Indian Subcontinent Watch Thread

[caltrek]

India Unveils Higher Spending but No Direct Measures for the Poor
by Megha Bahree
February 1, 2022

https://www.aljazeera.com/economy/2022/ ... r-the-poor

Introduction:

(Al Jazeera) India has promised to spend more in the upcoming financial year to keep the engines of its economy running but with no direct handouts for the millions of poor.

On Tuesday, Finance Minister Nirmala Sitharaman outlined plans to spend 39.45 trillion rupees ($529.7bn) for the coming fiscal year that starts on April 1, up from 37.7 trillion rupees ($515.5bn) a year ago, where she promised to step up investments in building highways and railways but did not offer any direct giveaways for the poor or the middle class to spur consumption.

“It’s an investment-oriented budget but there’s not much on consumption,” Madan Sabnavis, chief economist at Bank of Baroda, told Al Jazeera. “There’s an investment approach to growth … and there’s nothing for households, despite two successive years of high inflation.”

And while the big-ticket investments in infrastructure, like roads and ports, will no doubt help boost those sectors, and ultimately the economy, there needs to be an increase in private sector investment for long term growth “but that happens only when consumption increases,” warns Sabnavis.

“What the economy needs right now is demand boost,” says Devendra Pant, chief economist at India Ratings & Research, a Fitch unit. “Has the budget been able to give that kind of boost to demand, especially for the rural areas that are struggling with weak demand …? Chances are very less.”

Here is The National's take on this same topic: https://www.thenationalnews.com/busines ... inflation/. It includes a lot of repetition of what is in the Al Jazeera article, but also includes additional comments.

[caltrek]

Modi’s India Has Now Entered Genocidalism, the Most Advanced Stage of Nationalism
by Arjun Appadurai
January 30, 2022

https://janataweekly.org/modis-india-ha ... tionalism/

Introduction:

(Janata Weekly) The recent calls by members of the BJP-RSS combine, in Haridwar and in Delhi, for the large-scale elimination of Muslims, indicate that the dog whistle of Islamophobia has now become a foghorn. The silence of Narendra Modi and Amit Shah about these unprecedented calls for full-scale armed war against Muslims can be read in one of two ways: as signs of their sense of impunity and confidence, or as signs of their sense of precarity and insecurity. I make a case here for the latter argument.

My argument is not the familiar instrumentalist argument about the Uttar Pradesh elections and the BJP’s concern about being humiliated in its sacred heartland. I believe we are witnessing what I call genocidalism, which stems from a deeper logic which afflicts all xenophobic nationalisms. This logic is connected to the relationship between nationalism and violence, and to what Marx and many Marxists identify as “the treadmill effect”.

I have argued elsewhere that the relationship between nationalism and violence is both intimate and two-way. We are accustomed to thinking that nationalism can lead people to kill and die in the name of the nation. When nationalism becomes extreme, its believers also become extreme in their readiness to kill or die for the nation. All nationalism contains the germ of suicide-bombing. And the idea that only Islam spawns jihadis is one of the great lies of our times. Every Hindu, Christian or Jew who is willing to implode or self-immolate in the hope of achieving the status of martyr and soldier together, is part of the inner logic of nationalism, even if an extreme version. A committed army, police force or commando outfit minus the constant trumpet of nationalism is impossible, or toothless. We do not need to say much more about the road from nationalism to violence.

With the arrival of the modern formula of the nation-state, group violence takes on a new function, which is to provide the fuel for the very idea of attachment to the nation. The main place in which we can see this is in the formation of modern militaries, which use training, rehearsals and actual warfare to produce the sense of attachment to the fiction and abstraction of the nation.

[caltrek]

UAE and India Sign Comprehensive Economic Partnership to Boost Trade and Investment Ties
by Deena Kamel, Sarmad Khan, and Ramola Talwar Badam
February 18, 2022

https://www.thenationalnews.com/busines ... rade-deal/

Introduction:

(The National) The UAE and India, Asia’s third-largest economy, signed a Comprehensive Economic Partnership Agreement, that is expected to boost non-oil trade between the two countries to $100 billion in five years, from $60bn currently.

The agreement marks a new phase of strategic co-operation and will open additional avenues of investment and trade for companies in both India and the UAE.

The pact will add 1.7 per cent or $8.9bn to the UAE's gross domestic product and boost exports by 1.5 per cent or $7.6bn by 2030, Abdullah bin Touq, UAE Minister of Economy, said in an online joint press conference on Friday in New Delhi in the presence of top government officials from both sides.

