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An Economic Cataclysm—Sri Lanka’s Financial Crisis

The island nation of Sri Lanka is currently facing the heavy consequences of its government’s financial mismanagement and ill-timed decisions. A tremendous drop of 70 per cent in foreign exchange reserves has pushed the country to the verge of defeat. The coronavirus pandemic further dealt a massive blow to Sri Lanka’s already crumbling economy. With $7 billion to be paid in foreign debt obligations this year and just about $2 billion left in foreign exchange reserves, Sri Lanka faces the unenviable dilemma of choosing between paying for crucial imports and repaying its foreign investors.

The ones that are suffering the most during this economic calamity are the families belonging to the low-income sector of society. The inflation rate in Sri Lanka has skyrocketed to 17.5 per cent, the highest in Asia. Food and medicine costs are surging like never before. The ongoing war between Russia and Ukraine has only added to the misery of the common man by driving up the prices of oil. Four elderly men have lost their lives waiting in queues to buy fuel in the sweltering heat. Soldiers have been posted at hundreds of gas stations to prevent violence, stockpiling, and inefficient distribution. People have been forced to take up a second job, but the income from these is still not enough to sufficiently support their families and themselves. Paper and ink shortages mean students cannot give their exams. Hospitals are reporting shortages of necessary medical equipment. People are choosing to self-medicate instead of going to a doctor to get treated, which can only lead to higher morbidity rates. Electricity is also a rare commodity now, with daily ten to thirteen-hour power cuts becoming the norm. The drastic decrease in their quality of life has inevitably led to thousands protesting against the government and demanding change.

Sri Lankans waiting in a queue to refill their cooking gas cylinders in Colombo

Sri Lankans waiting in a queue to refill their cooking gas cylinders in Colombo. [Credits: AP Photo/Eranga Jayawardena]

Sri Lanka’s public debt is currently estimated to be 119 per cent of its GDP. This means that the country owes more than it can produce through goods and services. The largest portion of its foreign debt comes from international sovereign bonds, which make up 36.4 per cent of the total debt. These are followed by loans from the Asian Development Bank, Japan, and China. India has offered a $1 billion line of credit to assist Sri Lanka in procuring essentials such as food, fuel, and medicine. In addition to this, India has also extended a $400 million currency swap and $500 million for 40,000 tonnes of diesel to help with severe fuel shortages. India has also deferred the payment of $515.2 million by two months to the Asian Clearing Union.

This is the worst economic crisis the country has faced, since gaining independence in 1948. Sri Lanka is deep in debt with no single way to overcome it.

Who’s responsible?

The Sri Lankan government began financing its investments through foreign borrowings and in 2007, issued its first international sovereign bond for $500 million. A sovereign bond is a debt security issued by a government that can be denominated in both foreign and domestic currency. The buyer would be paid a given amount of interest for a stipulated number of years along with repayment of the face value on the maturity of the bond. The three-decade-long civil war with the Tamil militancy ended in 2009, following which the government focused on reconstruction and real estate. The nation was desperate to pay off foreign debt but didn’t work much towards diversifying its exports, an important source of forex. In 2019, the Rajapaksa government cut value-added tax from 15 per cent to 8 per cent which caused revenue losses of more than 2 per cent of its GDP. The same year saw the devastating Easter Sunday bombings that also took a toll on the tourism industry.

Police fired tear gas and water cannon at hundreds of university students who were trying to break through barricades near the town of Kandy. [Ishara S. Kodikara/AFP]

Police fired tear gas and water cannon at hundreds of university students who were trying to break through barricades near the town of Kandy. [Credits: Ishara S. Kodikara/AFP]

In 2020, the coronavirus pandemic caused Sri Lanka’s unstable economy to take a turn for the worse. The vital tourism sector dried up. Lockdowns disrupted the informal sector, which accounts for about 60 per cent of the country’s total workforce. Tax cuts from the previous year weakened the government’s ability to deal with the public health crisis. Further, in 2021, the government announced a ban on the import and use of chemical fertilisers and pesticides in an attempt to promote organic farming, as well as to conserve quickly depleting forex, which only led to shortages in crop yield and inflation in food prices. Remittances from foreign workers, the nation’s biggest source of dollars, also dropped by 22.7 per cent in 2021. That September, President Gotabaya Rajapaksa declared a state of economic emergency in the country to take control of the supply of basic food items and fix prices to control inflation. Due to the relentless protests of the citizens, the government has dissolved as all governmental authorities resigned except for Prime Minister Mahinda Rajapaksa and President Gotabaya Rajapaksa. Even after the imposition of a social media shutdown, people still circumvented using VPNs and got to the streets to march against the administration. The next major challenge that Sri Lanka needs to tackle is the repayment of a $1 billion bond maturing in July 2022

