Covid Dries Up Kerala’s Petro-Dollar Pipeline From Gulf

Critically dependant on remittances from the Gulf, Kerala’s economy is staring at an abyss after lakhs returned home following Covid lockdowns

Covid Dries Up Kerala’s Petro-Dollar Pipeline From Gulf

Ajeesh P.P., a 36-year-old Indian, ret­urned home from Oman in September 2020 after losing his job. His Arab employer had to shut down his upholstery workshop due to Covid-19 lockdowns and funds crunch, which resulted in job loss for Ajeesh and a couple of his colleagues.

Ajeesh, who had worked for 14 continuous yea­­rs in Oman, would be paid Rs 49k a mon­th. He was supposed to receive around Rs 3 lakh, including various dues as end-­of-service benefits. Instead, he only got Rs 99k, including his September salary. Since his return, Ajeesh’s life in Kerala is stuck.

He first worked to set up an upholstery worksh­op in his village. But it didn’t happen because he couldn’t raise the investment required. Then he decided to start a small mobile tea shop and took a small food truck on rent for Rs 5,000 per month. But due to the Covid lockdown, that too failed, even though he had to pay the rent. Now, he works as a painter in his town.

“We don’t get regular jobs. Life is hard here,” Ajeesh added.

Another returnee, Udaykumar Vasudevan (36), joined a cashew factory as supervisor for a mon­thly salary of Rs 15,000. Udaykumar had retur­ned from Qatar in July 2020, having given up around Rs 1,50,000 in pending salaries and end-of-service benefits due to him. Having ret­urned empty-handed, he couldn’t think of sett­ing up a self-employment initiative, unlike Aje­esh.

So, he joined a cashew factory. But due to the Covid lockdowns and restrictions, the factory is only open intermittently, and doesn’t pay salaries regularly.

According to Ajeesh and Udaykumar, many of their friends who returned from foreign lands in 2020 after losing jobs during Covid lockdowns, are in the same sit­u­ation.

A data point shared in Parliament on December 12 revealed that 7,16,662 Indians had returned from Oman, Saudi Arabia, Qat­­ar, Kuw­ait, Bahrain and UAE after losing jobs, follo­wing the Covid-19 outbreak.

Data released by the Department of Non-Resi­dent Keralite Affairs, a state government body set up for the welfare of Kerala’s sig­nificant mig­rant population, shows that bet­ween June 2020 and June 2021, 15 lakh Kera­l­i­tes returned from foreign countries following the pandemic. Of them, 12 lakh are now jobless.

There already were 37 lakh job-seekers in Kerala, according to government data. To this has now been added these 12 lakh returnees.


Photograh: Getty Images

Unfortunately, even if the returnees want to return to the Gulf looking for jobs, opportunities are fewer as Arab countries too are struggling with the Covid-induced economic crisis.

The World Bank’s August report says the Covid-19 pandemic and subsequent fall in global oil demand has dealt Gulf Cooperation Council countries a comm­o­dity market sho­ck over the health crisis, causing a GDP contraction of 4.8 per cent in 2020.

“Fiscal deficits are projected to persist for most over the forecast period, however. The three count­r­ies with the largest deficits in 2020—­Kuwait, Bahrain, and Oman­—­are projected to remain in deficit throughout 2021-23, but at narrower ratios to GDP in 2023 than during the economic down­turn in 2020,” the World Bank rep­ort adds.


Rajendra Prasad, a construction company manager in UAE, says the­re is little activity happening in the region, compared to pre-Covid times. “It’s slowly picking up. But as there is a funds crunch, salaries offered to fresh recruits are low, and there are few takers,” Rajendra says.

Indian government data also reveals that com­p­ared to previous years, the number of people who migrated for employment is few. The Indian Protector of Emigrants data reveals that till October this year, only 80,756 people migra­ted to foreign countries for jobs.

In 2019, the number of migrants who left Ind­i­­an shores for better opportunities abroad was 3,68,043. In 2020, that fell to 93,978. Com­par­i­­ng migration outflows of 2019 and 2021 rev­eals there is a 78 per cent fall.

In August 2021, Keralite businessman Sant­h­osh K. travelled to Saudi Arabia via Kyrgyzstan, as the Saudis had put a ban on passengers direc­tly from India. The trip cost him around Rs 2 lakh. However, as he was running a business in Riyadh, he couldn’t avoid the trip. But many wor­­kers who returned to Kerala during the pan­­demic couldn’t go back to the Gulf, as ticket prices are still high.

Since May 7, 2020, India is operating limited number of flights under an air bubble arrangement. As the demand is high, so are ticket pri­ces. If earlier, a ticket to any Gulf country cost Rs 15,000, today it is around Rs 50,000. This doesn’t include mandatory RTPCR tes­ts, nor the Rs 1.5 lakh for institutional quarantine, if necessary. “Who can aff­ord this huge amount for a Rs 20,000 per month salary?” asks Raj­eesh R., who had returned from Qatar dur­ing the 2020 lockdown. Rajeesh is now working as a head loader in Ern­a­kulam.

The Kerala government has announ­ced rehabilitation plans for retur­nees, but many like Ajeesh are strug­g­ling to make use of these schemes due to complicated application processes.

Kerala-based migrant rights expert Mini Mohan says the Keralite’s Gulf dream is fast fading. “Fewer jobs, slashed salaries and high cost of migration are turning away Keralites from the Gulf, and this is going to affect Kerala’s economy, as remittance plays a vital role in it,” she says.

A fresh World Bank report says that on an average, overseas rem­i­tt­a­nces fell by $267 per month amo­ng Kerala households who repo­rted receiving remittance. Kerala rec­ei­v­es around Rs 2.27 lakh crore in remittance ann­ually, which is equivalent to 30 per cent of the state’s GDP. “Kerala’s decent education sta­n­dards, high health and living sta­n­dards were all achieved through remittan­ces from the Gulf that started in the 1960s. Now, that’s going to end. Interestingly, Kerala’s public debt is aro­und Rs 3.25 lakh crore. We also pay around Rs 20,000 crore as interests on loa­ns taken. And we don’t have enough resou­r­ces too. If migrat­ion to the Gulf fades away, Kerala will be in big trouble,” Mini adds.

Economist Ram Mohan K.T. says the state’s economy is often known as LLR (liquor, lottery and remittance) economy. If remitt­ance falls, it’s going to severely affect the state,” he added.

(This appeared in the print edition as "A Widening Gulf")

(Views expressed are personal)



Rejimon Kuttappan is a journalist and author of Undocumented: Stories of Indian Migrants in the Arab Gulf

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