India braced for wave of Gulf redundancies

Delegates to a summit on the Indian diaspora warned India must prepare for a possible wave of redundant workers from the Gulf.

Manmohan Singh, the Indian prime minister, left, and Vayalar Ravi, the minister for overseas Indian affairs, right, watch as Ramidien Sardjoe, the Surinam vice-president, lights an oil lamp during theShow more

CHENNAI // Delegates to a summit on the Indian diaspora yesterday warned India must prepare for a possible wave of redundant workers from the Gulf. "The concerns are real and there are concerns of redundancy across the Gulf, and as you know, a majority of these workers are Indians," said R Seetharaman, the chief executive of the Doha Bank Group, outside the afternoon session entitled Reflections on Current Economic Crisis - Diaspora Concerns.

"But the Gulf economy is well insulated because it is not a paper economy, it is based on commodities and so for now I think we are relatively safe. But the worry is there." Mr Seetharaman suggested various Indian states look into starting rehabilitation and re-employment schemes that will help those who return. The Pravasi Bharatiya Divas, or Indian Diaspora Event, is a three-day summit in Chennai on issues concerning Indians who live and work abroad.

A number of the participants, mostly Indian delegates from more than 43 countries, expressed concern about the future of those who may be forced to return. In India, GDP projections have been revised downwards from nine per cent to less than eight per cent, and export-based sectors such as IT, textiles, and automotives are under pressure. Panel members suggested measures to the Indian government. "One must create a route for small investors," said CK Prahalad, a business professor at the University of Michigan.

"Those who return, for example, even hospitality staff from the Gulf, come with a unique set of skills and are of great value to India. But this is possible only if there is heavy investment in such industries within the country." Other participants were more sceptical: "We are not afraid of people coming but the question is, who is coming?" said Vayalar Ravi, the minister for overseas Indian affairs who attended, but did not speak at the session.

"There is no sign of any sort. So let there be this exodus that everyone says is coming. When they come, we will look into it." Although some evidence points to 150 Indians going home daily, mostly from the states of Kerala and Tamilnadu, Mr Ravi said that number was expected every year because of the cyclical nature of careers in the Gulf, where visas expire every three years. "Every year one million people come back ? because their contract is over," he said.

"But that does that not say that we are untouched by the global recession. There may be something in due course and we are keeping a close watch." Mr Ravi also said that the Overseas Indian Citizenship Scheme (OCI), which started in 2006, would help professionals who were made redundant. Earlier Manmohan Singh, the Indian prime minister, announced additional benefits to OCI card holders, of whom there are 3.5 million across the world.

"I am therefore happy to announce that henceforth OCI card holders who are qualified professionals - doctors, dentists, pharmacists, engineers, architects and chartered accountants - will have the benefit of practising their professions here in our country. Further details to operationalise this benefit are being worked out," Mr Singh said. Mr Ravi said the fact that Indians from abroad could also practise in India meant there would better knowledge transfer.

The chances of large-scale redundancies have also led to fears of a drop in remittances. Of the US$27 billion remittance that flows into India each year, $13bn comes from the Gulf, Mr Ravi said. The World Bank estimates that the biggest declines in the flow of migrant money next year are expected in the Middle East and North Africa, because of economic slowdowns in the Gulf and Europe. Mr Ravi did not expect the figures to change in the coming year and said there was added confidence in the Indian economy because it was still strong, despite worldwide recession, and because no Indian bank had collapsed like their US counterparts.

"The Indian banks are safe. They are trusted now," he said. @Email:[e-mail]