India, the large and profusely diversified country, has earned a hegemony and force to reckon with, in the South Asian region. India is a home to the world’s second largest populace and is surrounded geographically by fabled neighbours like Pakistan and Talibanized Afghanistan in the West; dragon China and small-landlocked frontiers of Nepal and Bhutan in the North; the largest border-sharing nation of Bangladesh and the Burmese land of Myanmar in the East; and the island nation of Sri Lanka in the South. The south of its continent is flanked by the Arabian Sea, Bay of Bengal and Indian Ocean, which insulate and shield the entire landmass.
Of all its neighbours, India shares a great proportion and strategic position in the enormous waterbody, which is ensuingly named after the landmass it adores. In the very waters, lie india’s neighbour, separated by Palk Strait and Gulf of Mannar, Sri Lanka. The island nation, which is just a few kms off India’s coast comprises of majority Sinhalese and minority Tamilians, who are settled there as inhabitants for long, post-migrating from south Indian state of Tamil Nadu. And this demographic aspect has always been the reason behind the series of conflicts and civil wars, which the country is ill-famed for. It was only in 2009 that the majoritarian rule of the Sinhala came to an end, giving way to what is called the people’s rule, i.e., democracy. Since then, many influential leaders have tried wooing the voters with miraculous promises, only to secure the power reins of majesty. And history stands testament to the times when the leaders made attractive yet problematic policy decisions, only to come or stay in power. One such instance goes back to 2019, when the Rajapaksha brothers campaigned proficiently to seize hold of their respective elitist spaces. They made such blunders after coming to power, that people whom they had won through enticing campaigns took to streets to campaign against their very political existence! Mahinda Rajapaksha, who has held office multiple times, believed in giving high positions to his kin. And this time, it was his sibling Gotabaya who got the throne, being the real executive in the presidential form of government!
Ever since, Gotabaya was campaigning, he tried his level best to beguile the citizens with promises like deep tax cuts, and especially the Sinhalese Buddhists, whom he promised to be of great service to, later. However, when he actually came to power, the expectations of the masses could meet the distorted reality pretty unbelievably. His policy decisions were based on the maxim of importing more than exporting, which subsequently led to high government expenditure and low source of income. This ensuingly led the Lankans to owe more than what they actually produced. And as promised, the deep tax cut policy initiated by Gotabaya led to country’s imminent ruins. The watchdogs and agencies warned the archipelago of bleeding state coffers and the situation when they would literally run out of money. A little later, sensing the unravelling trajectory of the country, Gotabaya tried to help. And unknowingly, he took the step of banning chemical fertilizers, only to reduce foreign imports. However, rather than being of any help, the move turned out worrying since the agricultural productivity downgraded to levels Sri Lanka had not witnessed before. All this while, the obedient president only assured its citizens by cajoling that he wanted to make the primary sector eco-friendly and food healthy for all. And as icing on the cake, even staple food grains like rice had to be imported from elsewhere, to feed the citizens filled with discontent. The dissatisfaction further built up because now even an embargo was put up on the import of luxuries, indicating the certitude that the country was literally scrambling to save dollars, and trying to brace for an imminent storm.
All this has been a part of Sri Lanka’s destiny because of the family politics and backfiring of their policies, which could have been thought over well before being implemented. Aforesaid, as Sinhalese Buddhists were preferred over others for seeking votes, the Rajapakshas spent heavily or invested heartily on the infrastructure using bilateral debt or financial assistance from the emerging giant, China. It decided to take a bailout from the Chinese giant in order to strengthen ties with it, rather than its helpful neighbour India.
However, Sri Lanka’s aide not only supplied it with money, but also the Wuhan virus, which subsequently took a global platform as a pandemic. And the contagious flu has been troublesome for all the nations for the losses they have suffered in their economies. Sri Lanka, undeniably, has borne the brunt of it to petrifying levels as the already-affected tourism sector (due to easter bombings) further recorded numbers which were substantially low than early standards. The toll on the GDP at large, was an unstoppable consequence of the hard-hit tourism industry, which accounted for nearly 13% of it, according to pre-pandemic levels. Furthermore, courtesy of the virus, even remittances stopped flowing in the island nation, adding to the misery.
Discerning the faltering economy and the country as a whole, Gotabaya could no longer just wait for the events to unfold into dreading reality. He sought financial aids from his free-handed neighbours, India and Bangladesh, after the international agencies turned a blind eye against the reputedly bankrupt Sri Lanka. Being unable to make-do with even the borrowed amount, the policy-makers decided to devalue their currency, only to encourage remittances from the Sri Lankans abroad and qualify for more loans from the international monetary fund.
Nonetheless, what emanated as a result of the ibid steps were soaring inflation, decline in people’s purchasing power and price-hike of even mere essentials. This pushed the Lankans to face the materiality of life, accepting the towering inflation rate, huge piles of debts to be returned, bleeding foreign reserves and tanking currency.
With these ingredients ready, the best recipe for a turmoil has been observed. The economic crisis has given a way to political unrest in the country, with people marching against their elected government, and seeking justice in trying times like these. With such a turmoil at its behest, Sri Lanka is saddled with the responsibility to pay back the loans and look after the 2.2 crore people, trying to quench their thirst for their basic amenities.
Yet India’s another neighbour isn’t very far from this juncture of their economy. Pakistan, too, is trailing behind like the crisis-stricken Sri Lanka, and the records suggest that it can land up worse than its failing Asian counterpart.
Although Pakistan’s rate of growth and development has never been at par with its old brother, India, it has tried hard to keep pace with other developing countries by registering stipulated growth trends since its very existence. Over the years, the country’s economical condition has never been as worrying as today, even if we see Pakistan’s recorded figure during the global economic crisis in 2oo8. However, the kind of situation it has been pulled into, calls for sympathy from the others.
Counting the odds that are against it, we find that the per capita income levels in the country has gone substantially down, the budget deficit has grown high and there have been dwindling foreign reserves at Pakistan’s behest. The currency has depreciated to levels which should not have been a part and parcel for a developing economy like Pakistan. The graph at the stock exchange also suggest that the Pakistani rupee has been underperforming. Even the investments by the foreign investors have been wiped out, an indication of the fact that they have turned away instead of sparing some money for Pakistan’s developing economy.
Nevertheless, when Pakistan is keeping up with such a detrimental condition, the trade deficits should not be overlooked while promising subsidies. Yes! The Pakistani government led by Imran Khan continued to overwhelm the citizens with subsidies for essentials and fuel, when it knew that it had to turn to the IMF for a bailout. The bankrupt nation witnessed extremely high inflation, making the gentry fend for themselves, especially the vulnerable class. However, it was only this moment that the PTI government tried to improve its election prospects by further pushing the country into deeper debts.
And it would not be surprising to know that the deteriorating condition of Pakistan accounts for the period when the Nawaz Sharif regime was toppled with military support and Imran Khan’s party took control of the reigns. But even before the ex-cricketer sworn in as the new prime minister, the economy had shown an unravelling trend, and as the state saw a new government taking charge, the prevailing situation neared by leaps and bounds. Even this year’s annual budget post Shahbaz Sharif’s government take over aimed at ameliorating the economy, but it seemed no hope for a rebound.
Aforesaid, the developments which have stirred crisis in both the South Asian countries, are merely but the tips of icebergs. All this did not happen in a matter of a day. The regimes in both the governments wanted to take their democracies on the path of an autocracy. The whims and fancies of extreme populism and strong dictatorial tendency long accounted for an impending disaster. The Rajapakshas in Sri Lanka and Imran Khan led-PTI in Pakistan remind us that political mishap can lead to an economic blunder.