Economic Highlights

New Delhi, 8 August, 2016

Arabian Night Nightmare

EMPLOYMENT CREATION VITAL

By Shivaji Sarkar

Development is dicey. Small change in policies or global shift in any area can cause turmoil. Hiking the petroleum price by producing nations itself had caused upheaval and as different energy sources are now being developed it is leading to an Arabian night.

Undeniably, the world did not realize that the boom was artificial and unsustainable for long. And the price crash was inevitable thereby causing miseries to workers in West Asia.

India too is having tough times. The Central Government has had to come to the rescue of workers a number of times over the last two decades and more, right from the invasion of Kuwait by Saddam Hussein in 1991. True, it is humanitarian issue wherein the Government has innumerable times organised and conducted such rescue missions.

In fact, the Indian Navy, External Affairs Ministry and the Government in its entirety have rescued not only Indian national but also citizens of over 26 nations in various conflict ridden countries.

Notably, this has raised many questions as well. Some going to the extreme of the Government getting into such rescue missions due to the failure of the concerned Governments in ensuring proper working conditions in various Gulf countries, preventing their exploitation, humiliation, extortion and the worst conditions they have to face.

The others even want an end to countrymen going to do menial jobs like domestic chores, baby sitting and cleaning jobs, particularly in Sheikhdoms.

Pertinently, the recent crisis in Saudi Arabia, where 25,000 workers were given exit visas has accentuated the problem. About 10,000 of them have to be evacuated immediately. This is not all. The Indian mission in Riyadh has to provide for provisions as many of them do not have money to buy food.

Certainly, the visit of Minister of State for External Affairs VK Singh has resulted in only a partial solution like some of the workers being allowed by the Saudi Government to move to other companies, which was earlier banned. Despite this their sufferings do not end.

The media is agog with stories of the workers miseries, including death penalties on the silliest grounds. Wherein the Indian Government has to spend a lot of its diplomatic skills, sometimes even large “ransom” and other heavy expenses for humanitarian reasons and prevent a political fall-out.

Clearly, India as of now can hardly do without remittances. An IMF report says India was the largest remittance receiving country, with an estimated $72 billion in 2015, followed by China ($64 billion) and the Philippines ($30 billion). If informal channels like hawala are included remittances could be 50 per cent higher, the report adds. Officially, world remittances total $ 334 billion.

The IMF adds, “Remittances are free-flowing money without strings which keeps the foreign exchange kitty high particularly as exports thaw”. Besides, it is not volatile as FDI or portfolio investments. “In 2009, remittances to some countries were as large as FDI and helped reduction of poverty of the recipient families”, the IMF states.

Undoubtedly, this is a disadvantage as such large remittances only add to inflation and erode the rupee.

Indeed, the US was the largest remittance source country with an estimated $56 billion in outward flows in 2014, followed by Saudi Arabia ($37 billion), and Russia ($33 billion).

Importantly, that is the catch. Remittances to India are not coming only from the Gulf but also from the US, Europe, South-East Asia and even Africa. Consequently, how can New Delhi stop emigration without providing jobs in the homeland?

This would not be possible till the Indian economy attains such resilience. Once it achieves that, it should also prepare for becoming a remittance source. Specially against the backdrop, of it becoming an outsourcing hub for low-paid jobs largely to some of the neighbouring countries.

Hence, should we stop emigration to such countries, where Indians are treated like slaves? According to many people, including the External Affairs Ministry officials this is the solution. Specially, as people from States like Kerala and Punjab happen to be the largest sufferers.

This is also true as their toil has boosted the economies of their home States. Naturally, there is concern in Kerala as the Gulf remittances subside. More so as even high skilled workers in the Gulf are being gradually nudged out. One reason is the locals are replacing many of them.

Remember, since 2014, remittances inflow started faltering; worse, it has since dipped by over Rs 23,350 crores in 2015 (according to the World Bank).

However, stopping emigration is not a solution till the country can create jobs in large numbers. Given that the Manmohanomics of 25 years only led to shrinkage of jobs despite an increase in investment.

The new Modinomics is only two-year old and aims at creating jobs through Make in India, Skill India, MUDRA, Stand Up India and many other programmes. The economists are keenly observing how these policies function and create employment in the coming years.

There is no gainsaying the policy planners tend to believe that the situation is changing. Finance Minister Arun Jaitley told the Carnegie Endowment for International Peace in the US recently, “The key emphasis of the Modi Government has been — decisiveness, consistency in terms of policy direction and transparency in functioning.”

Apparently the Government is taking steps. Creating jobs, however, is not easy. As most of the programmes would take time to yield results.

Also, there cannot be a blanket ban on emigration. In the 1960s, as IIT graduates moved to the US and Europe, there was furore. This was called “brain drain”. Twenty years later the Modi-led Government has termed it “brain gain” as the emigrants created a significant constituency and strong lobbies for promoting India.

But when it comes to the Gulf, India has to be more circumspect. Particularly as freedom to emigrants is limited and they are ill-treated. Wherein, the Government has often to intervene to help them out. Recall, India had stopped emigration to some countries in the past for such reasons.

Additionally, it is easier to say that a foreign country has to behave with immigrants in a humane manner. But if there is a breach, it is difficult to correct.

All in all, the Government has taken some steps to protect the emigrants as this is a difficult area. But till such time the Indian economy becomes resilient and booming, the solutions are not easy. Once that happens, which might take possibly a decade; people themselves would not be going to the notorious areas.

Obviously, emigration as a policy cannot be banned. Despite a vigilante Government, the country needs the remittances. Even after developing economic muscles, allowing people to go abroad saves the country from situations like the US, which is now fighting the political battle to save its resources.

India would not only have to create jobs in the country but also needs to balance remittance outflows in future with equal inflows. This would ensure the 21^st Century and beyond belongs to India! ---- INFA

(Copyright, India News and Feature  Alliance)