Sri Lanka neck deep in economic woes; Lankans seek refuge in India

Sri Lankan citizens are fleeing the country to seek refuge in India as food turns scarce

Things are getting absolutely crazy in Sri Lanka. The economic crisis the island nation has been pushed into has turned worse, with essential goods unavailable to pick. Shortage of food and other items have been in short supply, and the frequency of electricity blackouts have increased.

With the situation turning bleak, more Sri Lankans are starting to seek refuge in India. This in fact is turning the scene around with India on the verge of a refugee problem. The Sri Lankan financial woes may be seen as a fall out of the critical shortfall of foreign currency. This situation, in turn, had forced traders to stay away from financing imports simply due to the unavailability of cash resources.

Sri Lanka financial worries get worse

The after effects of the Covid-19 pandemic is, in fact, dealing a body blow on the country’s economic horizon. The nation had seen its tourism sector collapse when the pandemic had raged.  With tourism being Sri Lanka’s prime foreign currency earner, the collapse of the sector was much more than the country could handle. Added to this, the country had been recklessly borrowing from China, and that pushed debts up into a burgeoning monster.

The country’s tourism sector was already left crippled by the 2019 Easter bombings across the capital Colombo. And at that stage, the pandemic had spread leading to the demolition of the sector and with it all forex earnings avenues were closed.

With food and fuel turning out to be scarce, the Sri Lankan public were left with no option to forcefully take them from the little reserves. Petroleum prices had zoomed as the country faced a foreign exchange crisis, leading to inflation and shortage of essential supplies. This triggered sporadic protests among motorists who lined up for fuel and the government had to call in troops to guard petrol stations.  The protests saw the death of three elderly people. Further, the government has also cancelled all exams indefinitely due to an acute shortage of papers.

A refugee issue in the making

With Sri Lankans travelling all the way to India to seek refuge, the Indian Coast Guard has busy days ahead. On Tuesday, as many as six Sri Lankan nationals including three children from provinces of Jaffna and Kokupadaiyan in the northern Sri Lanka, were arrested by the Indian Coast Guard. They were detained after being rescued from an island near Rameshwaram in Tamil Nadu.

What actually went wrong in Sri Lanka is clear. With foreign currency needed to foot import bills disappearing, food shortage turned a major crisis. The island nation had been hugely dependent on imports for its essential items. Even daily essentials such as sugar, pulses, cereals and pharmaceuticals are imported.

The crisis saw a manifold increase with China also declining Sri Lanka’s request to reschedule its huge Chinese debt burden post the pandemic. What lies in store in the near term could be a bleak future. Indian assistance on the monetary front had already been announced, with New Delhi announced a US $ 1 billion line of credit towards procurement of food, medicines and other essential items. This was made known to the Sri Lankan Finance Minister Basil Rajapaksha’s when he came calling on March 17. Also, a US$ 500-million line of credit was announced last month by India. 

With the crisis blowing over, Sri Lankan President Gotabaya Rajapaksa is looking to seek International Monetary Fund assistance to tide over the situation.