The 881-page agreement lifts 80 per cent of tariffs on UAE and India goods, while all tariffs will be removed within ten years, Thani Al Zeyoudi, the UAE Minister of State for Foreign Trade, said.

"The fact that we were able to agree the terms of a deal of this size, scope and importance within five months, demonstrates the power of our shared vision," Mr Touq said. "I am confident that the UAE-India Cepa agreement will be regarded as a towering achievement and a new era, not only for our two nations, but for global trade."

The Hindustan Times also reports of the recent deal between the UAE and India:

https://www.hindustantimes.com/india-ne ... 83532.html

Extract:

(Hindustan Times) According to the joint vision statement, the two sides agreed to enhance maritime cooperation to maintain peace and security in the region, and reaffirmed their joint commitment to fight extremism and all forms of terrorism, including cross-border terrorism, at regional and international levels.

In the economic field, the two sides will expedite work on a dedicated investment zone for UAE companies and joint ventures with a focus on setting up a food corridor and establishing a dedicated “India Mart” in Jebel Ali Free Zone in Dubai.

…India and the UAE will also take steps to enhance the resilience and reliability of food supply chains. They agreed to expand cooperation through enhanced bilateral food and agriculture trade and to strengthen the infrastructure and dedicated logistic services connecting Indian farms to ports and the final destinations in the UAE.

The two sides further agreed to collaborate in research, production and development of reliable supply chains for vaccines and enhance investments by UAE entities in India’s health infrastructure. The two sides also agreed on establishing an Indian Institute of Technology in the UAE.

Nine broad sectors that account for 90% of India’s exports, in terms of value, to the UAE will get immediate market access at zero duty from the day the CEPA is enforced. These sectors are textiles, engineering products, gems and jewellery, pharmaceuticals and medical devices, plastics, automobiles, leather and footwear, agricultural products and other labour-intensive products such as furniture, wood products and sports goods.

[caltrek]

Indian Court Sentences 38 to Death for Fatal 2008 Bombings
February 18, 2022

https://www.courthousenews.com/indian-c ... -bombings/

Introduction:

NEW DELHI (AP via Courthouse News) — A court in India on Friday sentenced to death 38 people for a series of bomb blasts in 2008 that left more than 50 dead in Gujarat state, which has a history of violent clashes between Hindus and Muslims.

It was the first time that so many accused have received death sentences in a single case in India. The sentences must be confirmed by a higher court.

The attacks in Ahmedabad 13 years ago underscored communal tensions that are still reverberating in India.

A militant Islamic group called Harkat-ul-Jihad-al-Islami claimed responsibility for the bombings. It was considered to be Pakistani-based but apparently is no longer active.

The Indian Mujahideen, a radicalized faction of the banned Students Islamic Movement of India, also was involved, said Sudhir Brahmbhatt, a government prosecutor in the case, citing police documents.

[caltrek]

The Inequality in What Is Proclaimed to Be “Indian”
by Alishan Jafri and Apoorvanand
February 27, 2022

https://janataweekly.org/a-bindi-a-hija ... be-indian/

Introduction:

(Janata Weekly) The visuals of a Hindu teacher, bindi on her forehead, sindur proudly displayed, disrobing her Muslim, hijab-wearing colleague has proven, if anyone had an iota of doubt, that the so-called anti-hijab row in Karnataka is not about the hijab. It is a painful video to watch – a teacher being humiliated in full public view by her colleague, her supposed equal. What’s next? Will Hindu male teachers chop the beards of their Muslim colleagues before they enter the temples of education?

In the name of uniformity, an inequality has been created legally. This is a new inequality; it did not exist before the court order.

Once you create a new inequality, it is difficult to extinguish it; even if this ‘interim’ ban on the hijab is lifted, the harm won’t be undone. Inequality, even if temporary, brings with a feeling of humiliation. That is not temporary.

Before discussing it, we should also understand that a withdrawal of the ban will require an ethical miracle, highly unlikely in the present-day courts. The courts have also, and we must accept it is not new, found the power to discuss and decide the religious, traditional practices of Muslims, and it is difficult for them to let this go. This power to decide what is essential in the religion of others is intoxicating. Indian courts have been doing it without realising that when they do it, they do it without authority.

