Sri Lanka's storm in a teacup may compel India to bring out its checkbook

Having just seen its $3 billion investment in Afghanistan go up in smoke, India's appetite for economic diplomacy may even be lower than usual.

The Maldives and Sri Lanka, both highly tourism-dependent tropical islands, have seen the pandemic devastate their economies and finances. Government debt this year is expected to linger above 100% of gross domestic product in the two small Indian Ocean nations. Unsurprisingly, both have similar--and similarly poor--credit standings. A default by CCC-rated borrowers is a “real possibility” on Fitch Ratings’ scale.

And yet, the Maldives seems to be turning the corner on visitor arrivals, with numbers last month exceeding the figure for August 2019. Sri Lanka, where a deadly Easter Sunday suicide bomb attack two years ago hit tourism even before