Lines of Credit Current Affairs - 2020

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India signs Agreement to provide $318 million Line of Credit to Sri Lanka

India has signed an agreement with Sri Lanka to provide USD 318 million as line of credit for developing Sri Lanka’s railway sector. The agreement was signed between Sri Lanka’s Ministry of Finance and Mass media, and Managing Director of India’s Export Import Bank in Colombo.


In 2015, during the visit of Prime Minister Narendra Modi to Sri Lanka he had declared a line of credit of USD 318 million for the development of Sri Lanka’s railway sector. That visit of Prime Minister Modi was the first standalone bilateral visit by an Indian prime minister since 1987.

The line of credit comes at the backdrop of increasing Chinese presence in the Indian Ocean nation. China has made significant investments in Sri Lanka mainly in developing ports. Though China claims the investments are part of its Belt and Road Initiative that aims to link it with Europe and Africa via the Indian Ocean, the ports have the potential to be used as a base for its naval operations.

At present, Indian development assistance to Sri Lanka primarily focuses on improvement of infrastructure, livelihood development, education, healthcare, and capacity building. India continues to be a major developmental partner for Sri Lanka for nearly 40 years.

So far India has provided four lines of credit to Sri Lanka for developing its railway sector that totally amounted to USD 966 million. Sri Lanka has made used of these credit facilities to improve the southern and northern railway lines as well as for procuring the rolling stocks for the Sri Lanka Railways.

In addition, over the years Indian foreign direct investment in Sri Lanka has also increased rapidly.




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CCEA approves production subsidy of Rs 4.50/quintal to Sugarcane farmers

The Cabinet Committee on Economic Affairs (CCEA) has decided to pay a production-linked subsidy of Rs 4.50 per quintal directly to sugarcane farmers in the current crushing season.

Decision in this regard was taken at CCEA meeting chaired by Prime Minister Narendra Modi in New Delhi.

Key facts

  • This decision aims at helping cash strapped sugar mills clear arrears and would cost public exchequer about 1,147 crore rupees.
  • The production subsidy would be given to offset the cost of sugarcane and facilitate the timely payment of cane prices to farmers.
  • Currently, Sugar mills across the country are facing a liquidity crunch due to low prices of the sweetener in retail markets and they owe about 6,500 crore rupees to cane farmers.
  • In the last two crushing seasons, Union Government had given sugar export subsidy to millers in order to help them clear cane dues to farmers. But it was discontinued this season due to World Trade Organisation (WTO) objections.

Extension of Lines of Credit to African and other developing countries

  • The CCEA also gave its approval to the extension of Lines of Credit to African and other developing countries for another five years from 2015-16.
  • The Lines of Credit will be provided under Indian Development and Economic Assistance (IDEA) Scheme which has been in operation since 2005-06.
  • IDEA scheme attempts to promote India’s strategic political and economic interest abroad by positioning it as an emerging economic power and partner for developing countries.
  • The Union Government would make a budgetary provision to the tune of around 3,772 crore rupees for this scheme.
  • It should be noted that Lines of Credit are an important component of India’s diplomatic strategy.
  • It has been very useful tool in generating goodwill and building long term partnerships with different countries.

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