Oil meltdown affects Kerala diaspora, but experts not worried

THIRUVANANTHAPURAM: It is often said when the Gulf sneezes, Kerala catches a cold.

God’s own country, where almost every house has a non-resident Indian, is slowly but surely feeling the pinch of the oil price crash. Though there is no mass retrenchment or piling up of pink slips, many NRIs felt uncertain about their future as crude prices touched an all-time low.

For K Shaji, who works at an advertisement agency in Qatar, this has meant a 20% pay cut. For others, it has meant returning back to India without a job, or a reduced allowance from earning family members overseas.

NRIs fear if oil prices remain the same, it will lead to more job cuts and smaller pay packets. “It is natural when a country faces an economic meltdown, expats will be the first to get the axe,” said Shaji.

Given the slow down, migration rates to the Gulf have also been coming down.

Around 25 lakh people of the 3.25 crore population in Kerala have migrated out of the coun- try in search of greener pastures. Of this, 90% have moved to the six countries under the Gulf Cooperation Council -- Saudi Arabia, United Arab Emirates, Qatar, Bahrain, Oman and Kuwait. These people are mainly semi-skilled or unskilled labour hailing from the lower and middle class. Last year, the diaspora pumped ` 1 lakh crore in to the country, about 35% of Kerala’s total income.In a recent study, trade and commerce body Assocham warned that the oil price crash would deal a severe blow to remittances, and states like Kerala and Punjab would be hit hard. “With severe economic pressure in oil-producing nations, expatriates – mostly in the low income and labour-oriented sectors like construction, restaurant and tourism – will feel the heat in terms of wage cut, layoffs and the terms of employment deteriorating,” the study said.

For those living the reality, the outlook is stark. “It is a double whammy for us. Besides salary cuts, many firms have stopped fresh appointments, putting extra burden on existing employees,” said Subhash Chandran who works in Manama, Bahrain.

Raziya Ahmed, whose husband w Most people in Kerala with family in the Middle East eagerly scan bourse columns to find out the price of crude oil these days, hoping for some good news. Leading banks however claim there is no dip in remittances. “Rupee’s pain is a gain for NRIs who are in a race to park their money back home that will fetch them good dividends. Expats working in the Middle East are borrowing from friends and colleagues and taking personal loans to cash in on the situation,” said a senior bank manager.Dr Irudaya Rajan of the Centre for Development Studies, who has extensively studied migration, also sounded an optimistic note, saying there was no need to panic. “I feel people in higher income groups are taking the hit. Since 70 per cent of NRIs are unskilled and semi-skilled, (there is) nothing to worry as of now,” he said.

However, a government study on migration trends and the likely impact on the country would help mitigate any situation in the future, he pointed out. “Nobody has any idea how long this slump will continue. Instead of going around the bush, it’s better to have an in-depth study to point out the impact on migration,” Dr Rajan said.