Sri Lanka is battling an unprecedented economic crisis as it goes through a high level of inflation, pushing its citizens to the brink of poverty. Many are already fleeing their country and showing up on the shores of the Indian State of Tamil Nadu. The situation is so dire that the economic meltdown has significantly pushed the price of essential food items to sky-high prices. For example, the cost of 1 kg of rice has touched 500 Sri Lankan Rupees, and the price of 200-400 grams of milk powder has touched 700 rupees.
What has led Sri Lanka to this?
The Sri Lankan economy is heavily reliant on tourism and agriculture. Still, due to the raging pandemic and supply shortages, the country’s people could not keep up with rising inflation. Due to rising inflation, the country’s foreign exchange has depleted significantly, not just inflation. The country owes a large amount of debt to foreign governments like China. The Central Bank of Sri Lanka saw its foreign exchange reserves see a steep decline from almost $4 Billion to nearly $2.3 billion within a few months.
The country imports most of its essential, necessary items like Petroleum, sugar, paper, medicines, and some heavy equipment from around the World. According to the Observatory of Economic Complexity (OEC), an online data visualization and distribution platform mainly focused on the geography and economics of a country, it suggests that it imports most of its items from India and China. India exports almost $4.2 Billion while China nearly $4 Billion worth of goods.
How are citizens suffering?
Despite the rising prices of essential commodities, citizens have been suffering from the shortage of cooking gas, leading to the closure of numerous businesses. The cooking gas and the Sri Lankan refineries have also run out of crude oil, which has led to a considerable shortage. The government had to deploy Army at a few of the state-owned Gas stations as they could help in a peaceful distribution of the fuel amongst the citizens. This scarcity of gas has left at least three senior citizens dead of exhaustion as they had to stand in long queues for hours.
The government has decided to postpone the students’ exams indefinitely due to the shortage of papers in the country.
How is India stepping up to help its neighbour?
The Indian government has reacted quickly to this situation, starting with a $1 billion credit line given to the Sri Lankans. Also, there has been a sudden influx of Sri Lankan refugees in Tamil Nadu. On 22nd March, the first batch of refugees arrived from the Island nation with 16 people, including three children. According to the officials present on the ground, they expect at least more than 2000 refugees to reach the country. The Coast guard camp rescued one batch of refugees. Many say they have paid almost 50,000 thousand to get on the boat to India. Some Tamil organizations have already started raising their voices, asking the Indian government to grant refugee status to these individuals.