overseas remittances, coronavirus, COVID-19, Lockdown, Indian economy, stranded migrants
The share of inward remittances from Gulf countries has declined from more than 50 per cent in 2016-17 to about 30 per cent in 2020-21. Image: iStock

COVID-19, overseas remittances, and that elusive dream

Forget the economic growth numbers coming out on a daily basis. There is only one common denominator for the whole world: we are in for a spin that no one knows how it is going to stabilize eventually and at what point of time.

Forget the economic growth numbers coming out on a daily basis. There is only one common denominator for the whole world: we are in for a spin that no one knows how it is going to stabilize eventually and at what point of time.

If a nearly 23 trillion dollar economy like that of the United States has been literally brought to its knees on a virus that many are still debating the origins of, how would it impact a country like India — with about one tenth of the economy of America to boast of and a good portion of it in the hands of migrants of the country in the Middle East, states of the Gulf Cooperation Council, Europe and North America?

Before even looking at the financial implications of the coronavirus on something called overseas remittances, let us look at the two fold problem that overseas migrants from India currently face: first, in the lands of where they are currently and many are out of jobs; some have been declared persona non grata for having been in violation of visa norms; and a few others are simply stuck visitors having missed a deadline to return or in a cancellation of a flight. That airlines and bureaucrats are into the hair splitting game of parsing governmental memos and directives are of no use — Indians overseas are still stranded.

Second, many, if not most, of Indian migrant force in the Middle East and the Gulf want to return and have so expressed their intentions with local Indian diplomatic posts.

The southern Indian state of Kerala alone is bracing for the return of some 400,000; another 100,000 or so to Tamil Nadu; and the list continues. Out of political goodwill the host country may offer to transport a few hundreds; but the bulk will have to be taken care of by India which naturally raises the question whether adequate resources exist. And if the answer is in the positive, what is the time one is talking about given the new norms of social distancing? Even throwing security norms to the winds, bringing migrant workers from overseas in Indian naval vessels is going to take time.

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But to the hapless thousands languishing in inhuman conditions overseas, the overriding question could be “If the government could bring home nationals from Wuhan at the snap of a finger, why not us?”. That circumstances and time frames are different is not going to matter for people who are staring at despondency.

The fact of the matter is that even if all migrant workers in the Middle East and East are brought home and in record time, that still does not solve the problem. Are the states of Kerala and Tamil Nadu, for instance, prepared to receive thousands of their own who would invariably have to fit into the coronavirus framework of being screened, isolated, quarantined at home, in centers, and hospitals and in many instances not allowed to return to their homes? And all this discomfort being forced on a group of people who went for a better way of life and did seem to be a part of until the virus took a toll on the economy of the country where they had settled.

From a macro and a micro perspective, the coronavirus has impacted economies big and small, the developed, and the developing. For instance the American economy has shown a negative growth of some 5 per cent in this quarter leaving some 30 million people in the unemployment lines in the last six weeks, making it the worst economic showing since the Great Depression.

International agencies have markedly downgraded India’s economic growth for 2020, even putting it as low as 1.2 per cent. The projections for 2021 seem to be optimistic but the turnaround is invariably linked to how long this pandemic lingers around, the worst case scenario being that the virus may be due for round two sometime this winter. And for a global migration population of some 200 millions, this certainly cannot be a silver lining — even if economies in the host countries pick up, there is no guarantee a migrant would have recouped his resources to make a bid one more time.

India will have to brace for a huge fall in remittances that are projected to decline by as much as 20 per cent globally with the vulnerable households in lower and middle income countries to be the hardest hit as governments will have to come to terms with poverty, nutrition, child labor and education, to mention a few.

Overseas remittances are of critical importance in some countries or regions as this is far higher than foreign direct investments. “Remittances are a vital source of income for developing countries… Remittances help families afford food, healthcare and basic needs,” said the President of the World Bank, David Malpass.

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The bank points out that the largest decline in remittances flow in 2020 comes after the Lower and Middle Income Countries saw a record level of US$554 billions in 2019.

The fall for South Asia is pegged at 22.1 per cent; and the double whammy for a country like India is that COVID-19 came almost at the same time as the record drop in the price of oil that sent much of the Middle East into a tailspin.

Economies of the Middle East and the Gulf states that houses a vast majority of Indian migrants had already jeopardized the jobs of migrants before the coronavirus put another nail in the coffin. The World Economic Forum estimates that global migrant workers sent home some US$715 billion in 2019 with close to 75 per cent of the money repatriated, supporting about 800 million households in low and middle income countries.

In 2019, overseas remittances to India was to the tune of about US$83 billion; and it is generally said about 90 per cent of this came from the Middle East and the Gulf from the large pool of semi-skilled and unskilled workers, to be followed by the highly skilled pool from the United States.

More than 80 per cent of the remittances came from the United Arab Emirates, Saudi Arabia, Qatar, Kuwait, Oman, United Kingdom and the United States. The four southern states of Tamil Nadu, Kerala, Andhra Pradesh and Karnataka accounted for about 46 per cent of the remittances with Kerala alone showing about 20 per cent of the total receivables. Outside of the south, Maharashtra is said to receive some 16 per cent of total remittances followed by Karnataka and Tamil Nadu at 15 per cent and 8 per cent respectively.

In the immediate context, it is not just one of the Center and the States attending on an urgent footing to the massive shortfall of remittances to developmental imperatives in every conceivable category, but also pay serious attention to the evolving scenarios on the health and well being of returning migrants. Many will be returning workers after a short stint and hence having to face the stark reality of unemployment and under-employment together with coming to terms on meeting debts incurred in dreaming for that elusive better way of life for themselves and their families back home.

(The writer was a former senior journalist in Washington DC, covering North America and the United Nations)

(The Federal seeks to present views and opinions from all sides of the spectrum. The information, ideas or opinions in the articles are of the author and do not reflect the views of The Federal)

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