India world’s largest remittance recipient; balance job creation with emigration  solution



Development is dicey. Small change in policies or global shift in any area can cause turmoil. Hiking 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. The boom, world did not realize, was artificial and not sustainable for long. The price crash was inevitable causing miseries to the workers in West Asia.

India is having tough times. The central government had to come to the rescue of workers a number of times during the last over two decades right from the invasion of Kuwait by Saddam Hussein in 1991. It is humanitarian issue. The government has organised innumerable times conducted such rescue missions. Indian Navy, external affairs ministry and the government in its entirety have rescued not only Indian national but also citizens of over 26 countries in various conflict ridden countries.

It has raised many questions as well. Some going to the extreme of the government getting into such rescue missions to the failure of the government 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 sheikhdom.

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. Many of them do not have money to buy food. The visit of minister of state for external affairs VK Singh has led only to partial solution like some of them being allowed by Saudi government to move to other companies, which was banned earlier. Their sufferings do not end.

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

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 percent higher, the report says. Official world remittances total $ 334 billion.

Remittances, IMF says, are free-flowing money without strings. It keeps forex kitty high particularly as exports thaw. 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”, says IMF.

There is a disadvantage. Such large remittances add to inflation and erode rupee.

The United States 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).

That is the catch. Remittances to India is not coming only from the Gulf but it is also coming from the US, Europe, south-east Asia and even Africa. How can India stop emigration without providing jobs in homeland? It would not be possible till Indian economy attains such resilience. Once it achieves that it should prepare also to become a remittance source, as it observing itself becoming for low-paid jobs largely to some of the neighbouring countries.

Should we stop emigration to such countries, where Indians are treated like slaves? That is the solution according many people, including the external affairs ministry officials. People from states like Kerala and Punjab happen to be the largest sufferers.

This is also true that their toil has boosted the economies of their home states. There is concern in Kerala as the Gulf remittances subside. Even high skilled workers in the Gulf are being gradually nudged out. One reason is the locals are replacing many of them.

Since 2014, remittances inflow started faltering; it has since dipped by over Rs 23,350 crore in 2015 (World Bank).

But stopping emigration is not a solution till the country can create jobs in large numbers. The Manmohanomics of 25 years only led to shrinkage of jobs despite 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 and many other programmes. The economists are keenly observing how these programmes function and create jobs in the coming years.

The policy planners tend to believe that 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. Most of the programmes would take time to yield result.

There cannot be also blanket ban on emigration. In the 1960s, as IIT graduates moved to the US and Europe, there was furore. It was called “braind drain”. Twenty years later it was termed “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. Freedom to emigrants is limited. They are ill-treated. The government has often to intervene to help them. India had stopped emigration to some countries in the past for such reasons. It is easier to say that a foreign country has to behave with immigrants in a humane manner. If there is a breach, it is difficult to correct.

The government has taken some steps to protect the emigrants. It is a difficult area. But till such time Indian economy becomes resilient and booming, the solutions are not easy. Once it happens, which may take possibly a decade; people themselves would not be going to the notorious areas.

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 have to create jobs in the country but would also have to balance remittance outflows in future with equal inflows. That would ensure the 21st century and beyond belongs to India.


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