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How will new Indian leader’s economic policies impact Sri Lanka?

May, 19, 2014

Though Indian Prime Minister designate Narendra Singh Modi’s economic policies have not yet been fully revealed, his statement that he is prepared to maintain stronger ties with Sri Lanka is very significant to the island economically, says Sri Lanka Central Bank Deputy Governor Nandalal Weerasinghe.

While speaking to AdaderanaBiz he said that India’s middle class is increasing rapidly and that this number is around 15 times the 20 million population of Sri Lanka.

“This middle class sector is a group which is keen on travel and in investing. If the new Indian Prime Minister takes steps to economically work closely with Sri Lanka then it would be favourable to Sri Lanka,” said Weerasinghe.

China too could enjoy the opportunity of entering the Indian market through the free trade agreement between India and Sri Lanka, he added further.

“A free trade agreement is to be signed between Sri Lanka and China. Hence, China could utilize this agreement and enter the Indian market through Sri Lanka. The condition here would be that China has to do a 35 percent value addition in Sri Lanka.

Narendra Singh Modi is considered a pro-business person. Hence, most believe that during his tenure the Indian economy would enjoy greater development than now.

It is noteworthy that India has failed to obtain an economic development of more than five percent for several years.