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India ready to do more for Sri Lankan Tamils: Mukherjee

Finance Minister Pranab Mukherjee today said India was willing to provide even more assistance for the rehabilitation and resettlement of the Tamils in the north of Sri Lanka, over and above the assistance of Rs 500 crore announced by it earlier.

"India is doing and will continue to do whatever it can to assist Sri Lanka in this critical phase of its history," Mr Mukherjee said in the 4th Lakshman Kadirgamar Lecture in Colombo on the theme, "Economics as driving force of International Relations".

India is helping the Sri Lankan government in various ways in rehabilitation and resettlement of the Tamils after the Sri Lankan army decimated the separatist Liberation Tigers of Tamil Eelam (LTTE).

"The effective elimination of terrorism and secessionism from Sri Lanka offers you such an opportunity; an opportunity to shape history; an opportunity to permanently change the complexion of the relationship between the majority community and the minorities; an opportunity to address the legitimate grievances of all communities; and an opportunity to bring permanent peace and stability to this nation," he said.

"These are sine qua non for building the Sri Lanka of the future – a future in which all communities will live side by side and enjoy the same rights and privileges and get the same opportunities," he said.

Mr Mukherjee said that it was natural that, after freeing the Tamils from terrorist forces, it was natural that the first and primary focus of the Government of Sri Lanka had been to ensure the immediate welfare and safety of its citizens.

"Thousands of Tamils have come out of the conflict zone traumatized by the conflict and harbouring deep concern and fear of what the future holds for them. These citizens need reassurance. They yearn to return to their homes and resume their livelihood. Several thousand Internally Displaced Persons (IDPs) have indeed been resettled recently and we welcome this development. However, many more await their turn for resettlement in camps. We are confident that their speedy return is receiving the highest consideration of the Government," he said

"India has not hesitated to come to Sri Lanka’s assistance at this crucial juncture. This is only natural," he said.

The Finance Minister said India was moving from purely relief efforts to a broader rehabilitation and reconstruction phase. Its assistance had so far covered humanitarian supplies such as food, medicines and other essential supplies. It set up an emergency field hospital and four Indian de-mining teams are presently working in Northern Sri Lanka. Three more are on their way.

He said India was also sending additional shelter material and providing assistance to revive agriculture and livelihood in the North. He said both sides were also discussing assistance in reconstruction of critical civil infrastructure in Sri Lanka, including railways. They were now discussing larger projects for the population in key cities who were traumatised by the conflict.

Mr Mukherjee said they had, at the same time, not lost sight of the urgent requirements in the Eastern Province as well as of the Indian origin Tamils in up-country areas.

The lecture series is held in memory of former Sri Lankan Foreign Minister Lakshman Kadirgamar, who served under then President Chandrika Kumaratunga. Mr Kadirgamar was assassinated, allegedly by an LTTE sniper, in August, 2005.

Mr Mukherjee recalled the vision which Mr Kadirgamar had, both for close fraternal relations between India and Sri Lanka and for the future of Sri Lanka itself.

"It was he who dreamt of a world in which India and Sri Lanka would work together to build on our shared geography, history and culture in a relationship defined in his eloquent words by 'irreversible excellence'. It was also Lakshman who believed that Sri Lanka should remain united, and that its people should live together in an atmosphere of confidence and trust," he said.

He pointed out that Mr Kadirgamar believed that durable peace in Sri Lanka should be based on a constitutional arrangement acceptable to all communities in the nation based on democracy, human rights and the rule of law.

He recalled that the late Foreign Minister had said that it was important for all communities of Sri Lanka to realise that a political settlement was not a zero-sum game. It need not and should not come at the cost of another, he said.

He said Mr Kadirgamar's vision also drew upon the experience of the working of the Indian model. He believed that the Indian experiment with democracy was relevant in that India had chosen a democratic system which was designed to preserve the unity and integrity of the country without allowing for its disintegration.

The Finance Minister said there were many things in common between the two nations in terms of history, culture, philosophy and customs.

He said economics and international relations had a two-way relationship. "The economic strength of a country furthers international relations and vice-versa, creating a virtuous circle of growth and empowerment. The relationship has not changed though the (global economic and financial) crisis has brought in lessons that are likely to redefine the link in the interest of promoting global stability, he said.

