Sri Lanka started as a land of opportunities. It appeared to have a fine mix of tactical location in the Indian Ocean, uncluttered economy, high level of education, lack of inequality, robust export sector, effective government, and place among the most prosperous Asian nations. Then, what are the reasons that a country with so much potential cannot even pay for the fundamental needs of its citizens and what went wrong with Sri Lanka? The study talks about historical developments of the Sri Lankan economy, how it missed the train of globalisation, the involvement of the international community in the destruction of the Sri Lankan economy, and how it was exploited as a “Guinea Pig” by the Chinese and Indian aspirations for becoming a global hegemony. The study is going to address a panoramic view of Sri Lankan crisis; talks about, how the smaller and promising countries like Sri Lanka are subject to the will of the larger forces like India, China, USA, how Sri Lanka found itself stuck as the battleground for the power struggle in the region and how the small, embattled country is striving for its territorial integrity, sovereignty and even its ecological preservation.