India is set to disburse approximately USD 350 million, out of a total of USD 450 million committed for cyclone recovery efforts in Sri Lanka, in Indian rupees, according to High Commissioner Satosh Jha. Of this aid package, USD 100 million will be provided as grants.
High Commissioner Jha stated, “The assistance will be multi-pronged, assisting Sri Lanka in sectors that are the worst hit.” He outlined five key areas of support: the rehabilitation and restoration of road, railway, and bridge connectivity; construction support for houses that are fully destroyed or partially damaged; support for health and education systems affected by the cyclone; agricultural aid to address potential shortages in the short and medium term; and initiatives to enhance disaster response and preparedness.
A joint monitoring and coordination committee, including representatives from various ministries, has been established, with its initial meeting co-chaired by High Commissioner Jha and Minister Anil Jayantha in the last week of December.
India will allocate close to USD 30 million for the reconstruction of damaged bridges and will also assist in rebuilding railway tracks. Sri Lankan officials have estimated that reconstructing rail tracks will cost over USD 330 million, with the upcountry tracks being the most severely damaged. High Commissioner Jha confirmed that India will soon commence the reconstruction of the Northern Railway track, a project expected to cost around USD 5 million.
India’s IRCON, a state engineering firm, originally constructed the Northern track using welded rails and a strengthened base, allowing trains to operate at speeds of up to 100 kilometers per hour. In contrast, some of Sri Lanka’s other tracks are in a state of disrepair, forcing trains to run at slower speeds of around 20 km/h to prevent derailments.
High Commissioner Jha noted that approximately USD 350 million of the aid package will be denominated in Indian rupees. Previously, India extended a USD 1 billion equivalent credit line to Sri Lanka through the State Bank of India in Indian rupees, enabling easier transactions for imports amidst forex shortages caused by inflationary measures by Sri Lanka’s central bank.
As long as Indian suppliers accept payments in Indian rupees, Sri Lanka can effectively utilize credit lines or grants denominated in the currency. Other nations, such as Japan and China, have historically funded large projects in Sri Lanka using their respective currencies, the yen and the yuan. (Colombo/Jan09/2025)
