India's Neighbourhood hits turbulence: Sri Lanka and Afghanistan

India's Neighbourhood hits turbulence: Sri Lanka and Afghanistan

What's going on in the South Asian Neighbourhood? While one of the neighbours faces terrible food crises for his family, another neighbour's house is occupied and ruled by extremist militant groups. So much Chaos in the neighbourhood! These definitely have a direct or indirect effect on the neighbours; let's take a more profound insight into this and find out India's role.


Long queues have been accounted for at food markets costs of staples are moving upwards as Sri Lanka wrestles with an economic crisis that has hit imports and now forced the government to declare an emergency. Sri Lankan President Gotabaya Rajapaksa on 31st August announced an economic emergency to stem the expanding expansion after a precarious fall in the worth of the country’s currency drove a flood in food prices. The President announced the state of emergency under the public security ordinance to avoid hoarding essential food items such as rice and sugar.

“The president has promulgated emergency regulations under the Public Security Ordinance on the supply of essential goods,” Presidential Spokesman Kingsley Ratnayake told reporters as per PTI.

The emergency regulations issued under Public Security Ordinance by President Gotabaya Rajapaksa permit government authorities to hold onto food stocks held by dealers and arrest people who hoard essential food. The officials were ordered to ensure that essential items, including paddy, rice, and sugar, are sold at government-ordered costs or dependent on customs import costs. The president has also appointed a Major-general as commissioner of essential services to overseas food distribution. Costs skyrocket even as the country’s foreign exchange reserves drop amid failed bond auctions.

Ratnayake said that the government-guaranteed prices, reportedly based on import costs at customs, prevent the hiding of stocks. The imposition of a state of emergency came after the country witnessed a precarious expansion in prices of sugar, rice, onions, and potatoes. Long queues outside the stores accompanied the unexpected rise in cost due to the shortage of milk powder, lamp fuel oil, and cooking gas.


The Covid-19 pandemic has caused unprecedented economic disturbance worldwide, and Sri Lanka has been no special case. The Sri Lankan economy — intensely dependent on tourism and tea exportsshrank by a record 3.6% in 2020, while rising foreign exchange rates implied that the nation had fewer and fewer dollars to pay for imports.

Sri Lanka’s foreign reserves fell to $2.8 billion at the end of July 2021, from $7.5 billion in November 2019 when the government took office. An enormous trade deficit has been balancing the country’s financial quandary for years. The nation has been under the worst import controls since the 1970s. In fact, the Sri Lankan Department of Census and Statistics said that a strengthening dollar was the critical driver of the import crisis. According to data from the World Travel and Tourism Council, the commitment of the travel industry to Sri Lanka's GDP was 4.9 per cent in 2020, down from 10.4 % the prior year. Employment in the sector fell by close to 25 %, while foreign visitor numbers had declined by about three-fourths.

Yet, while Covid-19 might have enhanced it, the actual emergency is being credited by specialists to financial strategies and underlying variables. As the nation saw an economic boom in the post-LTTE years, it increasingly turned to foreign borrowings significantly from China through the issue of sovereign bonds. But outside of tourism and certain exports, the nation barely figured out how to ensure it was attracting enough FDIs and foreign funds to meet its rising debt obligations. The national debt has soared from close to $48 billion in 2016 to $86 billion in 2021.

The Reports currently say that the nation doesn't have stores to pay for over 90 days of imports even as it is gazing at paying out cash to reimburse its foreign debts. Sri Lanka reportedly still has to clear foreign debts to the tune of $3.7 billion this year, but as its currency debilitates against the dollar, such repayments will turn out to be more costly. On the demand side, the printing of Rs 800 billion by the Central Bank of Sri Lanka throughout the most recent year and a half to facilitate the economic crisis has increased liquidity in the economy. But this infusion of money, and the subsequent increase in demand without a corresponding increase in supply, has led to a sharp spike in inflation. This, in turn, has devalued the currency, made imports costlier, added to the debt, and put the forex reserves under more pressure.


The Sri Lankan government has initiated unprecedented steps to address the crisis, apart from setting off emergency provisions. In a bid to save on valuable foreign exchange reserves, it has added to an import embargo list with items like vehicle spare parts and dietary staple turmeric, presently untouchable for Sri Lankan purchasers.