[caltrek]

India's Ruling Party Claims Crime is Down. Muslims Indicate They've Never Felt Less Safe
by Lauren Frayer and Raksha Kumar
March 5, 2022

https://www.kazu.org/npr-news/2022-03-0 ... -less-safe Parallel audio story (6:53 minutes) also available at this site

Extract:

(NPR) A dramatic drop in crime is part of what Prime Minister Narendra Modi's Hindu nationalist party is running for reelection on in local elections this month. Singh, for one, cites it as the reason the party will have her vote. Most opinion polls predict the party will win in Uttar Pradesh -- one of five Indian states voting this month.

According to India's National Crime Records Bureau, rape, murder and theft fell in 2020 to their lowest levels in Uttar Pradesh since 2013. Preliminary data from 2021 shared by Uttar Pradesh police suggests the trend has continued.

With more than 200 million residents, Uttar Pradesh is bigger than all but a handful of countries. The results of these elections will be examined as a bellwether of Modi's own reelection chances in 2024.

But political scientists say the government's crime data is opaque, incomplete and probably biased. Human rights groups say any perception of safer streets in Uttar Pradesh has come with — or possibly because of — a spike in police brutality against minorities.

While many residents say their streets feel safer, some of their Muslim neighbors — members of India's largest minority group — say they have never felt less safe.

[weatheriscool]

India says it accidentally fired missile into Pakistan
Source: Reuters

NEW DELHI, March 11 (Reuters) - India said on Friday it accidentally fired a missile into Pakistan because of a "technical malfunction" during routine maintenance.

"On 9 March 2022, in the course of a routine maintenance, a technical malfunction led to the accidental firing of a missile," the government said in a statement.

"It is learnt that the missile landed in an area of Pakistan. While the incident is deeply regrettable, it is also a matter of relief that there has been no loss of life due to the accident."

Read more: https://www.reuters.com/world/asia-paci ... 022-03-11/

[caltrek]

Pakistan Demands Joint Probe into ‘Accidental’ India Missile Fire
March 12, 2022

https://www.aljazeera.com/news/2022/3/1 ... ia-missile

Introduction:

(Al Jazeera) Pakistan says it has taken note of India’s statement on the “accidental firing” of a missile into its territory, demanding a joint investigation to “accurately establish the facts surrounding the incident”.

“The grave nature of the incident raises several fundamental questions regarding security protocols and technical safeguards against accidental or unauthorised launch of missiles in a nuclearised environment,” the foreign ministry said in a statement on Saturday, adding that India must provide a clearer picture of the circumstances that led to the missile’s firing.

“Why did India fail to immediately inform Pakistan about the accidental launch of the missile and waited to acknowledge till after Pakistan announced the incident and sought clarification?”

Islamabad also asked New Delhi “to explain if the missile was indeed handled by its armed forces or some rogue elements”.

Pakistani officials earlier said the missile was unarmed and had crashed near the country’s eastern city of Mian Channu, about 500km (310 miles) from the capital Islamabad.

[caltrek]

Russia-Ukraine Crisis: An Indian Perspective
by Dr. Rajaram Panda
March 20, 2022

https://www.eurasiareview.com/20032022- ... rspective/

Extract:

(Eurasian Review) There is a new churning in world’s geopolitics following Russia’s invasion of Ukraine.
…
India’s stance stemmed from two visible reasons. Russia is a time-tested friend of India and has stood by it at times of crises. Besides, Russia is a major source of military procurement by India, which India is unable to overlook. Secondly, nearly 20,000 Indian students, mostly undertaking medical courses, were trapped in the crisis and their safety and safe return was a priority for the government. The death of an Indian student on 1 March 2022 led India to augment its evacuation process. There are several related issues that led to the Ukraine crisis. These need close scrutiny in order to understand the issue dispassionately and objectively. But before doing that, an understanding of the background of the crisis between Russia and Ukraine that reached dangerous proportion shall put this study in perspective.

Where did India position itself in its foreign policy narrative given its historical friendly relationship with Russia, seen as a reliable allay, while maintaining its strategic autonomy in any crisis situation? It abstained from the US-sponsored UNSC voting condemning Russia’s military action against Ukraine, the other two being China and the UAE. India viewed the decision in order to maintain its own national interests and thought was the correct decision to stay away. India also joined 35 countries in the 193 member UN General Assembly by abstaining from voting on a resolution deploring in its strongest terms Russia’s actions in Ukraine and demanding that Russia “immediately, completely and unconditionally” withdraw all of its military forces from the territory of Ukraine within its internationally recognised border.

