How Sri Lanka crisis could affect India?

The intensifying crisis in Sri Lanka can have ripple effects in India too and New Delhi must reach out to help Colombo end this turmoil

With the announcement of resignation by Sri Lankan President Gotabaya Rajapaksa, the continuing political crisis has intensified further in the island nation. New Delhi must reach out to Colombo and help it out of its current crisis.

According to observers, President Rajapaksa took the right step after protesters stormed his official residence and set the prime minister's house on fire. The situation in the country has taken a new turn. India must do whatever it can for a smooth transition of power in Colombo and a speedy redressal of the main cause of the Sri Lankan crisis.

If the current situation in the island nation persists, it could cause a major disruption to the normal functioning of the Colombo Port. This would be detrimental to India's interest. The port handles over 30 per cent of India's container traffic and 60 per cent of its trans-shipment.

India has had a substantial investment in Sri Lanka in the areas including real estate, manufacturing, and petroleum refining. They all might be adversely affected if the crisis continued.

Also, the continuing Sri Lankan crisis could compel many Sri Lankans to leave for India for their survival. Already, scores of them have fled from the island nation to India.

More importantly, the main threat the crisis poses to India comes from the rising influence of Communist China in the island nation. China today is Sri Lanka's top single lender and biggest source of foreign direct investment. Chinese investments in Sri Lanka have failed to generate adequate employment or revenue. This has compelled the Sri Lankan government to default and surrender its strategically-located townships and ports, such as the Hambantota, to China.

In the case of the Port City of Colombo project, Beijing received over 100 hectares in exchange for a $1.4 billion investment. If the economic crisis worsens in Sri Lanka, the country could lose control of its land in other port cities as well.

The observers suggest New Delhi could take appropriate steps aimed at checkmating the increasing Chinese presence in the region. The communist nation's aggressive designs against India have been all too obvious to be mentioned.

The main cause of the crisis in the island nation today is its fast-declining economy. Its inflation stands at more than 21 per cent today. Power cuts and shortage of essential items-like food, fuel, and life-saving medicines-have been acute in the recent months. Sri Lanka owes an external debt of more than $50 billion. Its forex reserves stand at just over $2 billion.

New Delhi could take steps to contribute to a closer integration of the island nation into the world economy. It could expand its bilateral trade with Colombo and ensure that the issues are ironed out soon.

(Jagdish N. Singh is a senior journalist based in New Delhi. He is also Senior Distinguished Fellow at the Gatestone Institute, New York)

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