Sri Lankan soldiers walk past a bus burned by demonstrators at the top of the road of President Rajapaksa's residence in Colombo, Sri Lanka [Dinuka Liyanawatte/Reuters]

Sri Lankan soldiers walk past a bus burned by demonstrators at the top of the road of President Rajapaksa’s residence in Colombo, Sri Lanka [Credits: Dinuka Liyanawatte/Reuters]

In the last decade, China has financially supported Sri Lanka by lending over $5 billion to help with projects like building roads, ports, and an airport. According to critics, however, these funds were utilised for unnecessary ventures with low returns. President Gotabaya Rajapaksa has now asked China to restructure its debt repayments, in addition to asking for concessions on imports from China, to help Sri Lanka tide over its financial crisis. President Rajapaksa also offered to allow Chinese tourists to return to Sri Lanka, a major move in the wake of the COVID-19 pandemic. Sri Lanka is a significant member of China’s Belt and Road initiative, which is a long-term project focused on building infrastructure that links China with the rest of the world. This project has been called a “debt trap” for smaller nations with unstable economies. 

How It Affects India

The port of Colombo is a major trans-shipment hub on which India is heavily dependent for global trade. While exports to Sri Lanka only amount to 1.3% of India’s exports, 60% of India’s cargo trans-shipments are handled by this port. Any disruptions at Colombo port leave India vulnerable to increased costs and congestion issues. 

India is among the biggest drivers of Foreign Direct Investment in Sri Lanka. Investing in a wide range of sectors such as petroleum retail, hotels, real estate, manufacturing, telecommunication and banking services. Many Indian companies have a significant presence in Sri Lanka. Located at the centre of the Indian Ocean, Sri Lanka is a country of major military and geopolitical importance. In the last decade, Chinese influence in Sri Lanka has grown multifold, making China its largest import partner and one of its largest investors in public infrastructure projects. The Chinese presence in Sri Lanka is a cause of concern for India. However, Sri Lanka’s debt crisis has created an opening for India to counter Chinese influence. In the last few months, India has provided monetary support as well as relief in the form of food and medicine.

So far, sixteen Sri Lankan Tamils have arrived at Indian shores seeking refuge. They fled due to severe food shortages. India has not granted refugee status to any Sri Lankan since 2012, after the civil war. The Chief Minister of Tamil Nadu, M K Stalin, conferred with Prime Minister Narendra Modi requesting him to allow the Tamil Nadu government to provide humanitarian aid to the Tamils living in the northern and eastern parts of Sri Lanka.

Overcoming The Economic Crisis

Sri Lanka is currently facing a shortage of foreign exchange to pay for its imports. The government is now borrowing from other governments and carrying out currency swaps to overcome the forex deficit. However, these measures are not enough. The country has approached the IMF for help, to wade over this crisis. The IMF has recommended some policy changes to ensure that the most vulnerable are protected including but not limited to, reforming the revenue generation and collection system, increasing taxes to improve Sri Lanka’s low tax-to-GDP ratio and ensuring a greater contribution from higher-income earners of the country, and leaving fuel and exchange rates to the market rates.

Sri Lanka's inflation rate has increased to 17.5 per cent. [Credits: CNN]

Sri Lanka’s inflation rate has increased to 17.5 per cent. [Credits: CNN]

The IMF has also proposed the need for a banking act giving the Central Bank of Sri Lanka more regulatory powers to aid the process of resolving the country’s debt. Sri Lanka also desperately needs to diversify its exports as it is heavily dependent on tea leaves. The removal of import restrictions can help encourage investments, bringing in the necessity for exports. There is a need for reforms to improve conditions and ensure financial security for the labour force in farming and non-farming sectors to ensure the people living at the edge are uplifted first. 

Once revered as the radiant Pearl of the Indian Ocean, Sri Lanka’s crippling economy has rendered it a husk of its former self. The congregations within the government can only do so much to restore financial stability. The country desperately needs international helping hands to resolve the crisis, and revive the tourism industry in the process. The several strategies in place could eventually create a strong momentum—one which can hopefully pave the way to rekindle the glory of Sri Lanka.

