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Sri Lankan Prime Minister Ranil Wickremesinghe on Thursday said that the SAARC swap arrangement with the Reserve Bank of India (RBI) is part of the international assistance to boost the island's flagging reserves.

"The Reserve Bank of India has agreed to give our Central Bank USD 400 million under the SAARC currency swap arrangement. They (the Indians) are considering a further large sum," Wickremesinghe told parliament.

His remarks came a day after Sri Lanka's Central Bank on Wednesday said that the RBI has agreed to provide USD 400 million under the SAARC swap arrangement to boost the island nation's reserves. It said that a further request to the RBI for another SWAP arrangement of USD 1 billion is "under consideration".

Wickremesinghe said that Lanka will make its highest ever debt payment in history – USD 2600 million - on January 14.

"Within 2019 we have to pay USD 5900 million by way of interest and capital on foreign loans," he said.

Wickremesinghe said that the nearly two-month long political crisis had an adverse impact on the country's economy.

"During the 51 days, our Rupee fell by 3.8 per cent. When all other currencies were appreciating, the rupee was falling. There were capital outflows from the country," he said.

"We are yet to quantify the losses, but it was a death blow to an economy that was struggling to recover," Wickremesinghe told parliament.

President Maithripala Sirisena's dramatic move on October 26 to sack Prime Minister Wickremesinghe and install former strongman Mahinda Rajapaksa in his place following differences over policy issues, left the country without a functioning government for nearly two months. However, a Supreme court verdict forced Sirisena to reinstate Wickremesinghe.

Sri Lanka's reserves dipped from USD 7991 million to USD 6985 million during the crisis, the prime minister said.

Due to the political crisis, the big three credit rating agencies -- Fitch Ratings, Standard & Poor's (S&P) and Moody's -- downgraded Sri Lanka's sovereign rating.

Wickremesinghe said the government is in the process of raising USD 1.9 billion to boost its reserves. One billion dollars are to be raised in international markets while USD 500 million would be raised from Chinese Panda funds and Japanese Samurai Funds in addition to the USD 400 million from India's RBI under SAARC currency swap arrangement.

The government's priority right now is to work for the rupee's stabilisation, Wickremesinghe said. The weaker rupee has caused cost escalation of raw materials and all imports.

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Jahangir Aziz of JPMorgan is expecting the government to maintain fiscal deficit target of 3.2-3.3 percent.

"We do expect the government to make it (fiscal deficit) to 3.2 whether it is through finding new sources of revenue in the last few months or through contraction expenditure, most likely you will get 3.3 or slightly higher than 3.3 for the central government," he said.

Indian economy is expected to grow at 7.2 percent in 2018-19 against 6.7 percent in the previous fiscal mainly due to improvement in the performance of agriculture and manufacturing sectors, the Central Statistics Office (CSO) said on January 7.

The CSO estimate is, however, a bit lower than 7.4 percent growth projected by the Reserve Bank for the current fiscal.

"I have stopped focusing on levels of growth numbers given the uncertainty associated with them. So let us just focus on the trajectory of it. We had a decent first half and clearly there is a slowdown in the second half. At least the slowdown in the second half is consistent with what is happening elsewhere in the economy, what is happening to credit numbers, what is happening to credit situation including what has happened to global trade, which has slowed down quite a bit. So at least we have the first half and the second half consistent, which is a relief. The way we are looking at it, this slowdown is probably going to continue till the second calendar quarter of 2019. So the first quarter of next year and then once the impact of the liquidity and the financial conditions tightening fade, we should see some recovery beginning in the second half of calendar 2019," said Aziz.

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Jahangir Aziz of JPMorgan is expecting the government to maintain fiscal deficit target of 3.2-3.3 percent.

"We do expect the government to make it (fiscal deficit) to 3.2 whether it is through finding new sources of revenue in the last few months or through contraction expenditure, most likely you will get 3.3 or slightly higher than 3.3 for the central government," he said.

Indian economy is expected to grow at 7.2 percent in 2018-19 against 6.7 percent in the previous fiscal mainly due to improvement in the performance of agriculture and manufacturing sectors, the Central Statistics Office (CSO) said on January 7.

The CSO estimate is, however, a bit lower than 7.4 percent growth projected by the Reserve Bank for the current fiscal.

"I have stopped focusing on levels of growth numbers given the uncertainty associated with them. So let us just focus on the trajectory of it. We had a decent first half and clearly there is a slowdown in the second half. At least the slowdown in the second half is consistent with what is happening elsewhere in the economy, what is happening to credit numbers, what is happening to credit situation including what has happened to global trade, which has slowed down quite a bit. So at least we have the first half and the second half consistent, which is a relief. The way we are looking at it, this slowdown is probably going to continue till the second calendar quarter of 2019. So the first quarter of next year and then once the impact of the liquidity and the financial conditions tightening fade, we should see some recovery beginning in the second half of calendar 2019," said Aziz.

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India's sugar production increased by 7 percent to 110.52 lakh tonnes in the first quarter of 2018-19 marketing year that started in October, as mills in Maharashtra and Karnataka started operations early, industry body ISMA said on Friday.

"As on December 31, 2018, 501 sugar mills were in operation in the country and have produced 110.52 lakh tonnes of sugar, as compared to 103.56 lakh tonnes produced by 505 sugar mills as on 31st December 2017," Indian Sugar Mills Association (ISMA) said in a statement.

Maharashtra and Karnataka sugar mills started their crushing earlier this year and this resulted in rise in output in the first quarter of 2018-19 marketing year (October-December 2018).

"However, due to substantially lower rainfall and white grub infestation, Maharashtra will produce significantly lower quantity this year as compared to last. Overall, the country is expected to produce much less sugar this season as compared to last," ISMA said.

Earlier, the association had estimated that production could fall to 315 lakh tonnes in 2018-19 from 325 lakh tonnes in the previous year. The country's annual domestic demand is 260 lakh tonnes.

As per the data, mills in Uttar Pradesh have produced 31 lakh tonnes during October-December 2018, with an average recovery of 10.84 percent as compared to 33 lakh tonnes with an average recovery of 10.14 percent in the corresponding period of the previous year.

Although average recovery of sugar from cane is higher, the sugar production in UP would be lower as the sugarcane yield per hectare is lower than last season.

In Maharashtra, sugar production rose to 43.98 lakh tonnes from 38.39 lakh tonnes. The average sugar recovery so far is 10.50 percent as against 10.23 percent achieved in the corresponding period of 2017-18.

"Due to lower availability of cane in Maharashtra and an early start (of operation), the mills therein would be closing much earlier than last year," ISMA said.

Sugar production in Karnataka increased to 20.45 lakh tonnes from 16.83 lakh tonnes during the period under review.