India should use the ‘window of opportunity’ to finalise a ‘stronger’ FTA with Sri Lanka, says economist

Economist Razeen Sally, who served as an advisor to Sri Lankas former President and Prime Minister Ranil Wickremesinghe.
| Picture Credit score: RAGHUNATHAN S.R.

With Prime Minister Narendra Modi planning to go to Sri Lanka shortly, economist-writer Razeen Sally, who served as an adviser to Ranil Wickremesinghe throughout 2015-17 when the latter was Prime Minister of Sri Lanka, has referred to as upon India to use the “window of alternative obtainable now” to finalise a “stronger” bilateral free commerce settlement (FTA) with the neighbour.

In an interview with The Hindu on Tuesday night, the 60-year-old academician, who had stints at the London College of Economics (LSE) and Nationwide College of Singapore (NUS), stated the current Janatha Vimukthi Peramuna-led Nationwide Individuals’s Energy (NPP) authorities “is sympathetic to India and far much less defensive vis-à-vis India than [those of the governments led by] the Rajapaksas.” In addition to, there “is a change in the local weather of opinion which is beneficial to India”, as a end result of what the nation did throughout the 2022 financial disaster in Sri Lanka.

Nearer ties

The proposed FTA may “cowl providers; permit freer motion of some courses of employees and overcome protectionist blockages in each international locations — that are, I feel, extra on the Sri Lankan aspect,” the economist stated, including that nearer relationship between the two neighbours “should not upset different powers — China and the U.S. — which have stakes in Sri Lanka.”

Emphasising that “it’s not the job” of India to present {dollars} of assist to Sri Lanka “in perpetuity,” Mr. Sally, nonetheless, renewed that the name for financial integration of the island-nation with southern States of India, an argument, which Mr. Sally himself admitted, was being made for over a era.

In 2003, Mr. Wickremesinghe, then Prime Minister, whereas delivering a lecture in Chennai, floated the concept of constructing a bridge linking Rameswaram in Tamil Nadu with Talaimannar in the Northern Province of Sri Lanka as half of his bigger imaginative and prescient of regional financial integration, encompassing his nation and the southern area of India.

Large potential

Acknowledging that “the political roadblock amongst sure sections of Sri Lanka is Tamil Nadu,” Mr. Sally emphasised that “geography basically tells you what the benefits are. There exists large potential for nearer hyperlinks between Sri Lanka and particular person States — authorities to authorities, enterprise to enterprise, and enterprise to authorities.” He added: “We’re speaking of Tamil Nadu and three or 4 different States which might be economically doing very nicely.”

To a query whether or not the present authorities was receptive to the concept of Sri Lanka’s integration with the provide chain of south India, Mr. Sally replied that “it’s up to teams outdoors the authorities — enterprise and civil society — to make the case and discover folks in the authorities to champion the case.

On the political and financial scenario in Sri Lanka, the economist, with each British and Sri Lankan roots, stated the ruling NPP-JVP formation “has turn into the principal drive” in the nation with no efficient Opposition in the political panorama. Thus far, there had been no corruption fees towards it.

Financial scenario

On the financial entrance, the stabilisation package deal, labored out by the earlier Wickremesinghe authorities and the Central Financial institution of Sri Lanka, in line with the IMF [International Monetary Fund] programme, had gotten Sri Lanka out of an financial disaster. “However. it has not put Sri Lanka on the path of restoration.” The present authorities had to “transcend the IMF reforms”, and the nation should develop sooner to pay its money owed, which might turn into due in 2027, aside from producing further income for different necessities.

Nonetheless, if Sri Lanka caught to solely the IMF reforms, the nation would possibly “drift alongside at a pretty low stage of financial progress, sowing the seeds for the subsequent financial disaster.”