Western Asia is looking at an economic crisis. India has to be prepared | Opinion – analysis
Often humorously called “India’s fifth largest metropolis” or “India’s cleanest city,” Dubai is the center of economic power not only in West Asia, but also in the global financial system. There are more than 300 weekly passenger flights between Dubai and various Indian cities, showing its importance, and the larger region, to the Indian economy and society. Of the 3,336 Indians positive for coronavirus disease (Covid-19) currently abroad, 2,061 are in the Gulf.
However, bigger problems await New Delhi in the sprawling Gulf region with the world economy on the way to a critical recession. Some analysts suggest that the crisis will be bigger than the Great Depression.
Fractures have already begun to show in the Gulf economies, as markets collapse, blockades are imposed, companies stagnate, and an oil price war develops in the Organization of Petroleum Exporting Countries (OPEC) and beyond. . More than eight million Indians work in the largest region in Western Asia, with the United Arab Emirates (UAE) and Saudi Arabia taking most of those numbers. These more than eight million workers are also responsible for sending more than $ 50 billion in remittances to India annually. Now, the World Bank predicts an overall drop of 23% in remittances this year.
Estimates suggest that the Gulf economies may need more than $ 40 billion in this tax infused into the regional financial ecosystem to cushion the Covid-19 coup. Skilled and semi-skilled Indian workers in the region will feel the major consequences of this as they lose contracts with major events in the region like DubaiExpo 2020 and others that are postponed until next year.
Kerala, which has more than 1.5 million of its citizens working in the Gulf, expects a return of up to 400,000 of its inhabitants shortly after the blockades are lifted due to the consequences of the pandemic. Migration figures had started to decline in recent years, with a record number of returning semi-skilled labor. The reasons behind this trend have varied, from stagnant wages, cost of living, inflation, oil prices, the Indian government’s migration policies, and a shift toward requiring more skilled than semi-skilled labor. -qualified. Even in Dubai, once synonymous with general Indian labor, the Indian chief executive and Indian engineer are now most sought after.
Beyond the immediate crisis, it is certain that the pandemic will also put a key in the process of regional reforms. For example, Saudi Arabia, with its great king on hold, Mohammed bin Salman’s (MBS) grand plans to open up the Saudi economy in an effort to remove the kingdom from its dependence on oil, will certainly experience turmoil, prompting plan “Vision 2030” of the country under pressure and possibly depleting foreign exchange reserves.
With oil prices dropping astonishingly below $ 25 a barrel in the recent past due to a collapse in global demand reeling from the pandemic and disagreements between Saudi Arabia, the United States and Russia over crude production, the flaws. political and economic in an already existing conflict. Mounted neighborhood will deepen. While these low oil prices are good news for New Delhi, they will be a reward to the Indian government only if the economy is prospering and consumption is robust. The latest GDP data from the International Monetary Fund for India’s growth over the next year put the figure at 1.9% at the current tax. For now, the greatest benefit of these low prices is only in the economic recharge of the country’s strategic crude reserves.
It is also imperative to remember that while the United Arab Emirates and Saudi Arabia are highly focused on trade and migration issues between India and West Asia, smaller Gulf nations like Kuwait, Oman and Bahrain also have significant participation. Kuwait, where New Delhi recently dispatched medical teams to help combat the pandemic, is home to almost a million Indians. Together these three small countries only have around 1.5 million Indians as residents and workers. Beyond this, even conflicting states like Iraq have Indians working as oil workers, truck drivers, and logistics manipulators – as of last year, there were more than 17,000 working in the country.
Significant reverse migration in the post-Covid-19 era will add additional strain to the Indian economy as returning workers will add pressure on an already faltering labor market along with the loss of remittances that could reach billions of dollars. .
India’s reach during the pandemic to western Asia, from Saudi Arabia to Israel to Iran, has been strong. However, the government should also use this crisis to empower states to have greater participation in migration and economic resettlement issues as part of the Center’s foreign policy. It is the right time to prepare and act collectively.
Kabir Taneja is a member of the Strategic Studies Program of the Observer Research Foundation. He is the author of The ISIS Peril: the world’s most feared horror group and its shadow in South Asia.
The opinions expressed are personal.