India announces Financial Assistance Package for Maldives

The Government of India has decided to grant a substantial financial package to the Maldives in order to enable it to tide over the economic crisis it is facing due to the shortage in the tourist footfall due to the COVID 19 pandemic.

India has already extended assistance of $400 million through extended currency swap agreement to help the island nation tide over the liquidity problems it is going through at present and also the Indian government has helped the country by donating 6.2 tons of medicines under ‘Operation Sanjeevani’ and 600 tons of food items to the country in the midst of the deadly pandemic.

In addition to all the above, the government is planning to extend another financial package to the country though the details are yet to be worked out at both ends.

Why is it required?

According to the analysis done by the World Bank, the huge slump in tourism has hit the island nation badly, given the fact that tourism consists of about two-thirds of the nation’s overall GDP figures. It has spilled over to household earnings in the country and also unemployment numbers. The construction industry in the country has also suffered a lot besides the reduced demand for raw fish exports, which has only added to the misery.

What has India done so far?

India has extended a financial package of $1.4 billion in December 2018 and it was aimed at bringing the island country closer to the Indian government after its brief soiree with China. Also, China caused the country to go in more debt burden through its debt diplomacy in the nation. All these have brought the country closer to India once again.

India has extended the similar currency swap facility to Sri Lanka also recently because like Maldives, Sri Lanka also sees a major percentage of its total revenue coming from the tourism industry, badly affected by the COVID 19 pandemic all around the world.                                                  

Month: Current Affairs - July, 2020