The effect is quite evident.

The government has had to cancel school examinations scheduled over the past weekend due to an acute shortage of printing paper. Its only fuel refinery ran out of crude oil in November 2021. Nearly 1,000 bakeries across the country shut down due to the unavailability of cooking gas—some shifted to kerosene, Reuters reported.

Consumer prices have risen by 15% in February, the fastest among 13 Asian economies.

India’s ties with Sri Lanka

India has, time and again, provided assistance on several fronts to its neighbour to tide over its economic crisis.

Since January, it has helped with $2.4 billion, including a $400-million currency swap and a $500-million loan deferment for two months. On March 17, Sri Lanka signed a $1-billion credit line with India for the procurement of food, medicines, and other essential items.

Historically, both countries have maintained a cordial and relatively stable relationship since their independence. In the post-Liberation Tigers of Tamil Eelam era, India and Sri Lanka have aligned over key security and economic objectives, including freedom of navigation in the Indian Ocean region and combating the threat of terrorism.

However, Sri Lanka has also increasingly sided with China over the past few years, which is a threat to India.

“Sri Lanka’s embrace of China largely stems from two factors. First, Sri Lankans continue to be suspicious about India’s motives vis-a-vis the Tamil cause. Second, India’s slow bureaucratic processes that delay approvals incite suspicions of India’s commitment to Sri Lanka,” a global think tank Observer Research Foundation said in a report.

Sri Lanka has had a chronic ethnic Tamil dissidence problem, which in the past has received moral and material support from sections of the Indian population. The southern Indian state of Tamil Nadu, only a few miles across the sea from northern Sri Lanka, has strong ethnic, linguistic, and cultural connections to these disgruntled segments in the island nation.

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