Eight lengthy dhows, with value tags within the range of Rs 6 -9 crore each and every, would have sailed off the shores of Beypore, Kerala, if buyers from Qatar had no longer cancelled the orders a couple of months ago.
In 2010, Qatar had successfully bid to host the 2022 FIFA World Cup. The Qatari government ingeniously determined to accommodate guests on dhows anchored on the emirate's waterfront. Dhows are wood ships with triangular sails, made via conventional carpenters in Beypore.
"Qatar had plans to order some 100 wooden long boats. Some of the orders had come to us also... But these started getting cancelled after crude prices fell and Qatar-Saudi Arabia relations soured," rues Abdulla Baramy of Baramy Ship Builders.
Since its founding in 1954, Beypore-based Baramy Ship Builders has constructed with regards to 110 dhows for buyers within the UAE, Kuwait, Oman and Qatar. But their order book has contracted over the last few years — almost in keeping with the dipping fortunes of their buyers. "We make small boats for local fishermen these days. We also do odd repair jobs," shrugs Baramy.
The economic droop, bobbing up out of an unprecedented fall in crude oil costs and simmering geopolitical pressure within the Persian Gulf, are sending shock waves across the Arabian Sea. The truthful winds that ferried labour and material between Arabia and India have bogged down significantly.
Consequentially, NRI remittances to India from the GCC or the Gulf Cooperation Council international locations — comprising Bahrain, Kuwait, UAE, Oman, Qatar & Saudi Arabia — have slid alarmingly.
India, the most important remittance-receiving country international, witnessed a near 9% drop in NRI pay-in flows to $62.7 billion in 2016 over the former year, as mentioned in a World Bank file. Much of this shortfall has been attributed to the economic downturn in GCC states. As in step with RBI scrolls, inward remittances have fallen from a height of Rs four.38 lakh crore (in 2014-15) to Rs 3.66 lakh crore closing fiscal, a 12% decline.
"It is a case of an overall economic slowdown in the Gulf; lower oil prices have resulted in an economic slowdown in that region," says Madan Sabnavis, chief economist at CARE Ratings. "The slowdown in that region has also resulted in paycuts and job losses. The IT slump may have impacted remittances from North America too."
Send Money Home
How vital are remittances for India? Not much, in case you are only taking into account the proportion of remittances to the GDP. Inward remittances account for simply 3% of India's GDP. But, at a sub-national level, remittances play an important position. Take Kerala, which receives the lion's percentage of its remittances from the Gulf area. Remittances account for over 36% of Kerala's state domestic product and contribute significantly to household consumption.
That aside, remittances turn out to be vital in instances of excessive industry deficit, which isn't a concern at this point in time, reckon economists. Trade deficit is when the price of country's imports exceeds the value of its exports.
"Remittances provide a cushion in times of higher trade deficit. The impact of lower remittances would have been higher had global commodity and raw material prices been higher," says Devendra Pant, chief economist at India Ratings. "If there's a slowdown in India, our current account deficit may creep up. Without adequate remittances, the rupee could come under pressure as well."
Beyond that, states with excessive migration rates (Kerala, Tamil Nadu, Punjab and Karnataka) have body of workers from low migration states taking over unskilled or semi-skilled jobs. States like Kerala, Tamil Nadu, Karnataka and Punjab have migrant labourers from Uttar Pradesh, Bihar, West Bengal and Odisha incomes their livelihood. If Indians in GCC reduce the value of their cash orders, there would no longer be enough jobs for inland migrants ( see Say Hello to Replacement Migration ).
"If the Gulf starts sending back our citizens, we will be in trouble. Unemployment rates will go up. People from states with low migration rates, who go for employment to states like Kerala, could be hurt financially," Pant warns.
The Dependency Factor
As in step with External Affairs Ministry knowledge, nearly 85 lakh Indians work or are living in GCC international locations. In the primary seven months of this year, over 2.77 lakh Indians relocated to the Gulf in search of jobs. The UAE has absorbed a lot of these jobseekers (about 1.10 lakh Indians), followed via Saudi Arabia (59,911), Oman (42,095), Kuwait (40,010) and Bahrain (7,591).
Uttar Pradesh, with over 62,438 persons, tops the Gulf migrants list, followed via Bihar (50,247), West Bengal (25,819) and Tamil Nadu (24,003). Number of Gulf migrants from Kerala has diminished significantly over the last few years.
