Kerala’s is a unique place. A land of diversities with generations of forward thinking denizens. The state has a long standing history of cultural, political and religious harmony which is absent in many other parts of the subcontinent. Just like much of the state’s uniqueness, its economy is one that grabs a lot of attention of its own. In a country where there are 29 states and 7 union territories, this small southern state has the eight largest economy in the country.
Although the state is primarily an agrarian economy, with time it became largely dependent on trade services and resulted remittances. It is no secret that a large population of the state’s citizens are Non- Residents, with around 2.1 Million Kerala immigrants spread across the globe as of 2018.
“The Kerala Model” of development where the state has set a relatively high standard of living coinciding with low per capita incomes, with both figures distributes across the entire population is mostly a result of many wealth and resource distribution programs that are being followed in the state since long and the active political participation and activism of the general public.
Although the state is primarily an agrarian economy, with time it became largely dependent on trade services and resulted remittances. It is no secret that a large population of the state’s citizens are Non- Residents, with around 2.1 Million Kerala immigrants spread across the globe as of 2018. The Kerala Migration Survey (KMS) which started in the year 1998, has monitored the migration trends for years, which has shown noticeable variations in the pattern post the global recession of 2008.
The Gulf boom from early 70s to early 80s, where Keralites migrated in large numbers to the GCC showed a distinct reduction since the recession. Still, figures showed that in 2010, the NRI remittance from from GCC states alone stood at around $6.81 billion (US), which was more than 15.13% of the total remittance to India in 2008. Even with the decline in emigration rates, the estimated total remittances to the state stands at 83,000 crore as of 2018.
Kerala’s emigrant community has aided in building the state to its current glory in many ways. KMS shows that 40% of the remittances are used for land purchase, construction works and paying housing mortgage. During the initial days of Gulf boom, most of the emigrants were menial labourers or semi-skilled technicians from lower and middle class families. As a direct result, the standard of living among the economically backward strata improved drastically. Thanks to the foreign exchange rates in favour of NRIs, many families of emigrant workers were able to afford amenities that improved their standard of living. Improved households are a visible result of remittances, helping local economies within the state to improve.
The recent floods in Kerala however has strained the economy to a large extent. Revenue deficit is definitely going to widen, as is the state debt which is likely to go high under present circumstances. With the agrarian districts of the states devastated, Kerala is likely to depend more on NRI remittances in the coming days. All though the actual remittances to the state has varied and decreased over the years due to a number of factors like global recession and nationalization policies in the GCC, the incoming NRI funds has efficiently supported the state economy since the Gulf boom.
The existing remittances are expected to increase as increased support for the state in good faith, which constitutes donations for rehabilitation and rebuilding infrastructure. It is said in various studies that intensity of a disaster has an impact on migration. The monetary needs of individuals may trigger higher migration rates. However, increased migration will result in reduced number of local labourers to aid rehabilitation, which is the need of the hour.
The choice is left to the citizens of Kerala, whether to stay back or to leave. In the present scenario, the state will have to wait and see what patterns are likely to rise in the case of emigration, return emigration and subsequent remittances.