Authors: Assistant Professor Madhurya Chetia
Abstract: The Sri Lankan economic crisis, culminating in a sovereign default in April 2022, was driven by fiscal mismanagement, unsustainable debt accumulation, balance-of-payments stress, and policy missteps such as sweeping tax cuts and sudden organic-farming initiatives. This study explores its causes, impacts on India, and key lessons for safeguarding India’s economy. Methodology includes literature review of academic articles and policy reports, analysis of macroeconomic trends, and synthesis of expert recommendations. It finds critical importance in restraining fiscal deficits, diversifying exports, avoiding populist policies, and maintaining prudent reserves. Policy recommendations for India include bolstering domestic revenue, cautious infrastructure debt, gradual policy rollouts, export diversification, and regional financial cooperation.
