Migrant remittances from the West and West Asia have been displaying uncertain trends lately, due to various factors.
Indian policymakers would have to decipher this trend early to appropriately deal with the fallouts.
How has remittance benefited economies?
After the global financial crisis in 2008, the developing countries have become the prime engines driving global economic growth and recovery.
Emerging economies like India and China have become increasingly influential in determining global economic policies.
Notably, these economies have benefited from increasing globalisation and the growing movement of goods and people between countries.
Consequently, they are among the largest recipients of global remittances.
Notably, 23 countries, led by India and followed by China, Philippines, Mexico, Pakistan and Nigeria, receive over 80% of global remittances.
Impacts – Remittances has helped lift millions out of poverty and unemployment in the above mentioned low to middle-income countries.
It has also enhanced their standard of living and human development.
The positive impact of migration on economic growth and development through increased remittances is hence well established.
The experience of Kerala, which receives remittances equalling 36.3% of its state GDP, is a testimony to this.
How does India’s remittance profile fare?
India has witnessed sharp remittance growth since 1991, which grew from $2.1 billion in 1991, and touched $70.4 billion in 2014.
Since then, the value of remittances to India has seen modest declines - $68.9 billion in 2015 and $62.7 billion in 2016, although 2017 closed at $65.4 billion.
However, considering the cranky debate on migration around the world, considerable uncertainties about remittances remain.
Notably, India receives about 56% of its remittances from migrants in West Asia, with the remainder from mainly North America and Europe.
But rapid changes in the economy and the socio-political climate in emigrant destinations have had an impact on remittances.
What is the churn in West Asia?
Arab Spring in 2010 and subsequent counter-revolutionary moves by states had a drastic impact on its immigration policies.
Declining oil prices and sluggish regional economies, especially in the Gulf Cooperation Council (GCC) countries, aggravated the situation.
Consequently, most governments decided to prioritise filling their workforce with their nationals, which meant stricter visa norms.
Visa Regime - Notably, only UAE continues with its pre-2008 liberal visa regime, whereas, Oman has had a strict immigration policy since 1998.
The other countries (Bahrain, Kuwait, Qatar and Saudi Arabia) have now started looking increasingly inwards since the spring.
This move was clearly to appease its increasingly restless youth, many of whom were unemployed and participated in protests.
Actions - Saudi government enacted “Saudi Nationalisation Scheme” in 2011 with a view to reducing unemployment among Saudi nationals.
This included incentives for companies performing in accordance with this system and regularisation of over 5 million temporary workers.
Crackdown on illegal migrants, increased control over foreign workers and the apathy to curtain harassment of foreign labourers has also become common.
It is evident that the younger natives of West Asia, who are increasingly becoming educated, will replace migrants in the coming years.
How will this impact Kerala?
Since the 1970s, the Gulf region has attracted millions of Malayalis, and their remittances charted a unique economic growth path for the state.
With remittance accounting to almost a third of the state GDP, Kerala presents a unique case as no other large State in India depends so much on remittances.
The decline - Kerala Migration Surveys, conducted by the Centre for Development Studies, has studied migration from Kerala since 1998.
Its 2016 report notes that the Malayali migrant community had for the first time shrunk by 10% from the previous and currently numbers 2.2 million.
This was on account of two aspects - nationalisation policies in destination countries and enhanced aspirations of the now richer and educated Malayalis.
Unskilled and semi-skilled Malayalis in the Gulf are now being replaced by Philippinos, Nepalis and other Indian migrants from Bihar, Rajasthan and UP.
While the more skilled Malayalis now seem to be eyeing better jobs, the 10% decrease in migration for sure will dent the remittance significantly.
Economic Implications - Remittances to Kerala exceeded Rs. 71,000 crore in 2014 and a migrant typically supports 3 to 4 family members back home.
A third of the population directly benefits from migration and another third benefit indirectly through multiplier effects.
If the State does not identify alternative means of employment and revenue generation, it will turn out to be problematic.
Notably, returned emigrants account for 1.2 million of Kerala’s population and the State thus faces the huge challenge of reintegrating them into the economy.
This demands innovative policies targeted at equipping the workforce to find jobs and also promoting entrepreneurship and investments.
The Hope - Lower migration may not necessarily be a disaster for the State if local resources are channelized properly for enhancing opportunities.
This new trend might, in fact, lead to bettering the total scenario as migration comes with a lot of social costs and emotional costs.
Notably, while a migrant worker might make more money, he/she also has to leave a family behind, and live a life of hardship in a foreign land.
Also, women, children and elderly parents are left back to fend for themselves and deal with loneliness, anxiety and inadequate care.
How does the future look?
North America, which is currently a major remittance sending regions of the world, is expected see dampened migration due to the Trump presidency.
Europe, which surpasses even the Gulf region in remittance, is currently facing its worst refugee crisis since the days of the 2nd world war.
This has already fuelled xenophobic and anti-immigration sentiments across the continent and has resulted in the rise of rightist parties.
It seems obvious that migration and remittances will take on a more prominent role in internal and international politics in the near future.
This is in striking contrast to the latter part of the last century, which was commanded by liberal ideas on migration and open borders.
As the richer nations start relying more on its own workforce and tightly controls borders, the poorer nation will have to rely less on remittances.
Therefore, it is imperative that developing nations that have relied on remittances to recalibrate strategies go ahead.
