Demanding dreams

The National

Keach Hagey

June 11. 2009

According to the Pravasi Bandhu Welfare Trust in Dubai, only 2 per cent of Indian families with breadwinners working in the Gulf are able to set aside savings out of their remittances. Stephen Lock / The National
Take a look at Kerala from a car window, with one cotton candy-coloured dream home going up after the next, and you would never guess that it has a lower gross domestic product than many other states in India, or that its primary source of remittances, the Gulf, has taken a beating from the global recession.

Indeed, there is a sense of plenty permeating the palm-shaded southern state – something that inspires a combination of pride and worry in the heart of native son KV Shamsudheen, a businessman who runs the Pravasi Bandhu Welfare Trust in Dubai.



“We have a very unique culture, and that is part of the problem,” he said.

“In our social framework, if a person leaves home for the Gulf, the family thinks that they can live lavishly, so they start to spend very extravagantly. This extravagance is creating a problem for all the expatriate Indians working here. The family demands more than what they earn, so they will take a loan. When they live away from their family, they always think, ‘I have to help my family back home, let me make a sacrifice.’”



Since founding his welfare organisation in 2001, Mr Shamsuddheen has dedicated himself to educating Indians working in the UAE and the surrounding region – a large percentage of whom hail from Kerala – about the need to control expenditures back home while adhering to a regular schedule of saving and investment.

In 2002, his organisation conducted a survey that quantified what his three decades of working in the UAE had shown him anecdotally – only 2 per cent of Indian families with breadwinners working in the Gulf set aside savings out of their remittances, while only 5 per cent of workers believed they could maintain a comfortable lifestyle in the event of having to return to India.


Back then, the notion of sudden job loss seemed like a remote possibility. Now, of course, things have changed.

As Gulf companies were hit by the global economic slowdown – particularly in the UAE’s construction sector and the many other sectors, from IT to marketing, that developed to support its booming growth – tales of massive job losses and waves of repatriation began making their way through the Indian press.



The Hindustan Times reported in April that 500,000 expatriate workers from Kerala – about a fifth of all Indians employed abroad, 90 per cent of whom worked in the Gulf – had lost their jobs and were coming home. More conservative estimates put the number around 50,000, but definitive statistics on this matter are hard to come by (the Indian ambassador to the UAE actually issued a polite but slightly exasperated statement on the consulate’s website in February asking journalists to stop asking for statistics on the matter).

The lowest official estimate so far has come from Vayalar Ravi, India’s minister of overseas Indian affairs, who told India’s parliament in February that 20,000 Indians working abroad had returned home, based on data from the airlines.

While most officials expect the eventual toll for the recession to be higher than this, there is an emerging consensus that the first reports were overblown.

Dr S Irudaya Rajan, the chair professor of the research unit on International Migration at the Centre for Development Studies, a think tank based in Thiruvananthapuram, Kerala’s capital, said the CDS is just now taking up a research request from the state’s government to provide reliable estimates of the number of returning emigrants. But already he has a sense that things are not as bad as was originally feared.

“In my opinion, both print and electronic media have overplayed the global crisis impact on return emigration and remittances,” Dr Rajan said.

If the media seems obsessed with gauging the size of the wave of repatriation, it is because the Keralite population working in the Gulf is so large and important to both the Arabian and Indian economies. Keralites are expected to send home 429,170,000,000 rupees (US$9.1 billion, or Dh33bn) during the 2008 to 2009 fiscal year, according to the CDS’s December report on the impact of the global crisis on the state.

Kerala receives the largest share of remittances of any state in India, and has about 10 per cent of its labour force working in other states or countries, according to the CDS.

Growing up and going to go work in the Gulf seemed to be a natural trajectory of life for James Tharian when he was coming of age in Thiruvananthapuram in the 1970s.
“A few of my uncles used to live in the Gulf, in Bahrain,” he said. “I think at that time, the cost of living was very low. They used to live here with their family. I saw all these guys coming back from the Gulf, buying land and building huge houses.”

So when Mr Tharian, who is 40, was offered a job in 2003 at a printing press in Ajman that payed six times what his job in the marketing department of RAK Ceramics’ offices in his hometown paid, he made the difficult decision to leave his wife and two sons behind in the hope of being able to provide a better life for them through monthly remittances.

Today, he works in the production department of Corporate Publishing International, an IT publisher in Dubai Media City, and is able to send home a little less than half of his monthly salary of Dh7,500. The money has helped support his family – and he is lucky enough to have inherited a house from his parents, so he has no mortgage – but so far he has not managed to save much.

“I came here for five years, and after five years, my bank balance is almost zero,” he said.