News organization Associated Press announced that everything from toothbrush handles to strawberries, vinegar, and wet wipes whose imports have been banned or made subject to special licensing requirements. As economies open up across the world, rising fuel prices, as well, are an additional weight for the nation, and the Sri Lankan energy minister is reported to have urged motorists to save on fuel to protect its foreign reserves for purchases of essential medicines and vaccines.


The bid to eliminate imports is additionally being viewed as one of the elements that impacted the government’s decision in April this year to declare that the nation will turn into the first on the planet to rehearse 100% natural cultivating. While the choice to toss out substance manures will help the nation save money on $400 million in yearly imports, the arrangement has agricultural producers in the nation stressed over yields.

News agency AFP said Sri Lanka’s no-chemical-fertilizers rule “threatens its prized tea industry and has triggered fears of a wider crop disaster that could deal a further blow to the beleaguered economy."

Sri Lanka is a net importer of food, and any means that influence domestic production would additionally fuel the foreign exchange crisis that the nation is presently wrestling with. Food and beverages imports remained at 7.2 % of complete imports in 2018, adding up to $1.6 billion.

Sri Lanka is in the hold of a pandemic-incited financial emergency, with GDP contracting multiple per cent last year, and a new Covid wave has hit the public authority's expectations of a re-visitation of development. The public authority would not end its aggressive push for complete organic farming, guaranteeing that its long-term benefits will compensate for the short-term pain of going organic. It has additionally vowed to supply ranchers with natural manures as another option.


As of June 2019, China’s loans to the Sri Lankan public sector have added up to 15% of the central government’s external debt, making China the largest bilateral creditor to the nation. Unable to service its debt, in 2017, Sri Lanka lost the unviable Hambantota port to China for a 99-year lease, which will definitely give China a strategic advantage over India. Many loans have been haggled among Colombo and Chinese institutions, including a recent syndicated loan for budgetary support of $1.3 billion from China Development Bank and a $1.5 billion currency swap pact with the People’s Bank of China this March.

Mahinda Rajapaksa's avalanche triumph in Sri Lanka's prime ministerial election in August has caused concern in New Delhi about Colombo's further tendency towards Beijing. The Chinese Communist Party embraces Mr Rajapaksa, who is known for his nearby connections to General Secretary Xi Jinping. During his tenure as president, Colombo's debt to Beijing expanded triple. China has a strategic interest in the region and has, therefore, put billions of dollars in Sri Lanka to advance its regional agenda.

However, this economic interaction with China has not been without Consequences for Colombo. Sri Lanka has been forced into a debt trap and has had to sell its strategic assets through debt-equity swaps prompting the production of zones where its own way has been refuted. Additionally, this is probably going to compel Sri Lanka to accord higher priority to diversity and maintain an equilibrium in its foreign policy and global relations.


As Sri Lanka draws nearer to China in its economic ties, concerns about the Indo-Sri Lanka bilateral relationship grow. Our Neighbourhood First policy had promptly expanded economic cooperation with Sri Lanka however its economy is in deep trouble and India's relations with it have gotten ugly this year.

India and Sri Lanka have always had a stable relationship since their independence. The neighbours have aligned over key security and economic objectives. This includes maintaining freedom of navigation in the Indian Ocean region, combating the threat of terrorism, and working together towards maintaining a more prosperous South Asian neighbourhood. Concessional financing of about $2 billion has been provided to Sri Lanka through various Indian government-upheld Lines of Credit across sectors. Yet the relationship is in need of a fresh impetus...

Sri Lanka has drifted towards China for monetary help and perspectives her as a more dependable accomplice in empowering economic development. This has generated concern in New Delhi over the state of the bilateral relationship between the two nations, which sees Beijing’s vicinity to its neighbours as sabotaging India’s influence in the island nation.

Prime Minister Rajapaksa has expressed, however, that relations with India won't endure, since his nation can't stand to turn into an intermediary landmark between the two significant Asian forces in their quest for influence in the Indian Ocean region. Though Colombo has given consolation, New Delhi remains concerned about the growing Chinese foothold immediately to its south. Notwithstanding its monetary difference with China, India tries to gain a powerful situation in Sri Lanka through different improvement projects and awards.

