New Delhi: While the government is confident that developments relating to the prospect of a debt default in Dubai won’t cause an exodus of workers returning home to India from the Gulf, it has drafted a contingency plan to deal with rehabilitation.

“We do not expect an exodus because the present crisis, which is a case of sovereign debt, will affect only the capital markets and banks and it will not have much of an impact on private sector projects," said G. Gurucharan, joint secretary (financial services), ministry of overseas Indian affairs (MOIA). “However, the government is ready with a contingency plan for those who are prematurely terminated from their work and returning to India."

Relief programme: A file photo of labourers at a construction site in Dubai. The proposed fund provides a mechanism to alleviate the financial distress of migrant workers forced to come back home. Charles Crowell / Bloomberg

The fund, which will start functioning with contributions from migrant workers and the Union government, is expected to provide interim support for returning workers and a programme of reskilling them in alternative sectors.

According to officials in the ministry, the government had expected a slowdown in the number of workers going to the Gulf in 2009 as the recession had hit the construction industry in Dubai.

Under the scheme, if any overseas Indian worker is prematurely terminated from his work, the local mission will attempt to reinstate the worker or he would get financial assistance from the fund after proper verification of the reasons for termination.

The Union government would provide an annual interest-free grant to OWWF for five years and no further financial support is envisaged after it becomes self-sustaining. The migrant worker should provide his contribution at the time of leaving the country.

Of the workers returning to India after losing their jobs, it is assumed that almost 60% return within the first six months of their contract duration, which is the probation period, during which layoff conditions are less stringent, officials said. Of such workers, 90% are assumed to be eligible for assistance.

According to the initial proposals, individual migrant workers could contribute Rs800 towards membership of OWWF.

“This, jointly with the prevailing processing charge of Rs200, would raise the total financial levy on the individual worker from the government to Rs1,000, which is expected to be fairly reasonable," the proposal said.

The government’s contribution is estimated at Rs100 crore spread over the first five years.

“Fund inflows consist of the grant from the government, contribution collected from the workers—which could be 60%—and the investment income," the proposal said. “In the fifth year, investment income becomes almost 7% of the total inflows."