Thiruvananthapuram: In 2008 oil prices had tumbled badly as a result of the global economic crisis. Fearing mass exodus from the Gulf, the then finance minister Dr T M Thomas Isaac had announced a liberal loan package for returnees in the 2009-10 Budget.
Surprisingly, the package suffered the fate of a highly qualified female in the marriage market: it had virtually no takers; not because the scheme failed to match expectations but because none really returned. The Gulf economy had swiftly bounced back.
Again in 2013, the Nitaqat Law introduced in Saudi Arabia to employ more locals in jobs, threatened to push out at least 30,000 Gulf Malayalis out of their jobs.
Then, the non-resident Keralites were smart enough to secure jobs elsewhere, in Gulf countries outside Saudi Arabia - Qatar, Kuwait, UAE - where no such ‘localisation’ was in force.
But this time, the Gulf Malayali will have nowhere to go. Almost all the countries in Gulf Cooperation Council suffer from deep fiscal distress. From 2014 on, Gulf economies have been riddled with current account and budgetary deficits.
Wage cuts and lay-offs are the norm. It is now estimated that oil prices, which on Monday was $40 a barrel, will never cross $50 a barrel; a mighty fall from the high of $140 per barrel. Worst case scenario: At least five lakh of the 26-odd lakh Gulf Malayalis will return in the next five years.
Finance minister Thomas Isaac, for a change, was groping for answers. He said he was not sure how to deal with the situation if more than one lakh return from the Gulf in the near future.
Even an influx of more than 50,000 NRKs would be too much of a strain on a back-broken economy. “We might have to provide monetary support, at least to the poorest among the returnees. Many have not been paid salaries for nearly a year,” the minister said.
“Just now I had a call from Oman saying 600 nurses have been served termination notice. Besides arranging for their return, we will also absorb their huge bank liabilities,” he added.
Isaac said the only way out was to spend like there is no tomorrow. “I had a sense of this crisis coming and that was why I unveiled the plan to bring in Rs 50,000 to Rs 1 lakh crore to the state in five years through the KIIF-B route,” the minister said.
His hope is, heightened economic activity will lead to more jobs, which can absorb a good chunk of unskilled returnees. More jobs mean more demand, and higher demand means a revival.
But any fall in remittance will hit consumption first, mercilessly pulling the rug from under Isaac’s plan to improve tax collection. The success of Isaac’s ambitious infra push is desperately dependent on a dramatic rise in tax growth.
However, with the Gulf crisis already playing out, sales during Onam, a time when the state mobilises the maximum tax revenue, might witness a historic dip.
Nonetheless, it is high time the State began thinking of ways to save the economy without remittances.
“The Gulf Dream is over,” said demographic expert Irudaya Rajan. But it looks like the truth has already been registered.
“The of growth of Gulf migration has dramatically declined in the last five years, a time when oil prices ruled high,” Mr Rajan said.