Featured Image Credits: CNN




Optimising Your Meals—Sitting Down with dotfood

“Time moves slowly when you’re hungry and even slower when you’re waiting for food delivery…”

dotfood is a new online food delivery platform operating inside the MIT campus. Developed by third years Soumith Ganji and Parthiv Menon, the product as a whole aims to make ordering food from restaurants and food courts within MIT hassle-free. The MIT Post sat down with the creators of this service to talk about the app’s past, present, and future.

dotfood is a new online food delivery platform operating inside the MIT campus. Why did you feel the need for such an app?

Soumith: What happens nowadays in MIT, especially in the peak hours after 9:30 – 10, you have to call the place a minimum of 5 to 10 times, for your line to get connected. And for restaurants like MFC, even ten is less. I know people who’ve called 50 times. To eliminate this very need of continuous calls and waiting, we came up with the platform called dotfood.

Who did you get in touch with while trying to bring this idea to life? What are the organizations involved in the development of this app?

Soumith: I spoke to the managers of FC2, Apoorva, and The Kitchen. There is no third-party organisation as such. We have a direct contract with them.

Parthiv: We also talked to all the restaurant owners and managers about signing a contract with them regarding how the app would function and the kind of deal that we would strike with them over a span of 30 days, for now.

What are some of the setbacks you faced?

Soumith: There was one major setback that we faced the day we launched the app. We got about ten fake orders, which all summed up to about three to four thousand rupees in losses. The issue was with there being no validation for phone numbers while placing the order. We had to change the app’s architecture immediately and had to force everyone to shift to the new one. This brought a negative impact to the users on the very first day itself.

Parthiv: We did manage to fix the bug in a day, and rolled out a new update which incorporated the OTP verification methodology and since then, the app has been functioning well and gaining traction with the students.

Give us a brief on the day-to-day workings.

Parthiv: There are two parts to the whole product. One is the app that the students use. The other is the web app that the restaurant managers or receptionists use to track orders, modify menus, and let people know the restaurants open for delivery. The app has three basic screens, a list of all the restaurants, menus for each specific restaurant, and available offers. When a person places an order, it gets added to the cart like on any delivery app, and then you can place your order along with the mode of payment. All of this data is reflected on the web app for the restaurants.

The user interface on the Android app

The web interface that restaurants see.

 

How did you come up with the name? Is there a story there?

Soumith: We were sitting about, thinking of a name, and it wasn’t us who came up with the name. One of our friends suggested it, and we really liked it. So we decided to go ahead with the name dotfood.

Parthiv: We were also trying out different combinations for logos, and this one looked pretty good. Earlier ones looked like we were impersonating some other companies.

When can we expect an iOS and a web version?

Soumith: We’ve already started looking for iOS developers. We have received multiple requests from people asking for the iOS app.

Parthiv: Right now, it’s just the two of us in the whole team, and we work on all aspects—marketing, outreach, development, and operations. So eventually, we are looking to expand our team. But at the moment, our priority is to get an iOS developer. And as far as the web version is concerned, we don’t feel the need for a web version because apps are handier for such use cases.

If you were to scale the idea, would you offer the same services to other universities if they face the same issues?

Soumith: We definitely have a plan for scaling up and around Manipal. Firstly, we plan to implement the same business model in Kasturba Medical College (KMC). Apart from that, there are several other colleges in and around Manipal, apart from MAHE as well. We hope to put this app in as many universities and colleges as possible.

Considering that the service is limited to a small area, would you consider using reusable crockery and cutlery picking up boxes from the customer in an effort not to generate avoidable packaging waste?

Soumith: That is a point to be considered, but there is a major drawback of using crockery. If they break or get misplaced, it is a loss. They also need to be washed. It may not be a significant loss, but it could be a considerable loss if many people break stuff. As for picking up leftover boxes or utilising reusable crockery, it is highly unpredictable in the longer run. We, as students, live mostly in hostels. And I don’t think a lot of people would have boxes or reusable crockery.

The UI is not only easy to use but also aesthetically pleasing. What are some of the software you used to develop this app? And which of them would you recommend to other aspiring app developers?

Soumith: I built the app using Java—it is a native android app. The web app portal for the restaurants was created by Parthiv using ReactJS. Personally, I would suggest all aspiring app developers to stick to native Android or iOS platforms instead of going for hybrid models.

