FLOOD OF PEOPLE, TRICKLE OF FUNDS

By Maria Kutty

With remittances from the Gulf dropping and laid-off Indians returning, the slowdown could hit home sooner than expected

For long, it was the Malayali’s Promised Land. The lure of shining cars, neon lights and petro-dollars has had Keralites flocking to Dubai since the mid-1970s. The money they sent back bolstered the state’s economy for over three decades, but the good times seem to be coming to an end, with the economic recession setting in.

An estimated 5.7 million Indian workers abroad sent home $27 billion in 2007 to make India the world's top receiver of migrant remittances, according to a World Bank report. And Kerala accounts for 19.4% or almost a fifth of all remittances by NRIs.

There are about 19 lakh Keralites in the Gulf, and 56% of remittances to the state originate from there. Economists believe that the slowdown in the Gulf countries will have a major impact on the state as it is heavily dependent on NRI remittances for its consumption expenditure.

Remittance figures with the state-level bankers’ committee show a decline in the contribution by non-residents to the total deposits received by commercial banks in Kerala since 2007. While overseas deposits comprised 32% of total bank deposits in Kerala as of September 2007, it has dropped to 27.71% in September 2008. The deposits received by the state’s banks as on September 2007 was Rs 97,113.30 crore, of which non-residents accounted for Rs 31,690 crore. But by September 2008, banks had received Rs 1,13,985 crore, of which just Rs 31,585 crore came from overseas residents.

There may be a fall in Gulf remittances as hundreds of jobs are lost in Dubai on a daily basis. Sudhir Kumar Shetty, general manager of UAE Exchange, Abu Dhabi, says, “We have not seen much of a dip in remittances compared to last year, but with new contracts not being signed and projects postponed, the situation looks bleak. There is going to be no growth in 2009.”

A number of economic activities in the state, notably trade, real estate and construction, were financed by remittances, says a study done by Thiruvananthapuram-based Centre for Development Studies. The report submitted to the state government in December 2008 says the growth in remittances could see a reduced rate during the short and medium terms.

“We never expected the problem in Gulf to be so bad. Though we mentioned that remittances could be one channel through which recession could hit us, we underestimated its effect,” says K J Joseph, who helped conduct the study.

Though there are no official figures for the number of Indians returning home, there are other indicators to show how bad the situation is. Dil Koshy, secretary of Agricultural Products and Processed Food Exporters’ Association (APEXA) says, “Since December 2008, there has been a 40% fall in export of fresh vegetables and other food items to Dubai.” Officials at the air cargo division of Kerala State Industrial Enterprises speak of a 20% fall in imports.

State finance minister T M Thomas Isaac says the worst is yet to come. “The situation is going to worsen in the coming months, particularly after March when the schools have their holidays,” he says.

However, tourism arrivals have not fallen. “Contrary to expectations, tourist arrivals for December 2008 have recorded a one per cent rise over December 2007. It is very reassuring, given that we were expecting a 25% to 30% drop,” says tourism secretary V Venu.

Schools have no space for returning students
Schools in Kerala are being flooded with enquiries for admission from Gulf countries, with thousands of overseas residents returning home after losing jobs. Ever since mega-construction projects in places like Dubai were shelved due to the slowdown, it is believed that thousands of Indians, many from Kerala, have been retrenched. Enquiries by HNN confirmed that many had already landed in Kerala, while a few fortunate ones have got time till March when children complete the school year.

Jomon Joseph from Thrissur was laid off by a construction company in Dubai. His son and daughter are studying in class IX and II. “I’ve been trying for their admission back home as I need to pack up by March, but I haven’t been lucky,” he says.

P Sunder, administrator, Chinmaya Vidyalaya, says they can admit new children only when others leave.

CBSE school rules state that the number of students in a class should not exceed 35. “We should be allowed to accommodate more students. This time, the requirement for new seats is far higher than the expected exit,” says E Ramankutty, Bharatiya Vidya Bhavan’s Kochi Kendra director.

The government could also grant ‘no objection’ certificates to schools awaiting CBSE affiliation. Some schools have approached courts to direct the government to grant NOCs. There are 300 schools awaiting NOCs. Education minister M A Baby told TOI it would be better if parents put their wards in government schools with state syllabus. “We are ready to relax norms to accommodate children. But granting NOC to CBSE schools is a major policy issue that we don’t encourage,” he says.