Nepal | April 05, 2020

Gulf remittance: Lessons from India

KP Nayar

In the context of growing concern over mounting deaths of Nepali workers in Malaysia and Qatar, the way forward may be to look at Kerala’s model: the Indian state has high level mechanisms to address the welfare of its migrant workers

Illustration: Ratna Sagar Shrestha/THT

India has competition from Nepal for remittances by their respective nationals working abroad, mainly in the Gulf.

According to World Bank (WB) data, disseminated through its successive Country Economic Memoranda (CEM), only one in four Nepali households figured in national economic statistics in 1996 as recipients of any income from abroad. By 2004, this figure had risen to one in three Nepali households.

Over the next four years, every second Nepali family benefited from remittances from diversified sources

. What has generated recent interest among Indians in the demography of non-resident Nepalis is that in the old days a lot of these inward remittances into Nepal came from India. No more.

In 2017, the six Gulf Cooperation Council (GCC) countries contributed an astounding US$ 4.894 billion in remittances to Nepal, according to the WB. This contrasted with a flow of just over one billion US dollars from India to Nepal. Even after making allowances for a large volume of unaccounted remittances from India, it is now clear that the Gulf States represent a key source of bridging Nepal’s current account deficit and confronting its growing trade deficit.

A clearer picture of the importance of foreign currency inflow from the Gulf emerges when the same statistics show that last year, the United States was the source of merely US$ 330 million in money sent by people there of Nepali origin. The United Kingdom’s share was even less – US$ 143 million. This writer grew up in the Indian state of Kerala, which has an economy very similar to that of Nepal. Wealth in Kerala is not significantly created by industry or even trade, but comes from remittances by its people, millions of them, working in the Gulf. Many conventional economists find fault with Nepal’s high reliance on remittances, but Kerala’s experience negates some of these arguments.

When the Gulf boom began in the 1970s, money flows from Dubai, Abu Dhabi, Kuwait and elsewhere in the Gulf region gradually transformed Kerala from an ocean of economic despondency and hopelessness into a prosperous state where beggars are now hard to find and social development indices are among India’s highest. All this raises several questions. Viewed from New Delhi, though, the most important of these questions is one that impinges on national security. Since the Modi government came to power in 2014, there has been a stepped-up crackdown on religious radicalisation involving the Middle East with a special focus on the Daesh and its proxies in the region.

India has not yet taken sides in the dispute between Qatar and three of its immediate neighbours – plus Egypt. But Delhi has been keeping a close watch because allegations of Doha has become a haven for extremists have been a matter of concern in India well before the United Arab Emirates, Bahrain, Saudi Arabia and Egypt aired them in public.

Qatar’s flirtation with the Taliban – which was allowed to open an office in Doha – and what it implies for all of South Asia have also been a cause for concern in the Indian security establishment. Statistics released at the end of last year showed that Nepal’s Department of Foreign Employment issued the highest number of work permits for Qatar in 2016-17. Proportionately, Nepalis in Qatar sent home US$ 1,968 billion last year. India and Nepal must work together to prepare for the potential consequences of a continuing decline in the labour population of their nationals in Qatar, as mega projects for the FIFA World Cup wind down, or in Saudi Arabia, where employing the Kingdom’s citizens is now a priority. Re-integration of returning non-residents is a challenge for any country, but for Nepal and India which share an open border, this poses an additional challenge.

The setbacks in Nepal-India security relations which eventually led to the murder of Mirza Dilshad Beg, a Tarai politician and two-time minister, in 1998 is a tale in caution about the need for cooperative border vigilance. It must also not be forgotten that the scars from the 1999 hijacking of Indian Airlines flight 814 from Tribhuvan airport took years to heal.

During a recent visit to Nepal, this writer found that recent social changes under a younger leadership in Saudi Arabia – which is the second largest source of remittances among GCC countries – were creating hopes of better conditions for expatriate labour in the Kingdom even if their numbers were likely to decline for other, economic, reasons.

In the context of growing concern over mounting deaths of Nepali workers in Malaysia and Qatar, the way forward may be to look at Kerala’s model: the Indian state has high-level mechanisms to address the welfare of its migrant workers. Prominent Keralites living in the Gulf are a part of such mechanisms. They have no vested interest in the manpower recruitment business and they are like a second window on blue collar labourers in addition to the government’s own consular apparatus.

At any rate, as India has learnt in three decades, Nepal has no option but to innovate on the welfare of its overseas labour force if only because the 2017 World Bank CEM on Nepal crucially noted: “Given the phenomenal rise in remittances, they are likely the primary engine behind the improvements in living standards witnessed in Nepal, both directly – households receiving remittances – and indirectly – increased labour income of those that remained.”

Nayar, a foreign correspondent for three decades, has spent 10 years in the Gulf.

 


A version of this article appears in print on June 19, 2018 of The Himalayan Times.


Follow The Himalayan Times on Twitter and Facebook

Recommended Stories: