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Business News/ Mint-lounge / Mint-on-sunday/  The return of the Gulf Malayalee

The return of the Gulf Malayalee

Oil prices and policy changes are affecting migration, employment and the age-old relationship between Kerala and the Persian Gulf

Photo: BloombergPremium
Photo: Bloomberg

They say that if it rains in the Gulf, a Malayalee in Kerala will catch a cold.

For a while now, Malayalees have been defined by their propensity to travel abroad in search of prosperity, particularly West Asia. More than 90% of the people who emigrate from Kerala end up in West Asian countries according to government estimates.

But now there seems to be trouble in the desert paradise. For legions of Malayalees who toil in an alien land and the millions of relatives who wait eagerly for their wire transfers, the crash in oil prices is bad news.

According to Bloomberg data, the price of Brent crude, a benchmark for crude oil prices, fell 75% from $106 per barrel in July 2014 to $26 in January 2016.

The fall, Bloomberg says, was sparked by a supply glut caused in part by China’s reducing imports and other geopolitical problems. The crude oil prices are unlikely to rebound to the high rates of 2014 in the short term and will continue to hover below the $60 range at least until 2020, Bloomberg reports.

This has triggered massive spending cuts and an austerity drive across Gulf countries. Towards the end of last year, Saudi Arabia announced cuts in spending as part of the 2016 budget to fix an alarming deficit (15% of gross domestic product).

For other Gulf nations, too, the coping strategy from this drain of wealth includes cost-cutting measures such as the halting of construction projects and subsidy cuts, and increasing their tax nets.

The slowdown could come down heavily on expatriate workers, experts say, because the knock-on effects of the economy in bad shape could include widespread salary cuts, stoppage of increments and, worst of all, potential mass lay-offs. Already, oil refiners, banks and shipping firms, among others, are slashing thousands of jobs.

How far has this affected Kerala? Has the remittance economy tanked? Can we assess something by looking at proxy indicators such as gold purchases and the real estate market, things that once thrived in Kerala thanks to the savings of millions of Malayalees toiling abroad?

The relative in Dubai

About 10% of Kerala’s population of over 30 million does not live in the state. Every third house in Kerala has a man working in the Gulf, which could mean Saudi Arabia, the United Arab Emirates (UAE), Kuwait, Qatar, Oman or Bahrain.

Every year, they send home more than Rs1 trillion according to data from banks in the state; in other words, their remittances form almost a third of Kerala’s net state domestic product of about Rs3 trillion, according to the state’s latest economic review.

It is the oldest migration pattern in the history of the country, says S. Irudaya Rajan of the Centre for Development Studies, an institution for applied economics and social science research in Thiruvananthapuram that has been analysing Malayalees’ migration patterns for two decades now.

“Kerala is the only state in India from where people have been migrating consistently to the Gulf for the last 50 years. Malayalees have established strong networks in the Gulf; everyone has a mama or machan (aunt or uncle) there," he says.

The money sent back has led to the rise of an affluent population that could afford to nurture and shape a consumerist society in a state with the highest inequality in consumption expenditure. The money has led to rapid urbanization, with the creation of 360 new census towns between 2001 and 2011.

Malappuram district in north Kerala, which received 20% of the total remittances from the Gulf, saw census towns increase 420% over the past decade.

Popular culture has been heavily influenced by the phenomenon, either reflecting realities or defining stereotypes. The 1985 film Akkare Ninnoru Maran (The Groom from the Other Shore) showed the struggles of a poor young man who had to pretend to have returned from the Gulf in order to marry his rich uncle’s daughter. In 1999, Garshome (Sojourn) showed the predicaments of a Gulf returnee who could not gain employment back home.

By 2007, it was the story of “Cuba" Mukundan, a staunch leftist, who had to take a call between chasing his revolutionary zeal or earning money by immigrating to the Gulf in Arabikatha (A Gulf Story). Even young filmmakers are telling the story of the successes (in Jacobinte Swaragarajyam) and failures (in Pathemari) of the Malayalee in the Gulf.

In literature, a novel that chronicles the ruthless violence and hardships of desert life has sold millions of copies. Adujivitam, or Goat Days, is into its 99th edition now.

In journalism, it has led to most Malayalam print publications rolling out a Gulf edition (the daily Madhyamam has six out of its 19 editions published from centres in the Gulf).

Gulf-based publications are writing about the loneliness faced by the more than 1 million married women in Kerala whose husbands are migrants, while most Malayalam-language television stations have at least a half an hour of coverage dedicated to the Gulf. There’s a weekly television show for Malayalees missing in West Asia, which is often flooded with telephone calls from distressed housewives or mothers.

A long way back

Kerala’s tryst with the Gulf began as early as the fourth century BC, when Arab traders in their dhows used to follow the monsoon winds blowing in from west to east and made a killing trading for spices in Kerala.

In fact, cinnamon, a prized asset then, might have found its way to West Asia from this land of spices through the Arabs, historian Sreedhara Menon noted in his book, A Survey of Kerala History.

Arabs were allowed to not only trade in the area, but also to freely mingle with the fisherfolk of the coast, historians have noted. By the time Ibn Battuta, the Moroccan explorer who journeyed for a quarter-century across Asia and Africa, arrived in Kerala sometime in the 14th century, Arab descendants in the state had not only established themselves as the first native Muslim community in South Asia, but also had developed their own language (Arabi-Malayalam), dance forms (Aravanamuttu), and even cuisine (biryani).

By this time, Malayalee sailors had started to accompany the Arabs on their return voyage, says M.G.S. Narayanan, former chairman of the Indian Council for Historical Research. The Hindu rulers of north Kerala or Malabar—the Zamorin—had even asked Hindu fisherfolk to raise a child in each family as a Muslim so they could sail back with the Arab traders and become expert seafarers, Narayanan adds.

