Warning: Creating default object from empty value in /nfs/c03/h01/mnt/56080/domains/filtercoffee.nationalinterest.in/html/wp-content/themes/canvas/functions/admin-hooks.php on line 160
Tag Archives | nri

The Khaleej and India

How will the instability in the Gulf impact India’s economy?

Political instability in the Middle East will likely have an impact on India.  We have already seen how the uprisings in Egypt and Libya have affected the lives of the over 18,000 Indians living in that part of the world.  The potential impact of the deteriorating situation in Bahrain will be far greater, where about 300,000 Indian expatriates live.  GCC countries today are home to about 4.3 million Indians.  This, of course, does not include the many undocumented (mostly blue collar) Indian workers in the region.  In some cases (as in Dubai, which experienced an influx of workers in the last decade), the number of undocumented workers as a percentage of the total population of expatriate Indians will be considerable.

But beyond the potential effects to the lives of Indian citizens, political disturbances in the region will also have an impact on India’s economy.  Today, remittances account for about 4% of India’s GDP (considerable, but not as high as other countries in the subcontinent).  Remittances to India as a percentage of GDP have also (somewhat interestingly) increased over time, and with the liberalization of India’s economy (from 1.1% in 1985, 2.8% in 2000 to about 4% in 2008).  As of 2008, the Gulf was the largest source of remittances to India at about 40%:

(Source of data: Reserve Bank of India)

Two important points need to be made here: first, while we already know that India leads other nations in terms of total dollar remittances ($46 billion, 2008), it does not include remittances made via hawala transactions.  Since the September 11 attacks, the U.S. has worked with Gulf countries to strengthen their finance and banking regulations to ensure control over hawala transactions (which, by their very nature, have been helpful to terrorists to finance attacks against the U.S. and India).  However, according to some estimates, hawala remittances to India from the Gulf are still pegged at about 30-40% of legal remittances.  That would effectively put total remittances from the Gulf to India at at least $60 billion.

Second, when one considers remittances as a percentage of net state domestic product (NSDP), some states will likely be far more vulnerable to political uncertainties in the Gulf than others.  According to a study published by the Centre for Development Studies, remittances to Kerala as a percentage of the state’s economy was at 30%.  Further, per data published in the same report, it can be inferred that remittances from the Gulf alone can be pegged at about 28% of the Kerala’s economy.

While the most immediate impact of the repatriation of Indian citizens from a worsening situation in Bahrain could result in a momentary spike in remittances, as some suggest was the case during the first Gulf War, it will undoubtedly have a medium- to long-term impact on the economies of states in India that depend heavily on them.

Read full story · Comments { 1 }

India’s response to Bahrain

Unpardonable negligence.

The situation in Bahrain has steadily deteriorated, with the al-Khalifa monarchy unleashing army tanks onto the streets of the capital, Manama.  About two days ago, I asked on Twitter what India’s contingency plans were for the over 300,000 Indian citizens that lived in Manama, should the violence escalate.  As early as February 14, I had tweeted that the violence in Manama will have a direct impact on the security of NRIs living in the country.

Today, on day six of the protests in Bahrain, MEA released this statement on the situation:

In response to a question the Official Spokesperson said that India is closely following the developments in Bahrain. Our Mission in Manama is in regular touch with representatives of the Indian community numbering over 350,000 , who are reported to be safe. We hope that calm soon returns and prevails in Bahrain. [Ministry of External Affairs]

Now, Bahrain no doubt is a friendly country and one of India’s important trading partners in the region.  And I appreciate the sensitivities involved in issuing statements on the situation.  However, I wasn’t hitherto aware that governments based their policy responses on “hope.”  Apparently, MEA “hopes” calm will return to Bahrain.

But what if it does not?

Further, how does the Indian Embassy in Manama know is citizens are safe?  If violence in Bahrain escalates, how do these citizens know where to apply for relief?

I make these points, because of the state of the Indian Embassy in Bahrain.  The Embassy didn’t bother to renew its website (indianembassybahrain.com), which resulted in the website being bought by an other owner, who ended up hosting pornographic content.  Worse, the Embassy purchased a second website (indianembassy-bh.com), which expired on February 15, 2011.  As of today, the Indian Embassy has no effective way of being able to communicate with NRIs in that country.

On being informed about the issue, the Foreign Secretary thanked the responder and said that the ambassador “is checking.”  Call this nitpicking, but surely Amb. HE Mohan Kumar or his staff should have already been alert to the minor issue of their website disappearing off the face of the earth, sometime over the course of the past three days.  If violence becomes unmanageable for the state this morning, I’m not sure how he or his staff expect to be able to communicate with stranded NRIs.

Their negligence is unpardonable.

Footnote: By the way, and for what it’s worth, Indian citizens in Bahrain can call the 24-hour helpline (+973 17713509) to reach out to the Embassy for relief, if needed.  This is the only number that the Embassy published prior to the demise of its website.  Going by current form though, whether or not this number works is another question altogether.

Update: It appears that the Foreign Secretary’s follow-up had the desired effect on Embassy staff in Bahrain (LT @nikhilnarayanan).  Indian Embassy, Bahrain’s website is back up (http://www.indianembassybahrain.com) as of 1:30pm, February 19.  The website includes an advisory to Indian citizens in Bahrain and emergency contact numbers[1771-2785, 3930-4285 and 3982-8767].

Read full story · Comments { 4 }