Prime Minister Narendra Modi with Sri Lankan President Ranil Wickramasinghe during their meeting at the Hyderabad house in New Delhi on July 21, 2023.
| Photo Credit: R.V. Moorthy

Sri Lanka is looking to accelerate greater economic cooperation with India with the tourism sector taking the lead, the island nation’s President Ranil Wickremesinghe said on April 25.

India’s status as a rising economic giant and Sri Lanka’s location as a strategic logistics hub will complement each other in driving forward the two economies, he said while addressing the opening of Indian firm ITC Hotels’ first overseas property, ITC Ratnadipa in Colombo.

“I have no doubt that this icon (ITC Ratnadipa) will help increase tourism into Sri Lanka, more particularly from India. Now these are part of the vision statement which Prime Minister [Narendra] Modi and I signed last year on how do we integrate our economies and we get closer,” Mr. Wickremesinghe said.

The economic background, the convertibility of Indian rupees, all have now been laid, he said, adding, ”so this is the start. I think more than any other sector we identified this [tourism] is one which you can start”. He further said, “Information technology is another area that we will be moving fast on and there are many other projects that India and Sri Lanka will have here.”

Highlighting how the two countries stood to gain from greater cooperation, he said, ”India is now one of the rising economic giants and we, Sri Lanka, is in a crucial location for logistics, and next to India.”

Specifically for the tourism sector, Mr. Wickremesinghe said, “I have no doubt that for many years, Sri Lanka will be the appropriate place to spend holiday. In time to come it would be easier for a person in Bengaluru, Chennai or Hyderabad to jump into a plane and come here than go to the northern part of India.”

Referring to ITC’s new hotel, which is one of the biggest investments in Sri Lankan hospitality sector by an Indian firm at around ₹3,000 crore, he said,”I hope this will encourage many other hotels, many other companies from other parts of the world to come and invest here.”

H.J.M Seneviratne cuts yellow paddy stems that dried following drought, at his paddy field in Anamaduwa, Sri Lanka.
| Photo Credit: Reuters

H.J.M Seneviratne (63) slices through yellowed paddy stems dried out by a drought that has destroyed more than 95% of his crop and is threatening crisis-hit Sri Lanka’s summer rice harvest.

The island’s economy was crushed last year by its worst financial crisis in more than seven decades, caused by a severe shortage of foreign exchange reserves that triggered widespread unrest and ousted its former President.

Helped by a $2.9 billion bailout from the International Monetary Fund (IMF) Sri Lanka has slowly stabilised its economy since March, rebuilding its decimated reserves, moderating inflation and strengthening its currency.

But even before the country’s agriculture sector could recover from sky-rocketing prices of inputs from fertiliser to power, the rains failed.

“I’ve been a farmer for forty years but I’ve never experienced a harder time than this,” Seneviratne said, standing in the middle of a dusty field near Anamaduwa, a town in north western Sri Lanka, clutching a fistful of straw-like paddy stems with hollow rice kernels. “We haven’t had enough rain since May. The harvest is so bad we don’t even have seed paddy for the next season.”

The southwest monsoon that farmers rely on for the Yala or summer harvest was scanty this year because of the El Nino weather pattern and the weather department estimates there will be no rains until October.

Typically, Seneviratne’s four acres yield about 4.5-6 tonnes of paddy for the summer harvest but this time he predicts he will get only about 150 kg. All but one of the eight water tanks, large ponds in which rainwater is collected for irrigation, in the area have dried out, destroying about 200 acres of paddy.

The paddy loss could be as much as 75,000 acres, according to Agriculture Minister Mahinda Amaraweera while other experts say full losses could be even higher as estimates are yet to be completed. Sri Lanka planted 1.3 million acres for the summer harvest, according to the Agriculture Ministry.

“We have lost at least 80,000 metric tonnes of paddy as per the latest data and it could be more,” said Buddhi Marambe, a professor of crop science at Sri Lanka’s Peradeniya University. Last year, when the crop was decimated by a lack of fertilizer because of the economic crisis, the season produced 1.5 million tonnes of paddy.

The drought could reverse a recent trend of falling food prices, which dipped an annual 2.5% in July after rising 94% year-on-year last September.

Sri Lanka’s central bank warned last week that the dry weather coupled with higher global oil and commodity prices could also “weigh on expected growth in the near term,” as the island struggles to limit economic contraction to 2% this year after shrinking 7.8% in 2022.

Sri Lanka’s northern neighbour India is also expected to have the driest August in more than a century prompting it to restrict exports of certain categories of rice. Sri Lanka has previously imported rice from India to bridge production shortfalls.

Sri Lanka has so far ruled out rice imports this year, a statement from the President’s office said, as regions that have escaped the drought have produced higher yields.

Prices of rice have remained largely unchanged at retail, edging up about 10 Sri Lankan rupees (about 3 U.S. cents) to 220 rupees per kg from last month. So far, rice stocks have staved off any impact but prices could tick up in coming months with a scanty harvest.

Experts say they are worried that if Sri Lanka doesn’t receive the rains it needs next March because of the continuing El Nino, the country will be left with scant reserve stocks and will have to resort to large-scale, expensive imports.

El Nino, a warming of water surface temperatures in the eastern and central Pacific Ocean, is linked to extreme weather conditions from tropical cyclones to heavy rainfall to severe droughts.

During the last El Nino in 2016/17, Sri Lanka suffered its worst drought in 40 years and rice output fell by nearly 50% year-on-year to 2.4 million metric tonnes over both its harvests.

Rice is the staple food of the country’s 22 million people and its biggest crop. According to government data, two million people in the country are rice farmers out of 8.1 million people engaged in fishing and agriculture in the largely rural economy.

To limit the El Nino impact, Buddhi Marambe says farmers will have to plant early during the Maha paddy season that starts in October as rains next March and mid-year are uncertain.

“If rains fail in March it will impact our main paddy season and we could have a very, very dry second season as well in the middle of 2024.”

The drought has also wiped out the small chilli, peanut and banana plants Seneviratne’s wife, W.M. Makamma, 62 grows to feed her family. “Before the crisis we used to cook for all three meals but now it’s only two,” she said. “We’ve stopped buying eggs, chicken or fresh fish. Lunch is a cup of black tea. I feel like we have fallen completely and its very hard to get back up.” ($1 = 323.5000 Sri Lankan rupees)