India's economic growth continues to be remarkable. From a humble 3.5% GDP growth in 1990, India has emerged as the world's 5th largest economy, with a growth rate of 7% in 2024. Reforms, liberalization, and digitalization have fueled this rapid expansion. Policy paradigm has created enabling environment which continues to propel the economic growth. Neighbouring economies are natural beneficiaries of such large-scale progression in the region. Sri Lanka’s economy can easily progress alongside this massive economic development. Eleven suggestions to accelerate Sri Lankan economic growth are listed in the paragraphs below.

Focus on Indian Tourists. Indian tourists are going places. Numbers are just increasing, and many countries are offering various sops to attract the Indian tourist. Sri Lanka has a fair share of Indian tourists yet there is scope of improvement to increase per tourist spend and tourist numbers. An immediate attention may be paid to often neglected Religious Tourists. It may be of interest to know that almost 400,000 pilgrims visit Ayodhya daily (City of India, known to be birthplace of Lord Shri Rama). Sri Lanka also has been strongly associated with sacred Hindu scripture Ramayana, the life journey of Lord Shri Rama. Then why should a fraction of such massive tourist movement i.e. 1% can’t be encouraged to visit Sigiriya in Sri Lanka which is mentioned vividly in Ramayana and also to other tourist places nearby. That alone would be more than 1.4 million annually i.e. more than the total current annual tourist arrivals in Sri Lanka. It is obviously an opportunity to be exploited in quick time.

Numbers Matter Most. Higher numbers of Indian tourists will positively add to higher revenues from tourism sector in Sri Lanka. Unlike many global journeyers the Indian travelers invariably evaluate the business propositions in the country they travel to. That may increase investments into Sri Lanka and create overall positive investment image, leading to improved credit ratings. Enhanced earnings in tourism sector may help correct the trade imbalance between the two neighbors (Sri Lankan imports from India are almost six times of the export to India). The Value Added Tax (VAT) collection may also increase. Government of Sri Lanka (GoSL) and Government of India (GoI) together may decide to raise the limit of expenses to at least INR One million or equivalent SLR for Indian tourists. For the  Indian investments in projects being done by Indian companies the limit may be project specific to move investment in Indian Rupees itself. This decision is likely to be impactful and in favor of Sri Lanka.

Enabling Digital Payments Using UPI. Online payments using India's Universal Payment Interface (UPI) payment system currently surpasses rest of world’s total digital payment numbers. It has revolutionized transaction in India and accelerating the economic growth. With over 5 billion transactions monthly, UPI has boosted financial inclusion, reduced cash dependency, and fueled e-commerce growth, making India a global leader in digital payments. The UPI is an important constituent of ‘India Digital Stack’. It was launched in Sri Lanka on February 12, 2024. To put it simply it enables Indian nationals traveling to Sri Lanka to make payments by scanning respective LankaPay QR code at any Point of Sale (POS) in Sri Lanka. Similarly, Sri Lankan nationals visiting India can use UPI for payments in India. UPI is directly linked to Bank Accounts of the traveler/user. All payments are handled smoothly, safely and securely by this software system.

UPI The Game Changer. In Sri Lanka the UPI payment services were introduced in partnership with LankaPay. The inaugural UPI transaction was conducted by genie business the Dialog company’s fin-tech solution. Barring few prominent places the penetration of this service remains grossly inadequate, and it is rare to find any merchant accepting payment using UPI. At the time of launch of the service the target was 10,000 merchant additions every week. But progress remains abysmal. The government may lead the effort by publicizing more, instructing banks to issue LankaPay QR code to all merchants and allowing zero balance accounts with LankaPay QR code for small and tiny business owners. It may increase per tourist spend. UPI is credited with fueling Indian e-Commerce story. It is simply a boon for startups and small businesses. The small businesses have their credit line enhanced based on the digital payments they receive via UPI.

Research Collaboration. Indian research institutions are moving fast in respective spheres. Many of Indian universities, institutes and research centers are recognized as world class and undertaking some advanced and critical research in respective domain. It is however seen that most do not have any association with their Sri Lankan counterparts. Recently India launched ‘One Nation One Subscription’ initiative wherein GoI has subscribed to all leading journals of the World and made them available to all Indian research scholars. Such provisioning will enable more and better quality research at Indian research facilities. Sri Lankan institutions if associated can collaborate on development of emerging technologies and also benefit by capacity building and development of Sri Lanka specific solutions. For example the collaboration with Indian Council of Agricultural Research (ICAR) can substantially improve Sri Lankan agriculture sector leading to enhanced food security as a whole.

Small and Medium Industries. Collaboration with and emulation of nano, micro, small and medium industries and production facilities of India can bring much needed self-reliance in critical sectors of Sri Lanka. Policy frameworks including dispute avoidance mechanisms need to be improved to enable Sri Lankan financing and leasing firms to associate with their Indian counterparts to facilitate Sri Lankan entrepreneurs to setup performance based incentive based production facilities. They may be encouraged to not only produce for Sri Lankan markets but for the bigger market of India as well. Current exporters of animal feed, Areca nuts, wood pulp, waste & scrap of paper boards, knitted fabrics and furniture etc. will benefit most.