By the time geologists came in search of oil to the Persian Gulf following the Great Depression, and when large-scale extraction started in the 1950s and threw up a range of economic opportunities, the Malayalees, bound by history, geography and custom, were willing participants.

No country for young men

A young man in his 20s, with a fresh bachelor’s degree in business administration, boarded a flight in September 2015 to Abu Dhabi, one of the seven emirates that together make up the UAE.

He joined a bank in the city, but just three months later, he was back in his hometown in Thrissur district. “The bank fired me, along with 250 others," he says, on condition of anonymity.

His story reflects one of the many ways in which the fall in oil prices, near their lowest in two decades, is affecting the south Indian state. Not only are people not getting jobs, the employed ones are losing theirs. Rajan says the last time he saw a similar situation was during the Dubai real estate crash in 2009.

“Companies (in the Gulf) are either cutting down salaries or number of employees," says K.C. Joseph, the minister for non-resident Keralite affairs. “It has not reached a state of massive exodus, but sooner or later, we will have to face a problem here."

“Because the working conditions are affected, returning has become a reality. Unlike the earlier days, people are not going there, they are only coming back from there," he says.

Data from the ministry of external affairs show that of the 781,000 people who emigrated from India for work in 2015, 96% went to Saudi Arabia, the UAE, Bahrain, Kuwait, Oman and Qatar. But the number of people emigrating from India for jobs have been shrinking.

In 2013, there were 817,000 people; this came down to 805,000 in 2014 and 781,000 in 2015, the Hindustan Times reported on 27 March, quoting ministry data. The New Indian Express wrote in January that hiring by big recruitment agencies was two-thirds less than usual at 6,000 in 2014-15.

The hiring cuts are coupled with the fact that governments in the region intervened to block expats from taking up certain jobs. This is true for most of the countries in the Gulf Cooperation Council, as per the New Indian Express report.

After the fall in oil prices, governments are intervening by delaying the issue of visas. It now takes six to eight months to get a visa, as against two to three months earlier, and by the time the process gets completed, either the employer’s needs have changed or the employee is no longer available.

The remittances

Historically, remittances from the Gulf have played a big role in giving Kerala an unusually high Human Development Index (HDI) rank, which is on par with developed nations despite considerable unemployment and a negligible industrial base.

Kerala has the highest HDI ranking among Indian states and also the highest rate of unemployment among the big states in India, more than thrice the national average of 2.3% at 7.4%, as per the state’s latest economic survey. According to economists, Kerala’s 12th position in the industrial ranking of the major 16 states in India is a strong indicator of the poor manufacturing and industrial base in the state.

Remittances changed the landscape of Kerala, says Rajan. Between the late 1960s (the period after the land reforms initiated by the second communist government in 1967, considered to have led to massive unemployment) and the early 1990s, migration to the Gulf had become a mass phenomenon, he says.

“It (migration) changed the landscape, the economy, the land price and the lifestyle. You had flashy houses being constructed, jewellery shops coming up everywhere and there were advertisement boards (of recruitment agencies) asking you to ‘work, study, migrate’," he says.

“Consider this: The state of 33 million already has three international airports and another one is in the making. Even the biggest state in India (Uttar Pradesh) doesn’t have four international airports," he adds.

A 2011 CDS study says that while 2.28 million Kerala immigrants live abroad, another 1.16 million have returned home. The former group is showing a decrease in numbers, while the latter group is increasing. The study also says that there was no evidence of an exodus from the Gulf region before December 2008, but suggests the situation might have changed since then.

However, an analysis of data from the State Level Bankers’ Committee (SLBC), a consortium of banks, shows the growth in deposits has mostly slowed over the past three years.

Kerala clocked Rs66,000 crore as deposits from abroad in 2012, most of it from Gulf nations. In 2013, it was up 40% to around Rs90,000 crore. But in 2014, deposits grew only 15% to hit Rs1.04 trillion. 2015 was somewhat better—deposits grew 22%—but then, as officials point out, the slight improvement may have been because of the rupee depreciating by 4.5% in 2015.

What does this mean?

Fewer people are buying land or gold. Land transactions have come down, says minister Joseph. “Must be because purchasing power has come down and therefore, registrations are not happening," he says.

Property expos in the Gulf held by Kerala-based real estate developers, a big hit in the past, are receiving fewer visitors now, according to Raghu Chandran Nair, vice-president of real estate lobby Confederation of Real Estate Developers Association of India (CREDAI).

Kerala was relatively unaffected when real estate markets were going down across India, until the Gulf crisis, he says. “Real estate prices have come down by 10-15%. Prices of stand-alone properties and apartments have come down by 30 to 40% but buying and selling are not happening in that state."

Gold, considered one of the non-resident Malayalee’s favourite acquisitions, has also been on the decline. Blue-collared workers buy gold as they see it as savings. “(But) their income has reduced and it is showing in the sales, which are down by 25%, even at a time when more shops were opened and gold rates came down by almost 20% last year," says Joseph Stanley, a jeweller and member of the Kerala Jewellery Association.

But despite the gloom and doom, the 25-year-old who had to return in from Abu Dhabi in three months without a job, is confident that he will get another opportunity soon.

Rajan ascribes this optimism to the fact that Malayalees have been going to the Gulf for years and have established strong social networks abroad.

He recalls a chat he had with a Malayalee at a labour camp in Dubai a long time ago. “I asked him, ‘You know, everybody wants to live with god, and you are from god’s own country. So, why have you left and come here to suffer like a slave?’"

“The man replied, ‘The truth is that god is not in Kerala anymore; he migrated to the Gulf a long time back. We are only following him.’"

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Published: 14 May 2016, 11:30 PM IST
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