"The demographic profile of people going to the Gulf is changing," says S Irudaya Rajan, professor at the Centre for Development Studies (CDS), Thiruvananthapuram. Rajan has spearheaded a number of analysis research on labour migration. "Not many of us from Kerala or Tamil Nadu are going to the Gulf anymore. Till some time ago, they have been being replaced via people from UP, Bihar and West Bengal.
Now, they are being replaced via non-Indians — most commonly people from Vietnam, Philippines, Bangladesh, Nepal and Sri Lanka." GCC (along with North America and Europe) made India probably the most largest receivers of remittances on the earth. In 2015 on my own, India gained $34.67 billion from the UAE, Saudi Arabia, Kuwait, Qatar and Oman. Data for Bahrain is not within the public area. Close to 35% of web remittances to India drift in from the GCC.
Bulk of migrants going to GCC from India are semiskilled or skilled labourers. About 30% of Indian expatriate body of workers is white-collar professionals, populating the products and services and IT sectors.
Over the previous few years, the Centre has set "preconditions" for Indians wanting to migrate for work. These are within the type of minimal referral wages and age bars for positive types of jobs. For instance, the federal government does no longer suggest ladies below 30 years to turn out to be housemaids in GCC. These prerequisites, albeit for the great of the people, have diminished the "employability" of Indians in GCC. Inevitably, Gulf employers have begun to favor people from other South Asian international locations to Indians. By and big, emigration statistics replicate a gentle decline in passage to Gulf, expose MEA knowledge (see States with High Migrant Rates to GCC).
"The long-term outlook for Indian migrants is bad. Many will have to come back home in a few years," says Arthur James, senior supervisor at India-GCC SME Business Council, an SME chamber. "People above 50 years of age are vulnerable as they are being replaced by younger people, who are willing to work for even Rs 15,000 a month," James provides.
The drop in crude costs has dealt a critical frame blow to the once-thriving GCC economic system. The value of crude dropped from $110 in step with barrel levels in 2012 to $22 (in step with barrel) in early 2016, and is recently soaring at $56 in step with barrel. The oil droop has impacted Saudi Arabia and Qatar the most.
"The lower price of oil means less money to go around, and GCC economies are largely oil-dependent. Remittances are unlikely to recover unless oil price again recovers to $100 per barrel level, which seems unlikely in the next couple of years," says Amit Bhandari, fellow, power and surroundings research, Gateway House, a think tank.
The Saudi-Qatar war is adding to the gloom within the area. With the UAE, Bahrain, Libya, Yemen and Egypt joining forces with Saudi Arabia, this struggle has turn out to be extra of a geopolitical tussle.
The pressure between Qatar and its neighbours has higher as the previous, due to its mammoth earnings from production and export of gasoline, vies for regional management. Security and stability within the GCC is of paramount significance to India as nearly a crore of its citizen work (and remit money back house) within the area. India depends upon some of these international locations for its power/petroleum needs as neatly. In case of a prolonged stand-off, India could also be compelled to intervene diplomatically as its stakes in GCC are excessive.
"Even a small socioeconomic change in the region can have a considerable effect on remittances to India," says Sohini Rajola, regional vice-president (India and South Asia), Western Union, a cash transfer provider supplier. Policies for nationalising the body of workers in GCC international locations and anti-immigration sentiments are discouraging employers from hiring foreigners. Saudi Arabia, which has the maximum selection of Indians in GCC, has lengthy implemented Nitaqat, a policy that ensures jobs for Saudi nationals.
The implementation of Nitaqat has impacted Indians. Unofficial estimates expose that over a lakh Indians have lost jobs in Saudi Arabia. "West Asian countries have a young population, with a large number of people entering the workforce. Governments need to find work for these young people — or they risk unrest," reasons Bhandari of Gateway House.
Several emirates within the Gulf are now contemplating taxation on outward remittances, in their bid to raise earnings, and partially, to deter migrants. The list of nations the place such taxes are being thought to be includes Bahrain, Kuwait, Oman, Saudi Arabia and the UAE, says a World Bank file. Some Gulf international locations are also looking to get started oblique taxation on goods purchased via electorate and residents. Starting January, each Saudi Arabia and UAE would impose five% VAT on goods and products and services. Such measures would take away the appeal of "tax-free" earnings for many migrants.
Less Savings
Remittances are associated with savings. Over the closing two years, with a slowdown of GCC economies, there was a visible have an effect on on earnings and savings of migrants. For instance, variable source of revenue akin to sales fee, incentives and bonuses have dropped throughout businesses. Job losses and diminished hiring are also responsible for the drop in remittances.
