OIL PRICE CRASH TO HIT RE­MIT­TANCES FROM GULF: ASOCHAM

Resource Digest - - NEWS -

The crash in crude oil prices and its crip­pling im­pact on economies of the Gulf na­tions can deal a se­vere blow to re­mit­tances to In­dia, says in­dus­try body As­socham. An anal­y­sis by As­socham ob­served that the max­i­mum im­pact could be felt in Ker­ala where al­most ev­ery other fam­ily is de­pen­dent on re­mit­tances, mostly com­ing from the Gulf na­tions. States like Pun­jab and Ut­tar Pradesh which also send a size­able num­ber of work­force there would also be af­fected. Of about 20 mil­lion NRIS spread in 110 coun­tries, around six-seven mil­lion are in the Gulf states of whom two mil­lion are es­ti­mated to be from Ker­ala.

“As melt­down in crude is lead­ing to a price war among the ma­jor oil pro­duc­ers and prices breach­ing 11-year lows, ma­jor economies in the Gulf re­gion have been caught off guard and their fi­nances are go­ing to come un­der se­vere pres­sure. “Be­sides, fresh in­vest­ment in the en­ergy sec­tor has come to a halt, leav­ing a neg­a­tive spin-off im­pact on a host of sec­tors like con­struc­tion, tourism, real es­tate, bank­ing and fi­nance,” the cham­ber said.

It said while the RBI data for April Septem­ber 2015-16 shows an uptick in the NRI de­posits of $10.1 bil­lion from $6.4 bil­lion in the same pe­riod last year, the trend is bound to get ad­versely af­fected in a multi-pronged fash­ion, go­ing for­ward. “For one, the num­ber of work­ers, both the blue and white col­lar, go­ing to the Middle East on fresh re­cruit­ment is go­ing to drop dras­ti­cally while those al­ready work­ing in the re­gion would find the go­ing rather tough,” said As­socham.

The bulk of the In­di­ans in the Middle East are spread in Saudi Ara­bia, UAE, Bahrain and Qatar while those close to the con­flict re­gion have re­turned to rel­a­tively peace­ful places. With se­vere eco­nomic pres­sure in oil pro­duc­ing na­tions, the ex­pa­tri­ates, mostly in the low in­come and labour ori­ented sec­tors like con­struc­tion, ho­tels, restau­rants, etc. would feel the heat in terms of wage cut, lay­offs and the terms of em­ploy­ment de­te­ri­o­rat­ing, the anal­y­sis ob­served.

“It is a mat­ter of con­cern and the Cen­tre and the state gov­ern­ments should keep a con­tin­gency plan ready should a sit­u­a­tion of work­ers’ dis­place­ment arise.

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