BRP BHASKAR
AS people who have lost their jobs in the Gulf states are trickling in, about two million Kerala families whose breadwinners work in that region are wondering what the future holds for them.
Since the oil boom started transforming the region's economy more than three decades ago, it has been the dream destination of the state's job-seekers. It is there that nearly 60 per cent of 3.35 million Keralites, who left home seeking means of livelihood, found employment.
According to media reports, 100 to 150 persons are returning jobless from the Gulf region each week. This is a small number, but there is reason to worry as the outlook for the immediate future is not rosy.
Observers of Gulf developments are of the view that there may be a steep rise in loss of Gulf jobs as the year 2009 progresses. The International Monetary Fund's forecast that plummeting oil prices will bring down the region's economic growth rate, which stood at 6.8 per cent last year, to 3.5 per cent this year reinforces local fears.
India is today the largest beneficiary of expatriate remittances. The Gulf region accounts for only about a quarter of the country's remittance income. However, remittances from the region are the mainstay of Kerala's economy. Ninety per cent of all Keralites working abroad are in this region.
Experts do not share the anxieties of expatriates' families. "There is no cause for worry," says an economist. "There is nothing to indicate that the Gulf job market is shrinking. All Gulf-bound flights from Kerala are going full."
According to Gulf-watchers, while employment opportunities are dwindling in some sectors, other sectors are still attracting job-seekers. They point out that all Gulf states are not equally affected by the economic slowdown. There are also noticeable differences in the way the different countries are responding to the situation. While Kuwait has said it will cut spending by 36 per cent this year, the United Arab Emirates (UAE) has announced plans to increase public spending by as much as 42 per cent. UAE and Saudi Arabia are the countries with the largest number of Keralites.
In the last few years, the state has been witnessing return migration simultaneously with outward migration. According to official sources, about 890,000 non-resident Keralites returned home last year. There was, however, no fall in remittances. This was partly due to the continued outward migration and partly due to the rise in the value of the Gulf currencies in relation to the rupee.
Return migration figures for 2008 are yet to be compiled. However, officials are the view that more people might have returned than in the previous year.
Apparently the phenomenon of outward migration offsetting the effects of return migration still continues. If some people are losing jobs and returning home from the Gulf, others are finding jobs and going there. This, of course, is poor consolation for the families of those who have lost jobs or stand in risk of losing them. They are waiting to see if the central budget, to be presented on Monday and the state budget, to be presented on Friday, will offer them any relief.
Both the centre and the state initiated steps last year to create institutional mechanisms to help migrants returning from abroad. However, these mechanisms are yet to become functional.
Under the central scheme, the Ministry of Overseas Indian Affairs has set up an Indian Community Welfare Fund, which will allocate money to Indian missions to help workers who have gone abroad after obtaining emigration clearance. Obviously the scope of the scheme is extremely limited.
In last year's budget, Kerala Finance Minister TM Thomas Isaac made a provision of Rs30 million to set up an NRK welfare fund. The state assembly later enacted legislation to create the fund, designed to assist not only those working abroad but also those employed in other states of India.
The law envisages a voluntary scheme which NRKs can join. The monthly subscription will be Rs300 for a person working abroad and Rs100 for one working in other parts of India.
A person who has been member for a minimum period of five years will be entitled to a pension after attaining the age of 60. If the member dies before that age, the family will get the pension.
Unless developments in the ruling party force a change in his plans, Chief Minister VS Achuthanandan is expected to visit Dubai shortly to launch a drive to collect funds under the scheme. –Gulf Today, Sharjah, February 16, 2009.
Showing posts with label Gulf migrants. Show all posts
Showing posts with label Gulf migrants. Show all posts
Monday, February 16, 2009
Monday, May 19, 2008
Regular currency fluctuations continue to worry Keralites
A major foreign exchange earner, Keralites suffer when the value of the Indian currency appreciates because every dollar or dirham they earn then fetches fewer rupees. There is, however, no mechanism to compensate them for the consequent losses.
Currency fluctuations directly affect two groups of people: exporters, who include producers of cash crops, and about two million people working abroad, a large majority of them in the Gulf States.
As the rupee declined continuously against the dollar and the Gulf currencies pegged to it in the closing decades of the last century, both these sections were happy as their bank accounts kept swelling.
After the turn of the century, the rupee gained strength, eroding the earnings of non-resident Keralites. However, the extent to which it affected the State's economy was not immediately clear.
KK George, Chairman of the Centre for Socio-economic and Environmental Studies, Kochi, and Remya S, a research assistant in CSES, have now quantified the loss to the State resulting from the rise in the value of the rupee since 2003-04.
They have estimated that non-resident Malayalees (NRM) suffered an aggregate loss of Rs 86.60 billion during a period of four and a half years as the value of the rupee appreciated.
George and Remya are of the view that the rise in the value of the rupee was not entirely due to the growing strength of the Indian economy, as is widely assumed. It was partly a result of the steady depreciation of the US dollar. They believe the large inflow of funds to the Indian capital market, a good proportion of which was of a speculative nature, also contributed to it.
The CSES has published the findings of their study in a working paper titled "Impact of rupee appreciation on non-resident Malayalees".
According to George and Remya, as the Reserve Bank was reluctant to intervene in the exchange market and conduct sterilisation operations, the value of the rupee rose unhindered. The appreciation became steep after July 2006.
The average exchange rate of the US dollar, which stood at Rs.47.69 in 2001-02, rose to Rs.48.40 in 2002-03. Thereafter it fell continuously for three years -- to Rs.45.95 in 2003-04, Rs.44.93 in 2004-05 and Rs.44.27 in 2005-06. In 2006-07, it went up again to Rs.45.28 only to slump to an average of Rs.40.21 during April-December 2007.
