Colombo, Jan 17 (IANS) India will extend financial assistance to Sri Lanka in restoring livelihoods of the ethnic Tamils and reviving the economy in the northern region of the island nation.

“Our development assistance projects are based on priorities of the Sri Lankan government and its people. Our funds ($712 million) will provide connectivity, housing, health, education, livelihood and economic revival in the northern region,” India’s External Affairs Minister S.M. Krishna told reporters here Tuesday.

To promote economic ties and boost trade between the two countries to $5 billion this year from $4.5 billion in 2011, both the governments also signed five agreements in the presence of Krishna and his Sri Lankan counterpart G.M. Peiris.

Under the first agreement, India will provide $260 million for the construction of 49,000 houses for about 300,000 ethnic Tamils who are in camps as internally displaced persons (IDPs) in the aftermath of the three decade-old armed conflict in the northern, central and eastern provinces.

The ambitious project includes reconstruction of 38,000 houses, repairs of 5,000 houses under the owner-driven model for IDPs and 6,000 units for those IDPs who are unable to build their own houses.

The second agreement envisages $382 million line of credit by the EXIM (Export-Import) Bank of India to restore the northern railway services in the strife-torn region. The credit will be used for track laying on the Pallali-Kankesanthurai railway line and other projects.

Under the third agreement, the EXIM Bank will extend $70 million buyer’s credit for funding a water supply project in the Dambulla region.

The fourth agreement facilitates cooperation in the fields of agricultural science, technology, farm production and agro-processing through joint activities, exchange of scientific materials, information and personnel.

The fifth agreement provides for setting up a mechanism of technical and institutional cooperation in telecommunications under the aegis of the Telecom Regulatory Authority of India (TRAI) and the Telecommunication Regulatory Commission of Sri Lanka.

To sustain the momentum in economic and trade ties between the two countries, Krishna stressed on finalising the comprehensive framework of economic cooperation that has been pending since 2007.

“India is also a leading player in Sri Lanka in terms of investments and tourist arrivals in the island nation,” Krishna said at a joint press conference that was held after his talks with Peiris.