India’s abstention was in line with what the government described as its consistent position that allows it to reach out to both sides to find the middle ground and foster dialogue and diplomacy. Explaining India’s position, Indian ambassador T. S. Tirumurti subtly sent a message to Russia that the UN Charter, international law and principles of sovereignty and territorial integrity must be respected. India’s decision to abstain did not mean support for Moscow but reflected India’s reliance on its Cold War ally for energy, weapons and support in conflict with neighbours.

[Yuli Ban]

[Yuli Ban]

Seems like Sri Lanka is about to collapse...

[caltrek]

In India, Hate-filled Songs Target Muslims
April 22, 2022

https://www.courthousenews.com/in-india ... t-muslims/

Introduction:

NEW DELHI (AP) — The frenzied fury against Muslims began with provocative songs played by Hindu mobs that called for violence. It ended with Muslim neighborhoods resembling a war zone, with pavements littered with broken glass, charred vehicles and burned mosques.

On April 10, a Hindu festival marking the birth anniversary of Lord Ram turned violent in Madhya Pradesh state’s Khargone city after Hindu mobs brandishing swords and sticks marched past Muslim neighborhoods and mosques. Videos showed hundreds of them dancing and cheering in unison to songs blared from loudspeakers that included calls for violence against Muslims.

Soon groups of Hindus and Muslims began throwing stones at each other, police said. By the time the violence subsided, the Muslims were left disproportionately affected. Their shops and homes were looted and set ablaze. Mosques were desecrated and burned. Overnight, dozens of families were displaced.

“Our lives were destroyed in just one day,” said Hidayatullah Mansuri, a mosque official.

It was the latest in a series of attacks against Muslims in India, where hardline Hindu nationalists have long espoused a rigid anti-Muslim stance and preached violence against them. But increasingly, incendiary songs directed at Muslims have become a precursor to these attacks.

[caltrek]

Explaining India’s Growing Enthusiasm for Free Trade Agreements
by Rahul Nath Choudhury
April 26, 2022

https://www.eurasiareview.com/26042022- ... -analysis/

Introduction:

(Eurasian Review) In 2022, India has renewed its interest in free trade agreements (FTAs) with several economies, including the United Kingdom and Australia. India and Australia had already signed an interim FTA last week and expected to enter into a full FTA by end of this year. India’s approach to resuming negotiations has a sense of urgency and a few rounds of discussion have already taken place. The United Kingdom has traditionally been a large trading partner for India while Australia is emerging as a promising destination.

This is a dramatic shift from India’s earlier approach to FTAs. After assuming power in 2014, the Modi government started reviewing India’s existing trade pacts. There was a widespread belief in the government that FTAs created significant economic losses by allowing subsidised foreign products and other unfair production advantages for foreign firms.

Australian trade matters to India because of its growing energy demands. India aspires to become a leader in energy-consuming industries such as information technology and electric vehicles. An FTA with Australia would allow India to meet its energy needs and export skilled professionals in IT, engineering and other services.

Australia also holds a crucial strategic position for India. An Australian FTA would offer the largest market to Indian businesses in the Pacific region. Initiatives such as the Quadrilateral Security Dialogue (Quad) and the Supply Chain Resilience Initiative have brought the two countries closer than before. An FTA is an opportunity to further strengthen bilateral relations.

In the UK–India FTA, India wants to secure larger market access for its agricultural produce and increase exports in services such as IT, nursing, education and health care. India seeks reduced tariffs in labour-intensive sectors such as textiles, leather and jewellery, which have always found a large market in the United Kingdom. India also wants to secure a larger number of employment visas for its professionals in the United Kingdom.

[wjfox]

Can Sri Lanka dig itself out of a $50 billion debt?

A mountain of foreign debt has led the country to default on loans for the first time since their 1948 independence.

By Natasha Ishak Apr 30, 2022, 5:04pm EDT

After a month of intense civilian-led protests over Sri Lanka’s deteriorating economy, President Gotabaya Rajapaksa agreed to appoint a new council on Friday to lead the formation of an interim government. The resolution would create a coalition made up of all parties in Parliament and would remove the grip of the Rajapaksa family dynasty currently ruling the country. At issue is the country’s economic future which is in shambles after defaulting on payments on its mountain of foreign loans — estimated to be worth $50 billion — for the first time since the country gained independence from the British in 1948.

Signs of Sri Lanka’s impending economic crisis became increasingly apparent over the last two years of the Covid-19 pandemic as food prices soared and power blackouts increased in frequency. Sri Lanka currently has about $7 billion in total debt due this year.