Stock Markets. Indian stock markets are booming. Companies big or small are able to raise funds and scale up leading to enhanced economic activity. In Sri Lanka due to economic crisis the infrastructure development suffered maximum. Due to credit rating issues the Foreign Direct Investment (FDI) is finding it difficult to finance capital intensive projects in Sri Lanka. GoSL can significantly benefit by leveraging the power of Indian stock exchanges if they suitably engage with GoI and may be launch Sri Lankan Sovereign Bonds denominated in INR. This strategic move can attract substantial investments from Indian investors, providing a much-needed capital boost to Sri Lanka's infrastructure development. By listing these bonds on Indian stock exchanges, such as the Bombay Stock Exchange (BSE) or National Stock Exchange (NSE), Sri Lanka can tap into India's vast and deep capital markets. This can help Sri Lanka raise funds at competitive rates, while also enhancing its economic ties with India.

Infrastructure Development. The global trend for using Public-Private Partnerships (PPPs) for developing capital-intensive projects is on the rise. Many countries are adopting this model to bridge the infrastructure gap and drive economic growth. PPPs allow governments to leverage private sector expertise and financing to deliver critical infrastructure projects, such as transportation systems, energy projects, and public buildings. A report by PwC notes that infrastructure spending is expected to grow significantly over the coming decade, with 49 countries accounting for 90% of global economic output. This growth is likely to be driven by PPPs, which offer a collaborative approach to project development and delivery. To offer projects on PPP mode a meticulous planning and preparation is needed which requires funds. In smaller economies such funds often are obtained from multilateral financing institutions which are not only time consuming but often have inherent issues influencing decision making by the host country. Such a situation then leads to inadequate price discovery during competitive bidding. So, if Sri Lanka can raise funds with Indian stock market support as described above then part of that can be inter alia used for evaluating feasibility and preparing detailed project reports for large capital-intensive energy, mobility, marine and other infrastructure projects. Those projects can be then offered in PPP mode through competitive bidding to attain energy self-sufficiency, better mobility and development of blue economy. It is imperative to note that establishing project development sovereignty is the first step to get to optimal price discovery and get most competitive tariff/toll/annuity in any PPP project.

Collaboration for Ship Building and Allied Services. The growth of Indian economy has led to more and more ship building and demand for allied services i.e. ship repair, ship maintenance and maintenance of other seafaring vessels. Then there are other marine services for layoff vessels, offshore services and related activities. As shipping and maritime activity increases the demand for these services continues to increase alongside. Trincomalee port of Sri Lanka remains grossly underutilized and holds immense potential to be a hub for all the ship building and associated services. India and Sri Lanka have agreed to jointly develop the Trincomalee oil tank farm, with Sri Lanka's then Energy Minister instructing the Ceylon Petroleum Corporation to form a subsidiary company for this purpose. There are seven major ports i.e. Colombo, Galle, Hambantota, Oluvil, Trincomalee, Point Pedro and Kankesanthurai and 21 small fisheries harbors. While Colombo is fairly developed there is lot of extra capacity lying idle at Hambantota. The other ports including Trincomalee are barely being used. Overall it there is huge economic potential waiting to be unlocked. PPP remains the way forward. Best results will be there if the projects are well planned out, market sounding done and bidding is transparent and meticulous.

Optimising Government Efficiency. Largest economy of the world USA is embarking on efficiency enhancement program as reported. Sri Lanka too needs to critically evaluate various organs and expenses of government to streamline the expenses and obtain better value for money. In regional context Indian Insolvency and Bankruptcy and Code (IBC) has achieved significant success since its enactment in 2016. It has achieved a reduction in non-performing assets (NPAs) in banks by 40% and increased investor confidence and ease of doing business. In addition to private corporates the State-Owned Enterprises (SOEs) in Sri Lanka have been plagued by Inefficient management to include lack of professional management, inadequate corporate governance, and political interference. Most of them are running huge losses and struggling with significant debt burdens. There is overstaffing and inefficiency which creeped in primarily due to corruption and nepotism due to political interference and extra professional acts. While a new SOE act is in place to address issues of governance, transparency and accountability much needs to be done. Corporate professionals with impeccable integrity and drive are needed to implement the act in letter and spirit. The SOEs need to be made competitive and it can start with award of performance based contracts alone. The SOE boards need to justify each and every resource which is being held and productivity therein. Comprehensive financial restructuring needs to be undertaken to address debt burdens and improve financial sustainability. Oversight mechanisms and extra transparency is required to be built in to ensure probity and accountability.

Bi-lateral Trade Agreement. The current India Sri Lanka Free Trade Agreement of ISLFTA came into effect on 01st March 2000. It is likely to be replaced with the new Economic and Technology Co-operation Agreement (ETCA). When signed it is expected to bring numerous benefits to Sri Lankan trade and commerce. There is likely to be increased trade in services, enabling Sri Lankan professionals to access the Indian market in IT, finance and healthcare. The better economic integration will lead to greater cooperation in trade, investment and technology. More and consistent investments into Sri Lankan energy, IT, electronics, marine including shipbuilding sectors is likely to lead to more job creation and skill development leading to immense benefits for Sri Lankan economy.

The suggestions above are not exhaustive and there may be many more low hanging fruits to help economic recovery and accelerate the development activity. All such suggestions if implemented in right earnest can deliver rich dividends. Need of the hour is to identify right professionals and put them at right place with specific objectives and review periodically, meticulously and ruthlessly.

(Dr.Naresh Bana is Vice Chairman of Indo Sri Lanka Chamber of Commerce and Industry (ISCCI). He is a peer recognized international PPP consultant and ‘Subject Matter Expert’)