Sri Lanka offers Free Visas to Indians to Revive Tourism

Why in news?

• Sri Lanka has waived visa fee for Indians and tourists from six other countries, as part of its efforts to boost tourist arrivals.
• This step is aimed at helping rebuild the island nation’s battered economy following last year’s financial crash.

What’s in today’s article?

• Economic Crisis in Sri Lanka
• News Summary

Economic Crisis in Sri Lanka

• 
• Sri Lanka is currently in an economic and political crisis of mass proportions, recently culminating in a default on its debt payments.
• There are several reasons for this crisis and the economic turmoil has sparked mass protests and violence across the country.
• Following is a brief timeline of events which eventually led to the crisis:
  • 2009
    • In 2009, a decades-long civil war in the country ended and the government’s focus turned inward towards domestic production.
    • However, a stress on local production and sales, instead of exports, increased the reliance on foreign goods.
  • 2019
    • Unprompted cuts were introduced on income tax in 2019, leading to significant losses in government revenue, draining an already cash-strapped country.
    • The country saw its tourism numbers take a dive in the wake of the 2019 Easter Sunday bombings.
  • 2020
    • Covid-19 pandemic affected the tourism industry. Prior to the pandemic, tourism was the third-largest source of foreign exchange inflows to Sri Lanka, accounting for about 5% of the country’s GDP.
    • It was also a major source of foreign exchange reserve.
    • With supply of foreign exchange drying up, the value of Sri Lankan rupee started depreciating thereby making the imports costlier.
  • 2021
    • The Sri Lankan government introduced a ban on foreign-made chemical fertilizers. The ban was meant to counter the depletion of the country’s foreign currency reserves.
    • However, with only local, organic fertilizers available to farmers, a massive crop failure occurred.
    • As a result, Sri Lankans were subsequently forced to rely even more heavily on imports, further depleting reserves.
  • 2022
    • A severe financial crisis saw mass protests and shortages of essentials such as fuel in 2022.
    • In June 2022, then Prime Minister Ranil Wickremesinghe said in parliament that the economy had collapsed, leaving it unable to pay for essentials.

Help Extended by India

A. Four-pillar economic cooperation arrangement between India and Sri Lanka

• In December 2021, India and Sri Lanka agreed to a four-pronged approach to help mitigate Sri Lanka’s economic crisis.
• The agreement included following initiatives:
  • Urgent food and health security package
    • This includes extension of a line of credit to cover the import of food, medicines and other essential items from India to Sri Lanka.
  • Addressing the balance of payment issues
    • It includes a currency swap agreement to deal with Sri lanka’s balance of payment issues.
    • In the swap arrangement, a country provides dollars to a foreign central bank, which, at the same time, provides the equivalent funds in its currency to the former.
  • Energy security package
    • It includes a line of credit to cover the import of fuel from India, and an early modernisation project of the Trinco oil farms that India has been pursuing for several years.
  • Growth and employment generation by facilitating Indian investments in different sectors.

B. Other steps taken by India to help Sri Lanka

• In March 2022, India announced a $ 1 billion line of credit to Sri Lanka as part of its financial assistance to help the island nation deal with its economic crisis.
  • With this, India provided a total financial assistance of $2.4 billion since January 2022.
• Along with India’s financial assistance, Indian made investments in renewable energy, ports, logistics, infrastructure & connectivity to help Sri Lanka in repairing its economy.

News Summary: Sri Lanka offers free visas to Indians to revive tourism

• The Sri Lankan foreign ministry announced Indians will get free visas to the nation as part of a pilot programme which will extend till March 31, 2024.
• This scheme is also extended to citizens from six other countries – Russia, China, Thailand, Malaysia, Indonesia and Japan.
• This step was taken to generate a target of five million arrivals by 2026.

India: a major source of tourists for Sri Lanka

• India has traditionally been Sri Lanka’s top inbound tourism market, followed by China.
• As per latest data from the Sri Lanka Tourism Development Authority, India is the largest source for tourists with 2,00,310 arrivals so far this year, followed by Russia with 1,32,300.

Q1) What is Pusa Decomposer?

Pusa Decomposer is a microbial solution that can turn paddy straw into manure in 15-20 days. It's a capsule that contains seven fungal species that help break down paddy straw. The fungi produce enzymes that aid in the decomposition process.

Q2) What is currency swap agreement?

A currency swap is a legal contract between two parties to exchange two currencies at a later date, but at a predetermined exchange rate.

Source: Sri Lanka offers free visas to Indians to revive tourism | Hindustan Times | The Hindu