The killing of Indian fishermen by the Sri Lankan Navy, as well as the cancellation of the tripartite partnership with India and Japan for its East Container Terminal Project at the Colombo Port, are lingering issues that have added to these concerns. Moreover, the Sri Lankan government led by the Rajapaksa family are historically known to be closer to China than India and these developments have made India and her allies worried about China’s growing clout in the Indo-Pacific waters.

China, for example, is set to initiate the development of a US $13 billion city on Sri Lanka's seafront near Colombo. Notwithstanding the union of objectives and interests, there is an urgent need for India and Sri Lanka to painstakingly and intentionally revitalize their bilateral relationship.

Last July, the Reserve Bank of India (RBI) had consented a currency-swap agreement with the Central Bank of Sri Lanka (CBSL) under the Saarc Currency Swap Framework 2019-22, for withdrawals of up to $400 million. The CBSL settled the scheduled facility with RBI in February 2021. Despite the fact that the arrangement was legitimate till 13 November 2022, India declined any further renewal of it without an International Monetary Fund program to address Sri Lanka's present macroeconomic imbalances.

Sri Lanka's hug of China generally originates from two factors.

  • Sri Lankans continue to be suspicious about India’s motives vis-a-vis the Tamil cause.

  • India’s sluggish bureaucratic processes that delay approvals prompt doubts of India's commitment to Sri Lanka.

The Indian government took five months to approve a loan moratorium sought by Colombo while Beijing approved the additional US $500 million loans from its development bank in no time makes them a more attractive partner. Owing to Sri Lanka’s strategic location at the intersection of major shipping routes, China has heavily invested in its infrastructure.


Nurturing the Neighbourhood First policy with Sri Lanka will hence be significant for India, albeit with due alert, to preserve its strategic interests in the Indian Ocean region. The Colombo port is crucial for India as it handles 60% of India’s trans-shipment cargo. Regional platforms like the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation and the Indian Ocean Rim Association could be leveraged to foster cooperation in common areas of interest.

In education, healthcare, and tourism, India is a far more grounded accomplice than China. Under the Indian Technical and Economic Cooperation Scheme and the Colombo Plan, Sri Lankan nationals can benefit from 400 slots for short- and medium-term training courses in an assortment of technical and professional disciplines. Since 2017, students from the island nation can also appear for the National Eligibility cum Entrance Test (NEET) and IIT JEE (Advanced) exams. India can expand on these instructive trades by building up an Indian Institute of Technology (IIT), English language training centres. Additionally, India and Sri Lanka anticipate broad participation in pharmaceutical manufacturing.

In the technology sector, India could create job opportunities by expanding the presence of its information technology companies in Sri Lanka. Aside from a special economic zone (SEZ) for pharmaceuticals, the two sides could also look into similar provisions for information technology and education, among other sectors.

As Sri Lanka embarks on the arduous project of drafting a constitution, India can lend its own experience in managing minority rights and diverse populations.

The island nation’s greatest number of tourists come from India, but the scope of religious tourism is yet to be explored. Through Modi’s USD 15 million grant for the promotion of Buddhist ties with Sri Lanka declared last year, the two countries can look forward to making a Buddhism knowledge and tourism corridor. Expanding the Indian Premier League (IPL) to Sri Lanka in association with Lanka Premier League (LPL) will urge people-to-people contact and lift the travel sector.

Cooperation in these sectors does not lessen worries on issues where the two neighbours probably won't align: Tamil minority rights and China’s significance in Sri Lanka’s economy. However, history, cultural closeness and the constraints of geography poise India and Sri Lanka as natural and long-lasting accomplices to tide over these issues and explore synergies in new avenues to further their respective financial and developmental aspirations together.

The question remains, notwithstanding, would India be able to become Sri Lanka’s significant accomplice or will Colombo keep on floating towards Beijing?


With Taliban making into headlines every day; showing its brutality over the afghans, establishing a new Government and forming a new all-male cabinet, trying to convince people that the new Taliban is better than the previous, exercising the Taliban version of Sharia law, let’s take a deeper insight over the impact on India as Taliban take control of Afghanistan.


