SRI LANKA ECONOMIC CRISIS – IMPACT ON INDIA

Name of the Topic: Sri Lanka Economic Crisis– Impact on India

Year of the Session: 2022-2023

Date and time of the session: 15th March 2023

Mode of Session: Offline

Name of the Teacher: Ms. Vishakha Pandey Head of the department- Ms. Nilofer Sarang

Faculty of the department- Ms. Vishakha Pandey

Objectives of the Discussion

The economic crisis in Sri Lanka is likely to have some impact on India due to the close
economic ties between the two [Link] following were the objectives of today’s
discussion.

1) Regional & Political Stability : Sri Lanka’s Economic instability could affect the stability
of the south asian region. This could have significant impact on India as it is a major
regional power. Sri Lanka's political instability and frequent changes in government have
had implications for India's regional stability. The lack of policy continuity has made it
difficult for India to engage with Sri Lanka on issues of mutual interest, such as trade and
security. In addition, the rise of nationalist and populist politics in Sri Lanka has raised
concerns in India about the potential for increased tensions and conflict in the region.
2) Chinese Debt: China has been a significant Lender to Sri Lanka, providing billions of
dollars in loans for infrastructure projects. As a result, Sri Lanka has become heavily
indebted to china. This has led to various concerns about Sri Lanka’s ability to repay its
debt and the potential for China to excert greater influence over the [Link] Chinese
debt in Sri-Lanka is a complex issue that has a potential to impact India’s Stratergic
interests in the region.
3) Investments & Economic Impact: India has made significant investments in Sri-Lanka,
particularly in infrastructure and real estate [Link] Lanka's high debt burden has led to
a decline in investor confidence and a depreciation of the Sri Lankan rupee. This has had
negative implications for Indian businesses operating in Sri Lanka and has affected
Indian exports to Sri Lanka. The economic crisis in Sri Lanka has also led to a decline in
 bilateral trade and investment between India and Sri Lanka, which has had a negative
impact on India's economy.
4) Trade : Sri Lanka is a significant trading partner for India, especially in areas such as tea,
apparel, and precious stones. Sri Lanka is an important trade partner for India. If the
economic crisis leads to a decline in Sri Lanka's imports from India, it could hurt Indian
exporters. On the other hand, if Sri Lanka is forced to reduce its exports to India, it could
lead to a rise in prices of goods imported by India. Also, India relies on the port of
Colombo for global trade i.e around 60%. Sri Lanka is one of the largest trading partner.
5) Tourism: India ia a significant source of tourism for Sri Lanka. If the economic crisis
effects Sri Lanka’s tourism industry it would lead to decrease in Indian tourists travelling
to Sri Lanka.
6) Refugee influx in India: The economic crisis could result in many Sri Lankan citizens
losing their homes and livelihoods, leading to displacement within the country. This
could lead to an increase in the number of internally displaced persons (IDPs) in Sri
Lanka. The government would need to provide adequate support to these IDPs and ensure
that their basic needs are [Link] the worst-case scenario, the economic crisis in Sri Lanka
could lead to a large-scale refugee crisis, with thousands of Sri Lankan citizens fleeing
the country. This could have wider regional implications and could potentially destabilize
the region. Countries such as India would need to be prepared to handle such an influx of
refugees.

Outcome of the Discussion:

The Discussion was concluded as:

1) The economic crisis in Sri Lanka has the potential to impact India in several ways,
including trade, investment, regional stability, and tourism. If the crisis leads to a decline
in demand for Indian exports to Sri Lanka or a reduction in foreign investment from
India, it could have negative consequences for the Indian economy.
2) However, India could also benefit from any opportunities that arise from the crisis, such
as filling the void left by a drop in tourism. In addition, there is the potential for a refugee
crisis to emerge, which could pose challenges to India and other neighboring countries.
3) While the Economic crisis in Sri-Lanka may have some indirect impact on India’s
Economy, the overall effects are likely to be [Link], India Should Closely
monitor the situation in Sri lanka and take measures to mitigate any Potential risks to its
economy and strategic interests in the region.
4) The impact of Sri Lanka’s Economic crisis on India’s import-export actor is likely to be
mixed and depended on the specific industries and products [Link], any
regional instability arising from the economic crisis in Sri Lanka could have wider
implications for the entire South Asian region, including India. Therefore, it is essential
for India to closely monitor the situation in Sri Lanka and take proactive steps to address
 any potential [Link] there is a possibility of a refugee crisis arising from the
economic crisis in Sri Lanka, it is crucial for the Sri Lankan government to take measures
to prevent this from happening and provide support to displaced citizens.
5) Overall, the impact of the economic crisis in Sri Lanka on India remains uncertain, but it
is vital for both countries to work together to minimize any negative impacts and promote
regional stability and economic growth.

No. of Participants Present : 7

2223-BMS12-105, 2223-BMS12-106, 2223-BMS12-107, 2223-BMS12-108, 2223-BMS12-111,

No. Of Participation Absent: 1

2223-BMS12-110