Former Sri Lankan President Ranil Wickremesinghe has highlighted the critical role of India’s rapid economic growth and technological advancements in steering Sri Lanka away from the debt-driven growth model that has plagued the island nation for two decades. Speaking at the 7th Atal Bihari Vajpayee Memorial Lecture in New Delhi, Wickremesinghe emphasized the potential of synergizing Sri Lanka’s economic recovery with India’s momentum to create larger markets and ensure sustainable development.
Moving Beyond Debt-Fuelled Growth
Wickremesinghe pointed out that Sri Lanka’s heavy reliance on excessive debt for funding infrastructure projects between 2000 and 2021 led to economic instability, culminating in the 2022 bankruptcy declaration. He lauded the 2024 India-Sri Lanka joint statement, which focuses on shifting Sri Lanka towards a sustainable economic model by leveraging India’s economic success.
India’s projected ascent as the world’s third-largest economy by 2040, with Tamil Nadu alone expected to surpass a GDP of $1 trillion, presents a regional powerhouse to which Sri Lanka must align itself, Wickremesinghe argued.
Strengthening Bilateral Ties
Wickremesinghe recalled the evolution of India-Sri Lanka economic relations, beginning with a Free Trade Agreement (FTA) signed in 1998 and operationalized in 2000. Despite decades of negotiations, a Comprehensive Economic Partnership Agreement (CEPA) has yet to materialize. He attributed the delay to political changes and domestic opposition in Sri Lanka, including trade union protests and resistance to initiatives like the Trincomalee oil tank farm project.
However, Wickremesinghe acknowledged a growing political consensus in Sri Lanka on fostering deeper economic ties with India, accelerated by the country’s economic crisis and India’s $4 billion emergency aid in 2022.
Lessons from the Past
Reflecting on earlier India-Sri Lanka cooperation, Wickremesinghe highlighted the role of the late Indian Prime Minister Atal Bihari Vajpayee in supporting Sri Lanka’s ceasefire agreement with the LTTE in 2002. This collaboration laid the foundation for discussions on economic integration, though leadership changes disrupted progress on CEPA.
Future Outlook
With a Memorandum of Understanding signed earlier this month, Sri Lanka seeks to deepen partnerships with India while managing public skepticism over foreign investments. Wickremesinghe stressed that expanding bilateral trade and technological collaboration is essential for Sri Lanka’s economic stability and regional integration.
The narrative underscores India’s pivotal role in shaping Sri Lanka’s recovery and the ongoing efforts to formalize an economic partnership that benefits both nations.