"The near- to mid-term outlook for the GCC is generally neutral. The only country that can see a turnaround from the status quo is the UAE, where there is a concerted effort to propel economic growth," says Krishnan Ramachandran, CEO of Barjeel Geojit, a UAE-based stockbroking company.
Cost conservation used to be a direct step taken via corporations (and governments of GCC) after crude started its constant slide. This squeeze in spending has had a cascading effect throughout sectors, and activity losses followed.
BFSI, real estate, buying and selling and IT have been the worst affected. "The GCC job market may take one to three years to return to normality. Hiring will continue, albeit at a slow pace and will be more need-based," Ramachandran provides.
In its heyday, Arabia made billions of bucks, promoting oil to international locations in all places. But they don't rake within the greenback like they did — a reality India will have to reconcile with.
Say Hello to Replacement Migration
States like Tamil Nadu and Kerala have seen a vital upward push in migrant labourer inhabitants over the last twelve months. Economists and teachers term this development "replacement migration". People from states akin to Odisha, West Bengal, Uttar Pradesh and Bihar relocate to states with high-migration rates in search of jobs. They move to Tamil Nadu, Kerala, Haryana and Punjab, amongst others, to take in jobs left vacant via the residents of those states who have migrated to other international locations — particularly the Gulf.
"Close to 40 lakh Keralites work outside Kerala. Migrants from other states help to replace them. They are doing '3-D jobs': jobs that are dirty, dangerous and demeaning — just what Keralites do in Gulf," says S Irudaya Rajan, professor at the Centre for Development Studies (CDS), Thiruvananthapuram. Kerala is house to almost 25 lakh migrant employees, with over 2 lakh people coming in yearly. Most migrants from Kerala go to the Gulf international locations. Neighbouring Tamil Nadu also faces a identical drawback, however its migration profile is evenly dispensed inside the country, and all the world over. A droop in GCC may not have an effect on Tamil Nadu up to it will harm Kerala, economists consider.
"There's no large-scale return of migrants (from GCC) as yet. Migrants may be staring at paycuts, but they are not still out of jobs," says Madan Sabnavis of CARE Ratings. "Fears of large-scale repatriation and its indirect impact on replacement migration are a bit far-fetched at this point in time," he provides.
In 2010, Qatar had successfully bid to host the 2022 FIFA World Cup. The Qatari government ingeniously determined to accommodate guests on dhows anchored on the emirate's waterfront. Dhows are wood ships with triangular sails, made via conventional carpenters in Beypore.
"Qatar had plans to order some 100 wooden long boats. Some of the orders had come to us also... But these started getting cancelled after crude prices fell and Qatar-Saudi Arabia relations soured," rues Abdulla Baramy of Baramy Ship Builders.
Since its founding in 1954, Beypore-based Baramy Ship Builders has constructed with regards to 110 dhows for buyers within the UAE, Kuwait, Oman and Qatar. But their order book has contracted over the last few years — almost in keeping with the dipping fortunes of their buyers. "We make small boats for local fishermen these days. We also do odd repair jobs," shrugs Baramy.
The economic droop, bobbing up out of an unprecedented fall in crude oil costs and simmering geopolitical pressure within the Persian Gulf, are sending shock waves across the Arabian Sea. The truthful winds that ferried labour and material between Arabia and India have bogged down significantly.
Consequentially, NRI remittances to India from the GCC or the Gulf Cooperation Council international locations — comprising Bahrain, Kuwait, UAE, Oman, Qatar & Saudi Arabia — have slid alarmingly.
India, the most important remittance-receiving country international, witnessed a near 9% drop in NRI pay-in flows to $62.7 billion in 2016 over the former year, as mentioned in a World Bank file. Much of this shortfall has been attributed to the economic downturn in GCC states. As in step with RBI scrolls, inward remittances have fallen from a height of Rs four.38 lakh crore (in 2014-15) to Rs 3.66 lakh crore closing fiscal, a 12% decline.
"It is a case of an overall economic slowdown in the Gulf; lower oil prices have resulted in an economic slowdown in that region," says Madan Sabnavis, chief economist at CARE Ratings. "The slowdown in that region has also resulted in paycuts and job losses. The IT slump may have impacted remittances from North America too."
Send Money Home
How vital are remittances for India? Not much, in case you are only taking into account the proportion of remittances to the GDP. Inward remittances account for simply 3% of India's GDP. But, at a sub-national level, remittances play an important position. Take Kerala, which receives the lion's percentage of its remittances from the Gulf area. Remittances account for over 36% of Kerala's state domestic product and contribute significantly to household consumption.
