OIL PRICE CRASH TO HIT REMITTANCES FROM GULF: ASOCHAM
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.