Parthiv: Additionally, we used Firebase—it is a platform provided by Google that doles out backend as a service. Since we wanted a quick and clean launch, we stayed away from building the back-end of the application from scratch. We leveraged a lot of inbuilt functionalities provided by Firebase, including authentication and notification services. So, Firebase is what forms the sturdy back-end of our application.

Featured Image Credits: dotfood




Mind Over Matter—Sitting Down With Amigo

In 2021, the mental health conversation is louder than ever before. Medical infrastructure needs to catch up to this conversation. Seeking mental help can be daunting, not only because of the stigma that surrounds it, but also lack of accessibility to quality services. Amigo is a tech startup by four MIT students aimed at developing an integrated online platform that connects professionals to those seeking help. An affordable healthcare initiative driven by Arko Chattopadhyay-CEO, Enrique Ferrao-CTO, Pranav Reddy-VP of Engineering & Design, Priyanshu Gupta-Chief Marketing Officer & Development Head, and Mohammad Shifaz-Head of Operations. The MIT Post got down to business with the co-founders of Amigo to break down their journey thus far.

Was there any specific reason which inspired you to create a start-up addressing mental health issues? Any particular incident or experience? 

Arko: I faced the need to seek some help because of personal issues I was going through. I never found a good service out there, online. And offline I just wasn’t ready to go. It was something I wanted to keep to myself. Later that year in the Manipal Hackathon 2020 there was a problem statement related to health care and that was on mental health. The other co-founders entered this particular problem statement as a team. I didn’t participate at first, but Pranav pushed me to try. So I found some other members and gave it a shot. I happened to qualify for the national finals.  We didn’t win owing to too many features to be built in very little time. However, we got a lot of key insights. The rest of my team left saying it was just a Hackathon project. I pursued it further, talking to people in Manipal, the student welfare department and trying to come up with a solid idea and build it into a proper startup. This was something I was passionate about, creating new infrastructure for the mental health market. I reached out to Pranav, Enrique and Priyanshu and all of them agreed to join. Priyanshu wasn’t sure how much of a help he would be at first, and now he heads Development. I had worked with Pranav and Enrique before. They now handle servers, website development and the like. That’s how the team came together. We started talking to therapists and conducting surveys. We work closely with the counsellors at the Student welfare department. We found that this is a product we can build, there is a vacancy in the market. And that is how we started. This took about a year to come together.

Priyanshu: I am a junior here. I met the other members as seniors in the Student Project Rugved Systems AI department. I didn’t think that I could be a part of something like this with my seniors. But here I am.

As young entrepreneurs, could you elaborate on the world of startups. How did you navigate it? What kind of help did you need and where did you find it?

Priyanshu: An advice to fellow batchmates. Just stay put. You don’t have to reach Mars in a month. Have a simple idea and think of its implementation, don’t wait for the perfect time, there is no such thing. Just take the first big step. Initially, we were also having second thoughts if we should go with this. But then we decided and went ahead. We realised-Yes we can do it. Even though others could have come up with this idea, no one did it. No one has really made any mental health focussed app in the country till now. I know it sounds like a cliché to “take a risk”. But honestly, it is not a cliché. The other members of my team, my seniors have dropped placements though they are perfectly qualified. They are taking that risk, to be completely focused on this. 

Arko: Don’t panic. We panicked about 3 months into full-time development of the product. We had doubts about the business model and its profitability, whether anybody would invest in us. We almost pivoted to a food tech app. After talking to many people in the startup industry, we noticed that most companies don’t make it to the 4-month mark. They lose motivation and drive. So the team matters. The people you are working with. Even if you pivot you need the team. Make a team and start building. Don’t panic.

Can you tell us about how one goes about getting investors? How do you present yourself and such?

Arko: Few of them have reached out to us. Investors are always looking for investment opportunities and they would love to come in as early as possible to get a major share in the company. So they are always actively scouting for startups. They must have come across us somewhere and then approached us.

Priyanshu: Sometime last year a VC contacted us, cause everyone knows that mental health is gonna be the next big thing, one of the next big markets. They wanted to invest, but we wanted to completely build the product first. We want to see how it works and then reach out to investors.

How has MUTBI (Manipal Universal Technology and Business Incubator) helped you? Any mentors who’ve played a major role?