That aside, remittances turn out to be vital in instances of excessive industry deficit, which isn't a concern at this point in time, reckon economists. Trade deficit is when the price of country's imports exceeds the value of its exports.
"Remittances provide a cushion in times of higher trade deficit. The impact of lower remittances would have been higher had global commodity and raw material prices been higher," says Devendra Pant, chief economist at India Ratings. "If there's a slowdown in India, our current account deficit may creep up. Without adequate remittances, the rupee could come under pressure as well."
Beyond that, states with excessive migration rates (Kerala, Tamil Nadu, Punjab and Karnataka) have body of workers from low migration states taking over unskilled or semi-skilled jobs. States like Kerala, Tamil Nadu, Karnataka and Punjab have migrant labourers from Uttar Pradesh, Bihar, West Bengal and Odisha incomes their livelihood. If Indians in GCC reduce the value of their cash orders, there would no longer be enough jobs for inland migrants ( see Say Hello to Replacement Migration ).
"If the Gulf starts sending back our citizens, we will be in trouble. Unemployment rates will go up. People from states with low migration rates, who go for employment to states like Kerala, could be hurt financially," Pant warns.
The Dependency Factor
As in step with External Affairs Ministry knowledge, nearly 85 lakh Indians work or are living in GCC international locations. In the primary seven months of this year, over 2.77 lakh Indians relocated to the Gulf in search of jobs. The UAE has absorbed a lot of these jobseekers (about 1.10 lakh Indians), followed via Saudi Arabia (59,911), Oman (42,095), Kuwait (40,010) and Bahrain (7,591).
Uttar Pradesh, with over 62,438 persons, tops the Gulf migrants list, followed via Bihar (50,247), West Bengal (25,819) and Tamil Nadu (24,003). Number of Gulf migrants from Kerala has diminished significantly over the last few years.
"The demographic profile of people going to the Gulf is changing," says S Irudaya Rajan, professor at the Centre for Development Studies (CDS), Thiruvananthapuram. Rajan has spearheaded a number of analysis research on labour migration. "Not many of us from Kerala or Tamil Nadu are going to the Gulf anymore. Till some time ago, they have been being replaced via people from UP, Bihar and West Bengal.
Now, they are being replaced via non-Indians — most commonly people from Vietnam, Philippines, Bangladesh, Nepal and Sri Lanka." GCC (along with North America and Europe) made India probably the most largest receivers of remittances on the earth. In 2015 on my own, India gained $34.67 billion from the UAE, Saudi Arabia, Kuwait, Qatar and Oman. Data for Bahrain is not within the public area. Close to 35% of web remittances to India drift in from the GCC.
Bulk of migrants going to GCC from India are semiskilled or skilled labourers. About 30% of Indian expatriate body of workers is white-collar professionals, populating the products and services and IT sectors.
Over the previous few years, the Centre has set "preconditions" for Indians wanting to migrate for work. These are within the type of minimal referral wages and age bars for positive types of jobs. For instance, the federal government does no longer suggest ladies below 30 years to turn out to be housemaids in GCC. These prerequisites, albeit for the great of the people, have diminished the "employability" of Indians in GCC. Inevitably, Gulf employers have begun to favor people from other South Asian international locations to Indians. By and big, emigration statistics replicate a gentle decline in passage to Gulf, expose MEA knowledge (see States with High Migrant Rates to GCC).
"The long-term outlook for Indian migrants is bad. Many will have to come back home in a few years," says Arthur James, senior supervisor at India-GCC SME Business Council, an SME chamber. "People above 50 years of age are vulnerable as they are being replaced by younger people, who are willing to work for even Rs 15,000 a month," James provides.
The drop in crude costs has dealt a critical frame blow to the once-thriving GCC economic system. The value of crude dropped from $110 in step with barrel levels in 2012 to $22 (in step with barrel) in early 2016, and is recently soaring at $56 in step with barrel. The oil droop has impacted Saudi Arabia and Qatar the most.
"The lower price of oil means less money to go around, and GCC economies are largely oil-dependent. Remittances are unlikely to recover unless oil price again recovers to $100 per barrel level, which seems unlikely in the next couple of years," says Amit Bhandari, fellow, power and surroundings research, Gateway House, a think tank.
The Saudi-Qatar war is adding to the gloom within the area. With the UAE, Bahrain, Libya, Yemen and Egypt joining forces with Saudi Arabia, this struggle has turn out to be extra of a geopolitical tussle.