Timeline Infographic

In the Pashto language, 'Taliban' means student. Initially, the leader of this Taliban group was Mullah Omar. By September 1996, the Taliban captured such a significant portion of Afghanistan, and the other groups were left in small fractions. The Taliban established the Islamic Emirate of Afghanistan. In the beginning, ordinary people were supportive of the Taliban because they could finally expect some stability in the country, as the fsight going on for so many years was at an end. But with time, the Pashtun ideology of the Taliban came to the forefront.

In February 2020, while Donald Trump started peace talks with the Taliban, they said that if the Taliban cuts off its relations with terrorist groups like Al Qaeda, America will withdraw its forces and leave Afghanistan. Joe Biden, the President of America, continued with Donald Trump's policy and decided to withdraw the American troops from Afghanistan. They'd get their force out of place, ace.

It is said that America created the Taliban. If we look at it technically, forceout, this isn't true. But practically, there is some weightage to this argument because America tried its best to ruin democracy in Afghanistan by supplying weapons to the Mujahideen. With that, an environment was created that enabled the birth of the Taliban.

Many people say that if the purpose of America for staying in Afghanistan was revenge, then even after Osama bin Laden was killed in 2011, why did America let its troops be in Afghanistan then? Why didn't they withdraw their army then? On the other hand, if America's purpose of staying in Afghanistan was to make Afghanistan a democratic country and end the Taliban, that purpose hasn't been accomplished even a bit. America has completely failed in this aspect.


  • The US has been exaggerating the size of the Afghan army. They say that it is nearly 3 Lakhs, but it is much less than that.

  • The Afghan army wasn't built for long-term sustainability. The Afghan military was moulded to match the way the Americans operated. But when the US pulled support, intelligence, and contractors servicing Afghanistan's planes and helicopters, the Afghan army couldn't operate anymore.

  • The Doha agreement signed between the US and Taliban in Feb 2020 gave the Taliban one year's reprieve from the American airstrikes.

  • When U.S. forces were operating in Afghanistan, the Afghan forces were trying to maximize their presence by spreading out throughout the country and maintaining more than 200 bases that could be resupplied only by air.

  • The government paid little attention to the needs of the forces. By the time the Taliban attacked the urban areas, the morale of the forces was already down. And it became a piece of cake for the Taliban to take control over Afghanistan.


India refuses to speak to the Taliban publicly, even if it might communicate with them behind closed doors. The Indian government argues that the Taliban is a terrorist organization and doesn't communicate with terrorist outfits. But now that the Taliban is back in power in Afghanistan. What now?

India has three major interests in Afghanistan.

  1. Securing Indians.
    India's first interest is the safety of its own citizens - Indian diplomats, personnel and citizens, and religious minorities in Afghanistan like Hindus and Sikhs. Over the past year, since it became clear that the U.S. troops would leave the country, India has pared down its diplomatic presence there.

    India had completed its evacuations from Afghanistan before the August 31st deadline. It was possible in coordination with countries like the US, Tajikistan, Uzbekistan, Iran, and Oman. More than 500 people were airlifted in total, out of which 200 specifically afghan minorities like Hindus and Sikhs, which remains the top priority.

  2. Strategic Concerns.
    With the Taliban in power in much of Afghanistan, India has other concerns as well. One worry is that terrorist groups that have been keeping bases and training grounds along with the southern provinces that border Pakistan could now have more ungoverned spaces to carry out attacks against India. The Taliban’s control will also mean a bigger hand for the Pakistani military and intelligence agencies to influence outcomes for the country, which will mandate a much smaller role for Indian development and infrastructure work that has won its goodwill over the past 20 years.

    The Indian-built projects, including the $300 million Salma Dam and the $135 million Zaranj-Delaram Highway, are now under the Taliban's control. Not only infrastructure, but it also includes military equipment. An Air Force Mi-35 Hind attack helicopter that India financed for Afghanistan and handed them to the Afghanistan government in December 2015 as part of PM Modi's visit to Kabul. But the Taliban had captured the Kunduz airport and with it the Mi-25 helicopters. Many of the helicopters cannot be used by the Taliban due to operational reasons. But it does show how quickly India's investments have evaporated and turned into a sunk cost.