According to him, the present crisis would be another watershed in the evolution of economics and is expected to bring about radical retooling of the theory.

He said there was a need for "visible hand" of oversight and regulation, without compromising market efficiency. Macro-prudential norms that aim at avoiding systemic risk through a watchful eye on asset price bubbles and imbalances, together with early warning indicators would be the key to this effort, he said.

Mr Mukherjee said developing countries are more vulnerable to crisis, as they have fewer cushions against shocks.

According to him, to resuscitate growth in the developing countries, the lost export demand had to be replaced by expanding other components of domestic demand.

"The best option is to expand investment. An obvious area where additional investment is required is infrastructure, including energy, transport and other public services. These investments can be made ahead of requirements and therefore are an ideal form of countercyclical activity," he observed.

He listed the various steps the Indian government had taken to cope with the crisis. He said the Indian economy had shown remarkable resilience to the crisis because the financial system had no exposure to the toxic assets.

He said the Indian growth was largely domestic economy driven, with merchandise exports accounting for only about 15 per cent of GDP.

"The extent of globalization however has increased over the years, which has been responsible for the setback that the economy received due to external shocks. The crisis hit the Indian economy initially through slowdown and reversal of capital flows, which impacted the stock market and the exchange rates. Thereafter, especially after the Lehman crisis, the real economy was affected through slowdown in exports, reduced investment activity and general risk aversion," he said.

He said that economic growth was expected to be in the range of 6-7 per cent in 2009-10, despite the setback due to the poor monsoon. The effort now was to bring the economy back on the growth path of 9 per cent per annum.

Mr Mukherjee expressed satisfaction that the Sri Lankan economy had also exhibited considerable resilience in the first few months of 2009 despite shocks from the global recession and the resultant slowdown in domestic economic activity.

He said the world economy was showing signs of recovery and global output was expected to expand by 3.1 per cent in 2010.

"The risks however, remain and the recovery would be razor edge walk, especially because signs of asset price bubble and heightened carry trade activity are re-emerging," he said.

"Against this backdrop of our shared inheritance lie the sobering realities of the current economic crisis. Global economic and financial slowdown has put the spotlight squarely on Asia as a region which can lead the global economic revival. Developing countries were in no way responsible for the crisis but have been the hardest hit. India has also been affected but fortunately not as bad as some others," he said.

The Finance Minister said India and Sri Lanka could show the way for Asia by cooperating even more with each other, building on the success of their Free Trade Agreement (FTA). He noted that the two sides had already initialed a Comprehensive Economic Partnership Agreement (CEPA) last year.

"I can assure you one thing – at a time when global players are investing in India to leverage their synergies with us, including in services, CEPA can only be a win-win situation for both India and Sri Lanka," he stressed.

"There are, however, hopeful signs that the future is closer to us than we think," he remarked, pointing to the fact that one of Sri Lanka’s largest companies, Brandix, has started a fully integrated textile city in Vishakapatnam.

He said Sri Lankan Airlines is already the largest foreign airline in India. Colombo Port and Colombo Dockyard feed on substantial Indian business. Many other Sri Lankan companies have realized the potential India offers. Many Indian corporations are also investing in Sri Lanka, the most prominent being Tata, Ceat, Indian Oil, Airtel, Ultratech and NTPC. Indian banks and an insurance company operate in Sri Lanka as well, he said.

He also said the two countries were looking at power-grid interconnectivity. There are more than 100 flights a week between the two countries. India already accounts for the largest number of tourist arrivals into Sri Lanka.

"Our development partnership has expanded to include several projects which India is taking up in Southern Sri Lanka including the Southern Railway corridor. Trade, connectivity, tourism and exchange of information and ideas are the key to greater economic engagement, he said.

"The future of peace, security and development of our region has to be fortified through common economic prosperity. We are already engaged in this process through SAARC, which has moved from a declaratory to an implementation stage. The challenge today is to build inter-dependencies which not only integrate our region but also create a strong interest in each other’s stability and prosperity. Critical to this is connectivity of goods, people and ideas. India and Sri Lanka have the will and determination to take a leadership role in this quest," he added.

NNN

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