Many attribute Sri Lanka’s economic crisis to the mishandling of its finances by successive governments through mounting foreign debt and continued infrastructure investments. The Rajapaksa administration also implemented sweeping tax cuts in 2019, slashing the value added tax (VAT) rate — the tax applied to imports and domestic supplies — from 15 percent to eight percent which contributed to a decrease in the country’s revenue.

The president’s older brother, Mahinda Rajapaksa, is expected to be removed as prime minister as part of an agreement brokered by former President Maithripala Sirisena, who defected with dozens of other members of the incumbent president’s governing party in April in protest of the Rajapaksas’ poor governing.

But the country’s power struggle may have sown discord between the two brothers which could exacerbate its political impasse. On Friday, the Associated Press reported a spokesperson for the prime minister did not immediately confirm the elder Rajapaksa’s removal, saying that any such decisions would be announced by the prime minister in due time.

https://www.vox.com/2022/4/30/23050242/ ... -india-imf

[caltrek]

After Standoff, China Agrees to Support Efforts of Sri Lanka to Obtain IMF Loan
P. K. Balachandran
May 3, 2022

https://www.eurasiareview.com/03052022- ... -analysis/

Introduction:

(Eurasian Review) China, which had expressed displeasure over Sri Lanka’s approaching the IMF (International Monetary Fund) for a bailout without consulting it first, and had warned that its relations with Sri Lanka would depend on the conditions set by the IMF, has now revised its stand.

Beijing has realized that it cannot turn a blind eye to Sri Lanka’s plight and should join the rest of the world in helping it pull its economy out of the woods.

The Chinese Ambassador to Sri Lanka, Qi Zhenhong said told Lankan Finance Minister Ali Sabry on Monday that China would fully support Sri Lanka in securing the assistance of the IMF. As a major shareholder of the IMF, China is willing to play an active role in encouraging the IMF to positively consider Sri Lanka’s difficulties and reach a proper agreement as soon as possible, Ambassdor Qi told Sabry.

[caltrek]

Germany, India Sign $10.5B Green Development Deal as German Chancellor Olaf Scholz Elicits India's Support for Tough Stance Toward Russia
May 2, 2022

https://www.courthousenews.com/germany- ... ment-deal/

Introduction:

BERLIN (AP) — Germany and India signed a series of bilateral agreements Monday focused on sustainable development that will see the South Asian nation receive 10 billion euros ($10.5 billion) in aid by 2030 to boost the use of clean energy.

The accords were signed during a visit to Berlin by India’s Prime Minister, Narendra Modi. German Chancellor Olaf Scholz is seeking to elicit India’s support for the tough stance taken by Europe and the United States toward Russia over the war in Ukraine.

Modi reiterated his call to both Russia and Ukraine to end the fighting, saying: “We believe that no party can emerge victorious in this war.”

But unlike Scholz, Modi refrained from any overt criticism of Moscow, which has previously praised India for its “neutral” stance on the conflict.

Reporters were not permitted to ask questions after the two leaders spoke – an unusual arrangement at the German chancellery where at least four questions are routinely taken. The decision was taken at the insistence of the Indian delegation, said a German official, who spoke on condition of anonymity because of the sensitivity of the issue.

[caltrek]

India And Germany: Moving Beyond Diplomatic Niceties
by Harsh V. Pant and Tobias Scholz
May 9, 2022

https://www.eurasiareview.com/09052022- ... -analysis/

Introduction:

(Eurasian Review) Germany’s recently elected center-left coalition under Chancellor Scholz chose India as the partner for its first governmental consultations on 2nd May 2022. Beyond the signaling effects that Europe’s and Asia’s largest democracies intend to cooperate more closely together, the final joint statement exhibits the depth of mutual understanding and trust which has developed between both countries in recent years. Germany remains one of India’s most important bilateral partners in Europe, a relationship that remains embedded in the larger framework of the European Union of which Berlin is a key driver.

The strategic partnership between India and Germany dates back to May 2000, and its institutionalization with the launch of the Inter-Governmental Consultations (IGC) in 2011 at the level of heads of government galvanized this engagement. Germany’s invitation to Prime Minister Narendra Modi to join this year’s G7 Summit at Bavaria’s Schloss Elmau from 26th to 28th June 2022 stands out as the most immediate and obvious acknowledgement of the existing strategic partnership. However, Germany’s and India’s partnership is not just growing through diplomatic niceties. At the center of the convergence lies the mutual recognition of common strategic interests. Shared interests are particularly relevant for both countries’ quests for strategic autonomy, their attentiveness towards the Indo-Pacific, and a renewed recognition of climate action.

