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INDIA: Reverse Migration Casts Shadow on Kerala Economy

THIRUVANANTHAPURAM, Jun 30 2009 (IPS) - Recession in petroleum-rich Middle Eastern countries is causing thousands of workers to return to their homes in southern Kerala triggering fears of a negative impact on the local economy.

In the United Arab Emirates (UAE) alone construction companies have halted or put on hold projects worth 582 billion dollars with no word on when work may resume.

Adding to the problem is a decision made by Kuwait to deport roughly 100,000 expatriates for having irregular documentation.

With some 2.1 million workers in the Middle East, administrators in Kerala have reason to fear that a sudden exodus may upset the state’s economy, which has become heavily dependent on remittances over three decades.

In 2008 non-resident Indians sent home 32 billion dollars making India a major beneficiary of migrant remittances. That figure represents three times the amount of foreign direct investment (FDI) that India receives.

Sheela Thomas, principal secretary to the chief minister and head of the Department of Non-Resident Keralities Affairs (NORKA), told IPS that the state government is closely monitoring the reverse migration. “There is no room for panic or frenzy. We are in touch with various agencies in the Gulf to assess the predicament people are facing there.”

According to Peter Alphons, a Kuwait-based Indian businessman, thousands of Indians will lose their jobs if the government there implements deportation orders. Keralites form the single largest expatriate community in the Sheikhdom – about 580,000 in the total population of 3.5 million.

“Where Gulf rulers once depended on foreign workers to convert their petro- dollars into development, today they are not too happy with the large numbers of expatriates in their midst and see the global recession as an excuse to send back workers,” Alphons said. “The six member Gulf Cooperation Council (GCC) has been worried over the demographic imbalance caused by their preponderance in countries like U.A.E, Kuwait, Saudi Arabia, Qatar,” he added.

S.M. Najeeb, general manager of NORKA, has admitted that reverse migration, which started from Dubai following a halt of construction work there, is now increasing rapidly. “It is due to various reasons such as job loss, delay in salary, high cost of living conditions and restrictions on family visas.”

NORKA has decided to start schools to cope with the reported situation of massive reverse migration of Kerala students from Indian-run schools in the Middle East.

“Hundreds of students have already obtained school transfer certificates from Kuwaiti schools alone, while the picture is not different in the UAE,” said Thomas Chandy, a worker in Kuwait.

Recruiting agencies confirmed that hundreds of job visas were cancelled from across the Middle East. Especially affected is the Muslim dominated district of Malappuram where 71 percent of the families have either an emigrant or a returnee.

Overseas Development and Promotion Consultants Limited, which recruits Keralities for overseas jobs and has 60 enlisted recruiters in different countries, stated that a recruitment fall has occurred due to recession in Middle East.

M.C.A. Nazer, bureau chief in the Gulf for the Malayalam daily ‘Madhyamam’, told IPS over telephone that 30,000 visas had been cancelled in Dubai within the last three months. “We do not know the exact numbers of Keralities whose visas were terminated following recession. More than 1,000 affected people, including Indians, are residing in camps in Dubai alone.”

According to B. Soman, an engineer in a French consultant organisation, petroleum and power are the only sectors that are safe. “In these sectors, there is no fear of job termination. But other sectors such as health, basic retail and food, as well as essential services are partially affected, he said speaking from Hujira in UAE.”

A study by the Thiruvananthapuram-based Centre for Development Study (CDS) shows that the migration tendency of Keralites has remained stationary since 2003, while the number of NRKs per hundred households dropped from 39.7 to 36.2 during 2003-07.

The study indicated the era of large-scale emigration from Kerala was generally over.

Prof. Irudaya Rajan, an expert on international migration at the Centre for Developing Societies (CDS) here said there was little evidence to show that the economy had slowed down as a result of layoffs and retrenchments in the Gulf.

He observed that all return migration is not necessarily related to recession and that Keralites abroad are good Samaritans and operate informal networks to help relatives and friends to find new jobs and stay employed.

Banking officials are however sceptical as to how long the remittance boom will continue.

Right now the state has 6.3 billion dollars worth of non-resident deposits. Of these 56 percent flowed in from Gulf region. A significant dip in remittances, coupled with an exodus of expatriates, could spell trouble for Kerala’s economy.

“Further deterioration in the global crisis can have a bearing on the inflow of NRI funds in the days to come, and some slowdown in remittances due to the global financial crisis and associated contraction cannot be ruled out,” according to the Reserve Bank of India.

Commenting on the banking system in the Gulf, K.N. Radhakrishnan, a bank official in Abu Dhabi said: “Many of the jobs are in the Small and Medium Enterprises (SME) sector and if the banks there can intervene to stabilise the situation many jobs can be saved – but this is not happening.”

Following reports of a spurt in the number of labourers returning, the state government has set up a two million dollar welfare fund besides creating a 20 million dollar package that could help those interested in starting new ventures at home.

Meanwhile the central Ministry of Overseas Indian Affairs has initiated bilateral talks to protect migrant workers. “The government is aware that some employers are retaining passports and do not renew visas in time, turning the workers into illegal immigrants. We are holding talks on the issue,” minister Vayalar Ravi said.

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