This fact has begun to weigh on him since job cuts sent one of his good friends home, and his daily drive to work from Um Al Quwain presents a daily reminder of the recession’s impact.

“In so many companies, people started losing jobs,” he said. “I used to leave Um Al Quwain at 5am, because if I started at 6am I would be stuck there for more than two hours. Now I start at 6:30am. Even on the roads, you can feel it.”

The recession has made him more cautious about the future. In March, he had plans to bring his family out, and even having visas arranged for them. But in the end he decided against it, partly because of the uncertain economic situation. Today, he’s focused on the long term.

“I plan to send more money,” he said. “I will cut down on expenses.”

In part because of people like Mr Tharian, the CDS still expects remittances to grow this year, if more slowly than before.

This month, Money Transfer International, an international trade association for the remittance industry, said it expects the UAE to continue its 5 per cent annual growth rate in remittances, despite the global slowdown. Last month, Prasanth, the manager of corporate communications at UAE Exchange Centre in Abu Dhabi, said the number of Indian expatriates opening remittance accounts is climbing.

For working-class Keralites, who are mainly employed in the construction sector, this may be because stalled construction projects are not necessarily translating into tickets home.

Malcolm Preira, the general manager of Labour Supply Services in Dubai, said his company has lost several contracts for construction work, but for the time being is continuing to pay and house its workers in labour camps in Ajman.

“But we haven’t sent anyone home yet because we are hoping that things might change,” he said. “We have some 60 to 70 people who we are trying to find work for.”

Mohammad Jindran, the director of Overseas Labor Supply in Sharjah, said he has seen between 400 and 500 workers sent home since September. But his recruiting company, which mostly recruits labour for the construction and construction-related industries, has dealt with the 70 per cent decline in demand for labour in the UAE by shifting its attention to other markets in the region.

“We have been hit badly by the slowdown, but fortunately we have offices in other areas of the Middle East,” he said.

“The work has picked up in Qatar, and in Oman as well.”

For what work that does exist in the UAE, he said, he has trouble getting recruits. “People don’t like to come to the UAE right now because of the heavy repatriation,” he said.

In the early days of the global downturn, Matthew Matthew, a 34-year-old Thiruvananthapuram native who now lives in Ajman and works in marine repair, saw the hard times as a good thing, since the exchange rate meant he could send a lot more money home to his family.

“When the recession started, the rates were really in our favour,” he said. “You needed to pay just Dh71 for 1000 rupees, and now it’s gone up to Dh79. When the recession started, I made use of that.”

But now, uncertainty has rippled through his circle of friends as a couple of them have been laid off, he said. “Many of them have cut down on their spending,” he said.
“Previously, they used to eat out a lot, go out for parties, but now they have cut down a bit.”

He still sends about Dh3,000 to Dh4,000 of his Dh10,000 monthly salary home to pay for, among other things, the loan on the house that he and his brother built in 2007.

“The loan was 2.6 million rupees and the house is worth 3.2m,” he said. “Since then, [the housing market in Kerala] has really crashed, but we have no intention of selling the house that we built.”

But fear of job loss has ruined many people’s appetite for luxury or second homes, according to Ramakrishnan Nanbiar, the managing partner and chief executive of Rainbow Realtors, a Kannur-based property company founded two years ago to cater to the market for Gulf money-funded dream homes.

“Out of the people who buy properties from the builders of Kerala, probably 60 to 70 per cent were working in Dubai,” he said.

“The realty sector has come down 25 to 30 per cent.”

This new-found sense of thrift and uncertainty about the future has a silver lining for Mr Shamsudheen, who finds that he is suddenly able to get his message of fiscal prudence through to people as never before.

“The economic crisis, in my experience, was a shock treatment for people,” he said.

“Those who were not saving started to save. Once they got a shock that people were losing their jobs and tomorrow this could happen to them also, they started to save for the future. In this way, the economic crisis was a blessing in disguise.”

But for some Keralites, like 52-year-old Ramaniar Vishnudas, saving is no new game. For the 13 years since he moved from Kozhikode to work in Dubai, he has sent 80 per cent of his salary home to his wife and two sons, who are now studying dentistry and engineering.

“So far I don’t even have a bank account in Dubai,” he said. “I keep a reserve fund of Dh5,000 to Dh8,000 with me always, then whenever I get my salary, I will keep 20 per cent of that. Then I send everything.”

He hopes that his sons will be able to stay in India to make a life for themselves, and when he moves back in two years to start a dairy farm, they will be there to support him the way he currently supports both them and their grandparents.

“In the future, I don’t think people will come [to the Gulf] like they have ... there are many opportunities in India.”