Strategic autonomy

India and Germany have realized that working towards a multipolar global order requires middle powers to support each other in their pursuit of strategic autonomy. While for India strategic autonomy means economic multi-alignment and neutrality on international conflicts, Germany increasingly seeks strategic autonomy through the European Union. In the context of the Ukraine crisis, it is interesting that as Germany is struggling to reduce its energy dependence on Russia, India too has been made aware of the costs of an overdependence on one supplier for defence. True strategic autonomy will come only after the two nations manage to reduce their dependencies which are real vulnerabilities in the present geoeconomic order.

[weatheriscool]

Sri Lankan prime minister resigns after weeks of protests
Source: AP

By KRISHAN FRANCIS, BHARATHA MALLAWARACHI and KRUTIKA PATHI

COLOMBO, Sri Lanka (AP) — Sri Lankan Prime Minister Mahinda Rajapaksa resigned Monday following weeks of protests demanding that he and his brother, the president, step down for dragging the country into its worst economic crisis in decades.

Rajapaksa said on Twitter that he submitted his resignation to President Gotabaya Rajapaksa, a move that followed a violent attack by government supporters on the protesters, prompting authorities to deploy armed troops in the capital, Colombo. There was no immediate comment from the president’s office.

For more than a month, protests have spread across the country, drawing people across ethnicities, religions and class. For the first time middle-class Sri Lankans also took to the streets in large numbers, marking a dramatic revolt by many former Rajapaksa supporters, some of whom have spent weeks protesting outside the president’s office.

The protests have sparked a political reckoning in the country, with the government facing a no-confidence motion in Parliament, and underscored a dramatic fall from favor of the Rajapaksas, Sri Lanka’s most powerful political dynasty for decades. The brothers were once hailed as heroes by many of the island’s Buddhist-Sinhalese majority for ending the country’s 30-year civil war, and despite accusations of war atrocities, the two were firmly entrenched at the top of Sri Lankan politics until now.

Read more: https://apnews.com/article/business-sri ... d868559fae

[Xyls]

Sri Lanka MP among five killed as violence escalates

https://www.aljazeera.com/news/2022/5/9 ... lish-tents

Things are going south fast here.

[caltrek]

Sri Lanka: The Making And Masking of a Debt Crisis
by Matt Whithers
May 13, 2022

(Eurasia Review) There are numerous immediate causes for the sovereign debt crisis (in Sri Lanaka), some of which are certainly attributable to the economic mismanagement of the Rajapaksa and Sirisena governments. Heavy international borrowing, excessive spending on largely uneconomical infrastructure projects, populist tax reforms and misguided agricultural policies have all contributed to Sri Lanka’s inability to weather the economic consequences of the pandemic.

Fixation on these interventions has lent support to a simplistic belief that Sri Lanka’s macroeconomic problems would disappear under a liberal market economy. Amid the chaos and deprivation of recent weeks, free market think tanks have espoused a tired ensemble of neoliberal reforms — spanning fiscal austerity, monetarism, privatisation of state-owned enterprises, and freer trade — as a pathway to recovery. Yet in the absence of any compelling examples of economic development guided by the invisible hand of market forces and extensive evidence to the contrary, calls to embrace IMF loan conditions ignore deeper structural problems that have primed the economy for crisis.

When Sri Lanka gained independence in 1948, its export sector was dominated by plantation cash crops — mainly tea, rubber and coconut. With rubber prices buoyed by the Korean War and tea prices spiking shortly after, Sri Lanka enjoyed a brief period of relatively favourable terms of trade. These terms were sufficient to run a surplus and amass foreign exchange reserves, but the opportunity for industrial development was eschewed in favour of food subsidies, agricultural investment and a liberal import regime.

Declining terms of trade and the political intractability of welfare spending quickly exposed Sri Lanka’s over-reliance on the primary sector. The ILO observed that ‘apart from Burma, Ceylon was the only country in Asia earning less foreign exchange in 1968 than in 1958’.

The lack of resolution to Sri Lanka’s first foreign exchange crisis ensured the inevitability of the current one. Throughout the 1960s and 1970s, jarring shifts between ideologically opposed regimes lurched the economy from autarky to partial liberalisation and back again without achieving an effective industrial policy.

Read more here: https://www.eurasiareview.com/13052022- ... analysis//

The article was first published by East Asia Forum: https://www.eastasiaforum.org/2022/05/1 ... bt-crisis/