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Thiruvananthapuram: The Dubai financial crisis has
fuelled fears among families of over two million migrants from Kerala working in the Gulf, with worries of massive job losses and
its fallout on the state’s economy, heavily dependent on
remittances.
The crisis erupted last week, when the
Emirate said it would delay payment on debt issued by Dubai World, a
leading investment firm, sending waves of panic across global
markets.
While experts have forecast job cuts
and a steep fall in remittances if the present trend continued,
another view is that Dubai is resilient enough to overcome the
current bad patch.
State Finance Minister, T.M. Thomas
Isaac says, he is very “anxious” about the possible slowdown in
construction activity in the Gulf, following the crisis which would
badly affect migrant workers from Kerala.
“A majority of workers in the
construction sector in the Gulf are from Kerala. We are really
anxious about their future,” he told PTI here.
“I think the world economic recession
is finally taking its toll on the Gulf region also,” he said.
On Dubai World asking its creditors
for a ‘standstill’ on paying back its USD 60 billion debt until May
2010, Isaac said it might be a way of politely saying they needed a
six-month moratorium.
Irudarayarajan, a faculty member with
the state’s premier economic and social research institute Centre
for Development Studies here has said, “we should not be too much
worried about these things. Similar fears were expressed during the
crisis in the Gulf last October, but nothing happened,” he told PTI.
During the last crisis, experts had
predicted some five lakh people would return from the Gulf and that
the Kerala economy would be hit hard, but no such thing happened,
Irudayarajan said.
“Dubai is still alive, though
construction activities are a bit slow. Basically the problems of
Dubai will be relieved as other Emirates are doing well. A strong
Abu Dhabi itself can bail out Dubai in a crisis,” the economist
said.
He does not think the crisis would
affect either migration from Kerala or remittances from the Gulf.
“Migration and remittances were not affected in the last crisis
also,” he said.
Irudayarajan said he had conducted a
study on South Asian migration to the Gulf, which found that besides
India, migration from Pakistan, Bangladesh, Sri Lanka and Nepal had
increased in the last 10 months and people were still going.
Agreeing there would be some
short-term problems with the crisis, he said it would be solved at
the end of the day.
“What government should do is to
create a conducive atmosphere for people willing to return to their
country, as there are enough job opportunities here if people are
willing to work", he said.
The Kerala government is as yet
clueless about the crisis and its possible impact on the state.
Finance Minister Isaac reacted cautiously, saying the whole
dimension of the crisis is yet to be known.
“It is crucial to understand the
impact on major financial institutions who have lent money to Dubai
World before we can gauge the extent of its impact on Kerala,” he
said, echoing the general feeling that the state would have to feel
the pinch, if the situation snowballs into a meltdown hitting the
Gulf badly.
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