The Sri Lankan Crisis is the product of about 12 to 14 years of investments and expenditure based on external finance. The debt repayment program of any small nation will come from the inability to pay debt in foreign exchange. The earnings drop from tourism has the major impact and this has to be dealt with optimism, humanism, and a fair exchange of ideas to address the situation on a day-to-day basis. India needs to extend all possible cooperation – economic, political, and social, as it would greatly benefit from a healthy prosperous neighbor for all time to come. The Indian position needs to be consolidated from neighborliness as well as a higher degree of self-interest. Previous conflicts bring into mind certain barriers, hesitation, and an inability to act under difficult circumstances due to narrow domestic political interests.
A broad-minded approach requires a complete and holistic assessment with attention to details. It requires to begin in a series of small economic and social steps, and political gains in the national or international arena will come when the benefits are assimilated directly by the Indian sectors in both social and economic segments. Political gains are always in the medium and long term when sensible steps are taken. Reason we should prevail over emotions and the action should be bound both by expediency or quickness in dealing with the specific requirements of specific segments. However, broadly it has to come from economic sector, that India and Indian government will have to provide the resources on a regular as well as an exceptional basis. Here, the long term also needs to come into play. Economically, the first big requirement is to be done by the Ministry of Finance, NITI Aayog, and the Department of Economic Affairs, as to how India can benefit from an Indian rupee – Sri Lankan rupee convertibility arrangements as well as a swap. It is not impossible for Sri Lanka to renegotiate the international currency arrangements it has. It has initiated the same.
Sri Lanka can also invoke assistance from South Asian GCC nations in the current account services segments. This will enable it to negotiate medium term notes for longer periods by Escrow Mechanisms for inward remittances and services incomes.
Sri Lanka will be able to launch corrective actions for the medium-term once the near-term is resolved.
