FM Nirmala Sitharaman pitches for economic integration with Sri Lanka

Finance Minister Nirmala Sitharaman on Thursday urged industry leaders for economic integration with Sri Lanka to mitigate the risk of the foreign exchange-driven crisis.

Sitharaman assured India will continue to work closely with the island nation on debt restructuring discussions and extend support for its economic recovery.

“The task is cut out for industry leaders and it is for us to make sure that both countries will have economic integration to avoid supply chain disruptions so that there will be no foreign exchange-driven crisis impact on the country and also reduce dependency on any one economy,” the finance minister said on Thursday, at the India-Sri Lanka business summit in Colombo.

“Yet, there could be some arrangements (bilateral)  between the two countries for issues such as logistical cost and essential goods etc which benefits both the nations,”  she said.

Sitharaman added that all over the world there is a clear interest in bilateral agreements/arrangements given the global situation.

The countries would like to have arrangements in regional currencies so that there would not be shocks because of the currencies volatility; there will not be forex driven crises where two countries understand each other's strength. Bilateral arrangements ensure that food security is in place and energy should not go on a roller coaster ride, she explained.

Highlighting the need of robust digital infrastructure, the minister said that the Indian government would be able to save Rs 2 trillion through 45 central schemes as technology has helped in weeding out middlemen and corruption.

Further, she spoke on how Sri Lanka can utilise its solar and wind energy powers as there is huge rush for investments.

She said that at least 5-6 years ago, the per unit cost of solar energy in India would be somewhere between Rs 14-15.

With acute competition and favorable government policy, we saw healthy competition and India is today able to produce per unit of solar power costing Rs 2.45, she added.

Addressing an event to celebrate the 200 years of arrival of Indian-origin Tamils in Sri Lanka, the finance minister said some of the connectivity projects that have made progress include the commencement of passenger ferry services, negotiations on an economic and technological cooperation agreement, and UPI-based digital payments, which will be launched soon.

“We are working closely on other identified areas as well. As we enhance connectivity between the two countries, we build enduring bridges of experience and opportunities for our people…the Indian- origin Tamils will continue to play an important role in shaping a shared future for our two countries,” Sitharaman said.

India, the finance minister said, had rendered an unprecedented financial assistance of over $4 billion for the people of Sri Lanka and was the first bilateral creditor to convey financing assurance to the International Monetary Fund.

“(It) paved the way for others to provide similar assurances that formalised the IMF programme for Sri Lanka,” Sitharaman said.

Sitharaman highlighted that 3,700 houses have already been handed over to the plantation workers, under the India-backed housing project scheme, and the foundation stone for 10,000 houses under phase four of the programme had also been laid.

Sitharaman also announced that India would soon send teacher trainers to work with local teachers to keep them abreast of the latest developments and also enhance the teaching skills in meeting the growing needs and aspirations of students from Malayaha Tamil community.

“Our leaders have released a vision document for economic partnership in July this year, outlining specific areas of cooperation for sustainable economic development and prosperity for our people. Our government will work closely with the Sri Lankan government in realising the vision provided by our leadership,” she added.