Sri Lanka Economic Crisis: For the past few days, our neighboring country Sri Lanka has been grappling with a number of problems. Rajapaksa government declared a financial emergency in the country and almost all cabinet ministers had given their resignation and some new ministers were appointed.
Similarly, the governors of the central bank Had also given their resignations. The first fight for taking responsibility and after digging grave they resign it’s a bad thing that I have ever seen in my life.
Over the last few months, the financial situation in Sri Lanka has to become worsened day by day. According to the situation, the government of Sri Lanka has declared a state of emergency. The situation is so bad, that people are dying every day You have to pipe for the necessities of life.
People are also queuing up on the streets for food and drink. After the emergency, all the ministers of the government came to Prime Minister Mahindra Rajapaksa They have submitted their resignations (ministers resign).
People of Sri Lanka are going to the streets to protest against their government. What happened suddenly in Sri Lanka, when inflation rose sharply, is out of the question It is natural to be created. Here In this article, we are going to tell you the reasons behind Sri Lanka’s economic crisis and today’s condition of our neighbor country.
What is happening in Sri Lanka?
Sri Lanka is facing the highest inflation and economic recession in the last 75 years. As you know a state of emergency has been declared in Sri Lanka and a curfew was imposed in many parts of Sri Lanka on Saturday.
Similarly, Sri Lankan army soldiers were on the streets to take over and control the situation. Many people find it expensive to buy a liter of milk in Sri Lanka. It is being said that people are reluctant to buy their necessities due to inflation.
1. Sri Lanka economic crisis Due to tax breaks
In 2019, the Rajapaksa government in Sri Lanka decided to give a large tax exemption. This put an additional burden on the government coffers.
According to a report, Rajapaksa had reduced VAT in Sri Lanka from 15 percent to 8 percent. This was an additional burden of Rs 60,000 crore on the treasury every year. As a result, Sri Lanka suffered huge losses and its economy weakened.
2. Covid caused the economy to collapse in Sri Lanka
For the past two and a half years, covid’s influence has affected the entire world, but it has hit the economies of tourism-based countries like Sri Lanka the hardest.
Due to the closure of tourism and industry, the economy of Sri Lanka was hit hard. about 10 percent economy of Sri Lanka comes from tourism. But due to the closure of tourism due to Covid, Sri Lanka had to suffer the consequences.
At the same time, due to the huge increase in unemployment, people were anxious. To recover from this, the Sri Lankan government created a huge currency. But even then, Sri Lanka’s economy plummeted.
3. Economy Crisis In Srilanka due to Foreign Debt has increased
Many other factors, including Covid, had a major impact on Sri Lanka’s income. Therefore, it is time for Sri Lanka to take foreign loans and these loans are increasing day by day. The Sri Lankan economy has been hit hard by the lack of income growth. Foreign debt rose 173 percent. According to one source, Sri Lanka has a total debt of Rs 2.55 lakh crore. And China has the biggest share in this.
4. Changes in agriculture plans by Sri Lankan government
Considering the agricultural sector, the sultanate decision of the government proved fatal for agriculture. The Sri Lankan government had declared and confirmed that it would now pursue fully organic farming.
As a result, pesticides and chemical fertilizers were prescribed in Sri Lanka. The use of Chinese-made products has had a devastating effect on agriculture. Agricultural production began to decline.
Sri Lanka also proscribed the import of Palm Oil. Due to such various Tughlaq fatwas, the agricultural sector has suffered a great loss and Sri Lanka has not been able to produce enough to meet the needs of the people.
5. Ukraine Russia conflict
Ukraine Russian war also affected Sri Lanka’s economy as you know Sri Lanka majorly import large sum of daily need items and petrol from other countries, therefore because of lack of petrol, diesel transportation of daily need product is affected due to this reason price of fruits, vegetables and other daily need items was increased.
This is another major reason the public is out on street for protest.
Sri Lanka’s food & economic crisis is due to whimsical policies, reckless populism & fiscal profligacy. It is a cautionary tale for all poor nations. Many states in India are indulging in reckless short-term freebies for electoral gain, ignoring growth & core functions.1/2
— Jayaprakash Narayan (@JP_LOKSATTA) March 24, 2022
Neighborhood first. India stands with Sri Lanka.
US$ 1 billion credit line signed for supply of essential commodities.
Key element of the package of support extended by India. pic.twitter.com/Fbzu5WFE3n
— Dr. S. Jaishankar (@DrSJaishankar) March 17, 2022