The pressure between Qatar and its neighbours has higher as the previous, due to its mammoth earnings from production and export of gasoline, vies for regional management. Security and stability within the GCC is of paramount significance to India as nearly a crore of its citizen work (and remit money back house) within the area. India depends upon some of these international locations for its power/petroleum needs as neatly. In case of a prolonged stand-off, India could also be compelled to intervene diplomatically as its stakes in GCC are excessive.
"Even a small socioeconomic change in the region can have a considerable effect on remittances to India," says Sohini Rajola, regional vice-president (India and South Asia), Western Union, a cash transfer provider supplier. Policies for nationalising the body of workers in GCC international locations and anti-immigration sentiments are discouraging employers from hiring foreigners. Saudi Arabia, which has the maximum selection of Indians in GCC, has lengthy implemented Nitaqat, a policy that ensures jobs for Saudi nationals.
The implementation of Nitaqat has impacted Indians. Unofficial estimates expose that over a lakh Indians have lost jobs in Saudi Arabia. "West Asian countries have a young population, with a large number of people entering the workforce. Governments need to find work for these young people — or they risk unrest," reasons Bhandari of Gateway House.
Several emirates within the Gulf are now contemplating taxation on outward remittances, in their bid to raise earnings, and partially, to deter migrants. The list of nations the place such taxes are being thought to be includes Bahrain, Kuwait, Oman, Saudi Arabia and the UAE, says a World Bank file. Some Gulf international locations are also looking to get started oblique taxation on goods purchased via electorate and residents. Starting January, each Saudi Arabia and UAE would impose five% VAT on goods and products and services. Such measures would take away the appeal of "tax-free" earnings for many migrants.
Less Savings
Remittances are associated with savings. Over the closing two years, with a slowdown of GCC economies, there was a visible have an effect on on earnings and savings of migrants. For instance, variable source of revenue akin to sales fee, incentives and bonuses have dropped throughout businesses. Job losses and diminished hiring are also responsible for the drop in remittances.
"The near- to mid-term outlook for the GCC is generally neutral. The only country that can see a turnaround from the status quo is the UAE, where there is a concerted effort to propel economic growth," says Krishnan Ramachandran, CEO of Barjeel Geojit, a UAE-based stockbroking company.
Cost conservation used to be a direct step taken via corporations (and governments of GCC) after crude started its constant slide. This squeeze in spending has had a cascading effect throughout sectors, and activity losses followed.
BFSI, real estate, buying and selling and IT have been the worst affected. "The GCC job market may take one to three years to return to normality. Hiring will continue, albeit at a slow pace and will be more need-based," Ramachandran provides.
In its heyday, Arabia made billions of bucks, promoting oil to international locations in all places. But they don't rake within the greenback like they did — a reality India will have to reconcile with.
Say Hello to Replacement Migration
States like Tamil Nadu and Kerala have seen a vital upward push in migrant labourer inhabitants over the last twelve months. Economists and teachers term this development "replacement migration". People from states akin to Odisha, West Bengal, Uttar Pradesh and Bihar relocate to states with high-migration rates in search of jobs. They move to Tamil Nadu, Kerala, Haryana and Punjab, amongst others, to take in jobs left vacant via the residents of those states who have migrated to other international locations — particularly the Gulf.
"Close to 40 lakh Keralites work outside Kerala. Migrants from other states help to replace them. They are doing '3-D jobs': jobs that are dirty, dangerous and demeaning — just what Keralites do in Gulf," says S Irudaya Rajan, professor at the Centre for Development Studies (CDS), Thiruvananthapuram. Kerala is house to almost 25 lakh migrant employees, with over 2 lakh people coming in yearly. Most migrants from Kerala go to the Gulf international locations. Neighbouring Tamil Nadu also faces a identical drawback, however its migration profile is evenly dispensed inside the country, and all the world over. A droop in GCC may not have an effect on Tamil Nadu up to it will harm Kerala, economists consider.
"There's no large-scale return of migrants (from GCC) as yet. Migrants may be staring at paycuts, but they are not still out of jobs," says Madan Sabnavis of CARE Ratings. "Fears of large-scale repatriation and its indirect impact on replacement migration are a bit far-fetched at this point in time," he provides.
This is crucial key the Gulf holds to improve India's job woes
![This is crucial key the Gulf holds to improve India's job woes]()
Reviewed by Kailash
on
November 05, 2017
Rating:
