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HomeDiplomacySri Lanka to borrow $55 mn from India to buy urea, year...

Sri Lanka to borrow $55 mn from India to buy urea, year after disastrous organic farming turn

Sri Lankan cabinet Tuesday approved proposal for the loan, which will be extended via EXIM Bank of India. India will also be supplying the country with 65,000 metric tonnes of urea.

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New Delhi: Sri Lanka is borrowing $55 million from India to buy urea for paddy cultivation, continuing with its U-turn on chemical fertilisers a year after the Rajapaksa government banned chemical fertilisers in an attempt to switch completely to organic farming, plunging farmers in the island nation into an unprecedented crisis.

The Sri Lankan Cabinet Tuesday approved the proposal to sign the agreement, which was tabled by Prime Minister Ranil Wickremesinghe in his capacity as the minister of finance, economic stabilisation and national policies.

The $55-million loan (around Rs 427.7 crore), being provided via the Export-Import Bank of India (EXIM Bank), will be given for use in the procurement of urea in the 2022-23 harvest season.

Sri Lankan farmers have been reeling under a massive crisis after the Gotabaya Rajapaksa government last year ordered a country-wide ban on all chemical fertilisers and shifted entirely to organic farming, leading to the country experiencing a 50 per cent crop loss. However, now all the previous agricultural policies have been cancelled with the coming of Wickeremesinghe, who has drawn up a plan to revive the economy, especially agriculture.

Apart from the loan, India will also be supplying Sri Lanka with 65,000 metric tonnes of urea to help the farmers and the country, which is facing a severe food crisis.

Gopal Baglay, India’s high commissioner to Sri Lanka, said Sunday, “Prime Minister [Narendra] Modi has approved the urea consignment donation, which will travel directly to Sri Lanka from its origin in Oman.”

This comes after Sri Lanka’s agriculture minister Mahinda Amaraweera sought help from the Indian High Commission there in order to address the growing food crisis. As a result, despite a ban on urea exports, India will be sending the shipment to Sri Lanka.

This consignment of urea will be given under the existing $1 billion line of credit extended by India.

Also read: Sri Lanka faces tough choice between food security and debt repayments

Relief mission

In an address to the nation Tuesday, Wickremesinghe said, “India, China and Japan are leading the list of countries that provide us with loans and assistance. Relations with these countries, which have always been strong, are now broken. Those relationships need to be rebuilt.”

He added, “We need to import food items to meet our daily requirements. It costs about $150 million a month. The task of rebuilding our declining agriculture must begin immediately. We are losing the international market for our export crops.”

India has, this year alone, extended support worth over $3.5 billion to Sri Lanka to help the country overcome its current difficulties. In addition, India has also provided assistance in mitigating shortages of essential items such as food and medicine among others.

(Edited by Zinnia Ray Chaudhuri)

Also read: Crisis-hit Sri Lanka bets big on $14 bn China-backed Port City, wants reluctant India to invest


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