line for fuel, and a USD 55 million credit line for fertilizer.

India has been donating to Sri Lanka as a gesture of goodwill and humanitarian assistance. The Indian government will provide the Sri Lankan Transport Department with a fleet of 500 buses. India's High Commissioner to Sri Lanka, Gopal Bagalay, handed over 75 buses to Sri Lanka.

India's assistance to Sri Lanka is consistent with the country's 'Neighborhood First' policy, which prioritizes the security and development of its neighbours. Sri Lankan President Ranil Wickremesinghe recently stated that as the country enters the New Year with baggage from 2022, 2023 will be a critical year for the country to turn around its crisis-stricken economy.

"Wickremesinghe in his New Year message acknowledged that the citizens of the country are looking at the year 2023 after having undergone the bleakest of times, immense hardships, as well as the uncertainties and hopelessness of last year. I understand the great burdens placed on all of us and the setbacks that a majority of us have suffered as a result of the country's abject economic collapse," Wickremesinghe said.

The critical situation of Sri Lanka's currency crisis has resulted in political, economic, and social turmoil. Furthermore, the currency collapse has resulted in a 100% increase in food prices in two years. Despite this, President Wickremesinghe has sought assistance, according to The Island Online.

Agriculture supports approximately 40% of Sri Lankan households. From June to December 2022, two out of every ten households saw their income decrease. According to The Island Online, one out of every two households uses negative coping mechanisms like loans to deal with a lack of food or money to buy it.