Returning migrants: Big trouble awaits Covid-hit Kerala economy

By Nebu John Abraham

As it faces the rising number of Covid-19 cases, Kerala is staring at another huge challenge. The state government under Chief Minister Pinarayi Vijayan has done a great job of checking the spread of the new coronavirus pandemic so far. But the challenge of rehabilitating a large number of migrants, especially those from the Gulf region, may prove to be a much more onerous task.

The Kerala Migration Survey, 20l8 puts the number of Malayalis outside India at 21 lakh, of which 89% are in West Asian countries. The other traditional destinations of emigrants such as the US and the UK have also become less attractive. Among the West Asian countries, the UAE and Saudi Arabia account for 62% of Malayali migrants. Districts such as Malappuram and Kannur have migrants in 42% and 38% of the households, respectively. Remittances by Gulf Malayalis made a huge contribution in building a society with high human development at low income levels — what is known internationally as the Kerala Model.

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Having seen the emigration trends, it is important to examine the return out migrants (Malayalis coming back from other states ) and out migrants, or Keralites migrating to other states. The Kerala Migration Survey (2008) indicates the number of out migrants as 9.9 lakh and return out migrants as 6 lakh. The number of migrant workers from other states is always difficult to estimate. The latest study conducted by Gulati Institute of Finance and Taxation estimates that there are 2.5 million migrant workers in Kerala. These workers are mostly from Bengal (20%), Assam (17%), Bihar 18% and UP (14.8%). The number of migrant workers more or less match the outflow of workers from Kerala.

The returning migrants come back due to various reasons — 54% of them because of job losses or failure to continue in outside destinations. Only about 11% come back after having successfully achieved the purpose of migration. There cannot be an accurate assessment of the number of returning emigrants, but one could make a fair assessment on the basis of the experience during the global recession of 2008. During the peak period of the recession, 1.73 lakh people returned home. If this is any indication, the next few months will see 2-2.5 lakh people returning from abroad. The normal annual number of return emigrants is around 12.5 lakh as per KMS, 2018. This would be around 60% of all emigration from Kerala.

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The influx of a large number of workers will change the employment scenario in the state. Kerala is already among the states with highest unemployment rates. The state would find it difficult to rehabilitate the additional workers. Kerala Economic Review has put the 12-month unemployment rate in the state at 10.4%, whereas NSSO puts it at 9.4%. Among urban youth unemployment rate is 18% while the same is 27% among rural youth. The sudden supply of unskilled workers would depress the wages, disincentivising migrant workers seeking jobs in Kerala. In all probability, ongoing construction work, retail trade and hotel industry will be affected by manpower crunch.

The crisis in the Gulf region could also have a major impact on remittances. Currently the foreign exchange contribution to the state domestic product is 19%. Total remittances in 2018 was Rs 85,092 crore. The average household expense of non-resident Keralites is much higher than that of the average resident. It contributes majorly to the consumption expenditure and related trade and industry. Decreased remittances may reduce the growth of state domestic product (SDP). The lower SDP and decreased remittance may lead to a fall in the per capita income which could affect the human development indices.

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The ratio of working age population to the population of dependents has a considerable impact on welfare. Index of development benefit (IDB) measures how much change in GDP is contributed by demographic factors. The population of the age group 15-39 years is critical in this measurement. Changing Kerala, a study by KC Zachariah, predicts that the IDB Index will drop from 42.8 in 2001 to 14.4 in 2021, which is projected to drop further to – 4.1 in 2031. The low total fertility rate in the state indicated in the latest National Family Health Survey will see a further fall in the population of the age group of 15-39 years.

A close examination of emigration trends reveals a fall from 24 lakh in 2013 to 21 Lakhs in 2018. The oil crisis in the Gulf region, the decrease in employable population in the 15-39 age group and the high demand for labourers from outside states will result in a further fall in the number of Keralites seeking jobs abroad. The share of remittances in SDP also have dropped from 25% in 1998 to 19% (Kerala Economic Review 2018). It is understood that, the Gulf region will not be the same land of opportunities in the coming years.

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At this juncture, the state government needs to have a feasible strategy along with an exit strategy with respect to Covid-19. The state could explore some of these ideas.

• A self-operated and funded household assistance scheme on the lines of the one in New Zealand could generate employment for returning emigrants. This will help the people going abroad to have peace of mind about the plight of their aged parents and property.
• As they are skilled in various trades, the returning migrants will provide a valuable pool of workers on demand. A software application that can pool this database will be helpful.
• Intensified industrialisation is a common way to fight the situation.
• A scheme for leasing land could help boost agriculture growth in the state with the help of returning emigrants.
• The state can encourage out migration by way of increasing transportation infrastructure.

The coming days will be quite difficult ones for the state government. It is already facing a recession induced by the Covid-19 pandemic, huge decline in revenues and rising unemployment. The current state of the economy doesn’t allow the government to rehabilitate the people coming back from other parts of India and abroad. The policy makers should come up with innovative ideas to boost economic growth and generate confidence among returning emigrants to sail through this troublesome period.