"Despite the importance of agricultural commodities and products of labour-intensive traditional industries in the State's exports and the big role played by NRM remittances in the State's economy," they observe, "the steep appreciation of the rupee and its adverse impact have received very little attention among political leaders, policy makers and the media in the State, with very few exceptions."
They put NRM remittances in 2004 at 18.4% of Kerala's gross state domestic product. Non-Resident Indian remittances formed only 2.9% of India's GDP in that year. These figures show that NRM remittances are far more important to the State's economy than NRI remittances are to the national economy.
They point out that the annual loss to NRMs and the State economy on account of rupee appreciation (estimated at Rs.10.26 billion in 2003-04, Rs.13.10 billion in 2004-05, Rs.18.90 billion in 2005-06 and Rs.16.67 billion in 2006-07) exceeded the total Plan grants from the Centre to the State (Rs.6.97 billion, Rs.9.33 billion, Rs.8.00 billion and Rs.9.98 billion respectively).
Business organisations represented to the authorities the case of the exporters who were affected by the appreciation of the rupee. Following this, the Central government offered them relief by way of interest subsidy and other measures. While the exporters got interest subsidy of Rs.83.51 billion, not even a token subsidy was offered to NRI bank deposits.
George and Remya describe the silence of policy-makers and opinion leaders in Kerala in this matter as baffling. "The sheer number of emigrants and remittance receiving households should have made them sit up," they say.
They add, "It appears that despite their importance in Kerala economy, the NRMs have not acquired sufficient clout and lobbying power with the State government, not to mention the Central government."
From the NRM point of view, there was a slight improvement in the situation since the beginning of this year as the rupee declined in tune with the downward trend in the stock market. But financial experts expect the rupee to bounce back when capital inflows rise. Obviously Keralites still have cause for worry. --Gulf Today, Sharjah, May 19, 2008.
Currency fluctuations directly affect two groups of people: exporters, who include producers of cash crops, and about two million people working abroad, a large majority of them in the Gulf States.
As the rupee declined continuously against the dollar and the Gulf currencies pegged to it in the closing decades of the last century, both these sections were happy as their bank accounts kept swelling.
After the turn of the century, the rupee gained strength, eroding the earnings of non-resident Keralites. However, the extent to which it affected the State's economy was not immediately clear.
KK George, Chairman of the Centre for Socio-economic and Environmental Studies, Kochi, and Remya S, a research assistant in CSES, have now quantified the loss to the State resulting from the rise in the value of the rupee since 2003-04.
They have estimated that non-resident Malayalees (NRM) suffered an aggregate loss of Rs 86.60 billion during a period of four and a half years as the value of the rupee appreciated.
George and Remya are of the view that the rise in the value of the rupee was not entirely due to the growing strength of the Indian economy, as is widely assumed. It was partly a result of the steady depreciation of the US dollar. They believe the large inflow of funds to the Indian capital market, a good proportion of which was of a speculative nature, also contributed to it.
The CSES has published the findings of their study in a working paper titled "Impact of rupee appreciation on non-resident Malayalees".
According to George and Remya, as the Reserve Bank was reluctant to intervene in the exchange market and conduct sterilisation operations, the value of the rupee rose unhindered. The appreciation became steep after July 2006.
The average exchange rate of the US dollar, which stood at Rs.47.69 in 2001-02, rose to Rs.48.40 in 2002-03. Thereafter it fell continuously for three years -- to Rs.45.95 in 2003-04, Rs.44.93 in 2004-05 and Rs.44.27 in 2005-06. In 2006-07, it went up again to Rs.45.28 only to slump to an average of Rs.40.21 during April-December 2007.
"Despite the importance of agricultural commodities and products of labour-intensive traditional industries in the State's exports and the big role played by NRM remittances in the State's economy," they observe, "the steep appreciation of the rupee and its adverse impact have received very little attention among political leaders, policy makers and the media in the State, with very few exceptions."
They put NRM remittances in 2004 at 18.4% of Kerala's gross state domestic product. Non-Resident Indian remittances formed only 2.9% of India's GDP in that year. These figures show that NRM remittances are far more important to the State's economy than NRI remittances are to the national economy.
They point out that the annual loss to NRMs and the State economy on account of rupee appreciation (estimated at Rs.10.26 billion in 2003-04, Rs.13.10 billion in 2004-05, Rs.18.90 billion in 2005-06 and Rs.16.67 billion in 2006-07) exceeded the total Plan grants from the Centre to the State (Rs.6.97 billion, Rs.9.33 billion, Rs.8.00 billion and Rs.9.98 billion respectively).
Business organisations represented to the authorities the case of the exporters who were affected by the appreciation of the rupee. Following this, the Central government offered them relief by way of interest subsidy and other measures. While the exporters got interest subsidy of Rs.83.51 billion, not even a token subsidy was offered to NRI bank deposits.
George and Remya describe the silence of policy-makers and opinion leaders in Kerala in this matter as baffling. "The sheer number of emigrants and remittance receiving households should have made them sit up," they say.
They add, "It appears that despite their importance in Kerala economy, the NRMs have not acquired sufficient clout and lobbying power with the State government, not to mention the Central government."
From the NRM point of view, there was a slight improvement in the situation since the beginning of this year as the rupee declined in tune with the downward trend in the stock market. But financial experts expect the rupee to bounce back when capital inflows rise. Obviously Keralites still have cause for worry. --Gulf Today, Sharjah, May 19, 2008.
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