Oil Crash to Hit Remittances, Will Affect Kerala Most
Remittances to India from Gulf nations could be in for a drastic fall and Kerala would face the maximum impact, warns industry body Associated Chambers of Commerce and Industry of India (Assocham). Their analysis is based on the crash in crude oil prices and its crippling impact on economies of the Gulf nations.
It also says that fresh recruitment in the Middle East is going to go down, going forward, and those already working there would find the going rather tough. The chamber called for assessment by Indian embassies across Gulf nations and for contingency plans to be prepared.
Assocham observed that apart from Kerala, where almost every other family is dependent on remittances, mostly coming from the Gulf nations, states like Punjab and Uttar Pradesh with their sizeable 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 a 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.
Bulk of the Indians in the Middle East are spread in Saudi Arabia, UAE, Bahrain, 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 low-income and labour-oriented sectors such as construction, hotels and restaurants 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. Moreover, the Indian embassies across the Gulf nations should start assessing the situation and suggest remedial measures,” Assocham Secretary General D S Rawat said.
A sizeable portion of remittances to India comes from Gulf countries like Qatar, Bahrain, Oman, Saudi Arabia and Kuwait which account for about USD 33-35 billion.