Saturday, December 5, 2009

Debt-laden Dubai makes Kerala jittery

Dec 05, 2009

When the markets crashed in Dubai with the threat of Dubai World defaulting on its debt, the direct impact will perhaps be felt more in the southern state of Kerala as it sends hordes of workers to the Emirates, reports CNBC-TV18’s Naveen Nair.

Economists call Kerala a money order economy. Precisely for this reason that every third house in Kerala has a man working in the Gulf. It is this Malayali's dream to making it big in the Gulf that was in the line of fire when the markets tumbled in Dubai.

Finance Minister of Kerala, Thomas Isaac says, “Malayalis constitute a majority of the workers in Dubai. So, they are going to come back in large numbers. We will have to take certain measures to provide safety net to them. It is very much worrying. Lakhs will lose jobs and return and then it could be a social problem.”

And many workers who are home for Bakri -Eid holidays fear the worst when they go back.

Fatharuddin, Employed in the UAE, “We don’t know what the exact picture is since the government is keeping it a secret. There is no surety that our job will be there when we return.”

From among 50 lakh Indians who work in the gulf, The Malayali diaspora alone account for more than 20 lakh. And they bring in more than 25% of the state's GDP as remittance.

So if the markets crash in the Gulf, the direct impact will no doubt be on the economy of the state. Not just that the future of two of Kerala's multi-crore projects, the Smart City and the Vallarpadam Shipping Terminal is also uncertain as both have Dubai World as partners.

But some others are still optimistic that the sun will never set on Dubai.

Overseas Indian Affairs Minister, Vayalar Ravi says, “I am not expecting a serious adverse impact on the Indian economy over Indian workers. This is just a continuation of what struck the Wall Street. There isn’t anything to panic. There will not be any exodus at this point in time. I am sure in two to three weeks time, things will normalise.”

Amidst all the fear and insecurity there is still hope because not many people have returned from the Gulf saying they have lost their jobs. But if the crisis deepens in Dubai World, it could very well be the case. That could very well leave the state's economy in complete ruins in the coming months.

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