THIRUVANANTHAPURAM: Kerala economy is likely to be hit hard by the global economic meltdown because of its dependence on overseas remittances and the service industry fueled by tourism, according to a new study.
There are 11.5 out of 100 households in Kerala that have persons working outside the state but within India. However, this is as high as 24.5 households when it comes to Kerala expatriates residing outside India, mostly in the Gulf region.
The fact that a considerable portion of the output and employment in the state depends on export of commodities like spices, cashew nut, coir products, marine products, handloom and handicrafts also presents a bleak scenario.
The study was conducted by K.K. George and K.K. Krishna Kumar of the Kochi-based Center for Socioeconomic and Environmental Studies.
“The overseas remittances are equivalent to 20 percent of the net state domestic product (NSDP),” it says. “In fact, the value of these remittances exceeds the value of income originating in state’s the primary sector as well as in the manufacturing sector.”
Nearly half of the deposits in the Kerala banks belong to the nonresident Keralites (NRK) and its banking system depends mainly on them. Recession in the world particularly in the Gulf countries has been affecting the employment opportunities of the NRKs.
There are apprehensions, the report says, about large-scale return migration. This is particularly true about emigrants working in the UAE, the country most adversely affected by recession. Some 42 percent of the NRKs are working in the UAE while the share of Middle East in NRK population is 89 percent.
Though only less than 4,000 people have officially lost their jobs due to slowdown, mainly in UAE’s construction sector, many more are likely to return if it lingers on. It is difficult to estimate exact figures as the job shifts as well as exits and reentries with new visas are common.
Leading schools here are being flooded with overseas inquiries for admissions because parents could not afford costs of education in the Gulf. The mad rush for admissions actually began two months back after the UAE banned sharing accommodation for families.
“Debt burden has become an epidemic among expatriates in the UAE leading to many social issues like increasing cases of suicide and financial frauds,” says K.V. Shamsudheen, director of Dubai-based Barjeel-Geojit Securities.
“Most of them are forced to send back their families and there will be an exodus from the UAE to Kerala after the current academic year,” he said in a representation to Chief Minister V.S. Achuthanandan demanding capacity addition in Kerala schools to accommodate children of overseas workers. The state government has also demanded federal aid for rehabilitation of the return migrants.
Meanwhile, the case of alleged corruption by Communist Party of India-Marxist (CPI-M) Kerala secretary Pinarayi Vijayan will be heard by the high court in Kochi today. The case has taken Kerala by storm and has created ripples in national politics.
On Monday, a division bench of the Kerala High Court ordered that it will hear Vijayan’s response to a notice served to him last week regarding his alleged involvement in the graft case.
An NGO had filed a petition with the court, stating that the governor’s sanction was not required to prosecute Vijayan, who has been accused in a multi-million rupee corruption scam by the Central Bureau of Investigation (CBI) after awarding contracts to renovate two hydro-power projects to Canadian company SNC Lavalin 12 years ago when he was power minister.
— With input from agencies