    One of India's most strategic assets is the Chabahar port it built in Iran, for which India spent crores of rupees. This port was meant to increase trade between India and Afghanistan without the help of Pakistan. But with the Taliban in control, the trade will only take place through Karachi and Gwadar ports.

  3. The threat of radicalization
    The third interest for India is the threat of terrorism. There is the threat of growing radicalization and space for pan-Islamic terror groups in India’s neighbourhood. Taliban may provide direct or indirect support to anti-India terror groups.

India has several options to defend these three strategic interests.

  • Firstly, by recognizing only a democratically-elected government in Kabul and providing political and humanitarian support while that lasts.

  • Secondly, India could also consider a proactive route by aiding the Afghan military with supplies via the Iranian route. But this looks unlikely because of two reasons~ India's support might not be enough to help Afghan forces defeat the Taliban. Then the Taliban has warned India against any military intervention. The spokesperson of the Taliban has expressed that its precondition for talks is for India to remain impartial between the Taliban and Afghanistan government. Another proactive step India can take is to offer sanctuary to senior Afghanistan leaders as it did for Tibet nearly 50 years ago.

  • The third and final option for India is to get in touch with the Taliban. If India wants to control Afghanistan's strategic direction, talking with the Taliban is inevitable.

Avinash Paliwal, a Senior Lecturer at the School of Oriental and African Studies in London, says that this decision to talk or not to talk is not India's alone. Taliban also has an equally difficult choice. Talking to China, Russia, Iran, UK, and the US isn't tricky for the Taliban, whereas India is tricky because of their's key supporter ~Pakistan. Pakistan would like to control the Taliban's relationship with India to any extent possible. If a senior Taliban leader is seen with an Indian leader in public, the Taliban might face grave consequences. Pakistan will either reduce financial and armed support or target those Taliban leaders who are engaging with India. In fact, some old Taliban leaders have maintained contact with India. But the current Taliban leaders cannot do so openly. This partly explains why India wouldn't officially confirm its backchannel talks with the Taliban. Even the backchannel talks are facing challenges.

The second challenge to backchannel communication is that the Taliban promises not to allow the Islamic State and Al-Qaeda to target other countries from Afghan soil. But it remains silent on its relationship with the Lashkar-e-Taiba and the Jaish-e-Mohammad. The Taliban's indications to India are that they will not become embroiled in Kashmir, but if they're supporting such terrorist groups, then this statement is meaningless.

Moreover, the reality is that India has always been a minor player in Afghanistan's situation. The way the Taliban overran the government forces, India's support won't have mattered much. India's challenging economic situation also meant that India's foreign aid to Afghanistan decreased in the past 5-6 years. India should consider its investments in Afghanistan as sunk costs, i.e., investments that it should forget about more important than the investments in its security situation. After the recent tensions with China at the Line of Actual Control, India is threatened by a two-front war. The Taliban group has been emerging as another significant concern considering that both Pakistan and China support the Taliban publicly. Consequently, it has become challenging for India to protect its strategic interests. But the immediate cause of concern for the world should be what awaits the citizens of Afghanistan under the Taliban regime.


The only sufferer in this turbulence is the innocent citizens of the country. The United States Needs to Revisit Newton's Third Law and stop continually ignore it while intervening in nations and regions all over the globe. Hoping against hope, it is recommended that the US administration should learn the lesson of Newton's Third Law and be mindful that "Reputations rise and fall almost as regularly as the tides". The open-ended wars on terrorism are always futile, and the one common people who suffer in this chaos are the innocent civilians of the nation. With the return of the Taliban regime, many challenges have popped up for India, but the primary cause of concern for the world should be the Afghans.

At the same time, the island nation in the Indian ocean is going through a terrible crisis, and China's proximity to Sri Lanka has undermined India's influence in Sri Lanka. The concerns about the Indo-Sri Lanka bilateral relationship grow as the distance between China-Colombo decreases. India's Neighbourhood First policy had led to increased economic cooperation with Sri Lanka. Still, its economy is in deep trouble, and India's relations with it have taken a turn for the worse this year. Despite the convergence of objectives and interests, there is an urgent need for India and Sri Lanka to carefully and deliberately reinvigorate their bilateral relationship.




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