Arko: We approached them for incubation and we are now in the final phase. We are talking to their business experts to see if our business model works. We are also in contact with other founders from MUTBI. Reaching out to them to hear about their journey and experiences. I spoke to the director of the Student Welfare Department, Miss Geetha M. and she told us that all her counsellors were available to us and to go ahead and approach them. About 7 months down the line we are actively working with them to build the product. Some of the Faculty in my branch are actively sharing our venture on social media. They are very excited about it, to grow the startup culture at Manipal. Out there, BITS Pilani has 5 or 6 unicorns, Swiggy, Big Basket to name a few. Manipal does not have such an active startup ecosystem yet. And we want to be an example to promote startup culture in Manipal.

The advantage of an app-based service goes beyond just convenience. Can you tell us about the benefit/role anonymity plays when someone is trying to reach out for help?

Priyanshu: About the anonymity feature you mentioned, there is complete privacy within the system that we have developed. When a user opens the site, it is completely their choice which therapist they want to talk to and at what time. Everything is the user’s choice. We play no role in deciding who the user talks to. We have the video calling and voice calling features within the application so that you don’t need Google Meet or Zoom links. There is no need to contact the therapists outside of the platform we have created. 

Arko: What we noticed is the lack of innovation in this field. There is no uniformity and nothing is aggregated into one single platform. So that’s what we are trying to do. And the anonymity feature is not just important for the client but also the therapists. Even though their name and speciality is information that is out there, other personal details should not be going out. Our therapists have told us in the past that they have received calls where they’ve been harassed. Our platform helps to weed out spam. We cater to those who come seeking help. 

Therapy is often about correcting fundamental mistakes that parents have been making for centuries, resulting in adverse consequences years later. How have your parents supported you? Would you like to give them a shout out?

Priyanshu: My family has been very supportive when it comes to this venture of ours, especially my father. He openly told me that he is even okay with me putting five years into this startup. He is always keen to know what is happening with Amigo and if there is any way in which he can help out. 

Arko: In fact, if it was not for Priyanshu’s dad we would not have an iOS app right now. His dad got him a Macbook which was needed for the iOS app development process. Coming to my parents, the fact that I am not sitting for placements and building a startup did raise some eyebrows but now they seem to be coming around it.

Your Instagram page says that it only takes 3 simple steps, can you elaborate on what those steps might be?

Arko: Choose the therapist, pick the slot and pay online. We have divided the kinds of counselling sessions available topic wise. Once you select the topic, a list of therapists comes up who specialize on that particular topic, after which you pick the therapist you would like to have your session with. Once that’s done all you need to do is book the slot and your counselling session is set up. Even with regards to payment, we have all the options available from UPI to credit cards. 

Priyanshu: Speaking of topics we have 24 total topics to choose from ranging from work-related stress to couple therapy. 

Arko: Even when it comes to the online session itself, other platforms usually conduct their session on skype or some other third party platform, with Amigo you can join in the session through the application 5-10 minutes before the slot timing by merely clicking on the “Join Session” button.

The counselling team can speak 12 languages and this is a highlight for anyone who comes across your app. Was this a happy coincidence or something you actively sought out?

Arko:  It’s something that was always on our minds since we are talking about people feeling safe and opening up. When it came to recruiting counsellors our main objective was to verify their credentials. We have 35 therapists in total and we have run stringent background checks with regards to their academic qualifications as well. And in this process, we always kept in mind the diversity of our country.

Priyanshu: From the beginning, our objective has been to reach out to as many people as possible. Especially people from tier – II and tier–III cities of our country. Undoubtedly, it is far easier for one to open up about their feelings in their mother tongue which is the language they are most comfortable in.  

Were there any particular setbacks you had to deal with along this journey of launching a startup? If so, could you tell us a bit about those setbacks?

Arko: A lot of people are not professionals in India, be it from banking to other legal formalities. Often processes can be very bureaucratic and little things can take 1-2 months’ time. If you were to compare it to how it happens in places like the US, these things don’t take much time. For example, even if a person wants to set up a bank account in India it can often take up to a week’s time. There is a great need for infrastructure in the mental health space in India so we definitely saw the potential of our idea. 

Priyanshu: I work on the technical side of things, so I often face setbacks with regards to sorting bugs in our code out and similar problems. But at the end of the day, we know that our venture is something that has a lot of potential and that’s what keeps driving us forward on a daily basis.

Featured Image Credits: Amigo