Gulf uncertainty tests Kerala, but new opportunities may emerge

A UAE-settled, middle-aged couple, hailing from a south Kerala district, visited home last month along with their children. Despite the deepening West Asia crisis, they have no plans to stay back.

“It’s not just about meeting daily expenses but also huge liabilities from buying land in Kerala. There is no question of staying back here,” they said.

Joyce, a cab driver based at Tiruvalla in central Kerala, was quite relieved when this DH reporter recently hired his cab for Assembly election coverage. “It is after one week that I am getting a trip. Usually, we are busy with NRIs during this season because of Easter and Vishu,” he said.

Their accounts reflect Kerala’s high-level economic dependency on Gulf
remittances.

Reports of layoffs, compulsory leaves and hiring freezes across Gulf countries have triggered much anxiety among families directly dependent on NRI incomes. The ripple effects are already visible in a host of sectors, such as tourism, travel, and exports. Even homes and hotels are facing a cooking gas shortage.

Experts anticipate a mass return of migrants in the coming months, which could lead to a nearly 20% drop in remittances. They also anticipate a counter-current: global firms in the Gulf exploring relocation to safer destinations in India and the possibility of a post-war hiring boom. 

Of Kerala’s 21.5 lakh overseas migrants, 80.5% are in Gulf Cooperation Council (GCC) countries, with the UAE topping the list with 38.6%. With this concentration, Kerala has more reasons to worry over the prolonged tension.

According to forums and government agencies working for NRI welfare, many NRIs working in sectors such as hospitality, event management, real estate and transport in the UAE are facing job loss. They are not ruling out chances of a mass exodus in the coming months. Flight disruptions and high fares are forcing many who have already lost jobs to stay back for now.

“The situation is quite concerning. Job losses have already been reported in sectors like hospitality, banking and event management, where scores of Malayalis are working. The construction sector is also likely to be affected if the crisis prolongs. The real impact will be clear only after flight operations normalise,” said Ajith Kolassery, chief executive officer of NORKA-Roots, a Kerala government agency working for the welfare of NRIs.

Mansoor Palloor, the Middle East convener of the Indian Overseas Congress, said jobs in sectors such as construction, transport and retail could be hit if the crisis continues. Companies are holding back fresh projects, which makes the situations quite concerning.

A senior official at the Thiruvananthapuram International Airport said that many who returned from GCC countries were found to be asked by companies to go on compulsory long leaves, and many were anxious about job loss.

Meanwhile, experts also point out that even as Kerala witnessed a mass exodus during the Kuwait war as well as Covid-19, emigration continued to increase afterwards.

“In the post-war scenario, there could be a large requirement of Malayalis for rebuilding activities in the Gulf countries. Hence, there could be a boom in migration. But it all depends on how long the war will prolong,” said S Irudaya Rajan, founder-chair of the Thiruvananthapuram-based International Institute of Migration and Development (IIMAD).

Rajan, who did extensive studies on migrations from Kerala, anticipates at least a 20% drop in remittance as an immediate effect. The long-term effects would be more severe if the war prolongs itself, he added.

At present, non-resident deposits in banks in Kerala are over Rs 3 trillion. 

According to various studies, Kerala holds a steady 21% share of India’s NRI deposits. The NRI remittances also play a significant role in strengthening Kerala’s economy; they constituted 1.7 times the revenue receipt of the state.

The tourism sector is already feeling the heat. April to June is typically when visitors from GCC countries, including the Arabs, arrive in large numbers, but this year has seen a sharp decline. The majority of tourists to Kerala arrived from the UAE and Saudi Arabia.

“Cancellations by tourists from GCC countries are massive. Arab tourists usually travel with families and spend lavishly. They are considered high-end tourists as they spend time and money at hill stations, Ayurvedic resorts and houseboats. The impact caused by the prolonging West Asia crisis is having its cascading effect on many such sectors,” said Jose Pradeep, president of Kerala Travel Mart, a key forum of stakeholders of the state tourism sector.

The export of perishables to Gulf countries was the first to be hit by the West Asian crisis, as the shipments depend heavily on scheduled flights. On an average, around 140 to 150 tonnes of fruits and vegetables were being exported daily to Gulf countries through the four airports in Kerala. During festival seasons like Vishu, Easter and Ramadan, the volumes typically went up. But flight disruptions have hit the exports badly.

“We were willing to pay a higher rate of up to Rs 200 per kg in chartered flights, which is more than double the normal fare. But airlines demanded up to Rs 600,” said Abraham Thomas, president of the Agricultural Products and Processed Food Exporters’ Association (APEXA).

Even amid this uncertainty, industry leaders in Kerala see fresh opportunities.

“While a mass return is expected, the state could also anticipate fresh opportunities, as many international firms, with key centres in Dubai, may now look for other safer destinations. So, Kerala as well as other Indian states could tap the opportunity. This could also open up job opportunities and facilitate reverse migration,” said S N Raghuchandran Nair, president of the Trivandrum Chamber of Commerce and Industry.