Coming Pressure to Create New Jobs

Context: Inward remittances are expected to fall steeply following a global slowdown and the conscious efforts to reduce dependence on expat workers in Gulf countries.

Inward Remittances 

• Finance the trade deficit: of approximately 43% in 2017-18, as per RBI. 
• Source countries of remittances: i.e the UAE, Saudi Arabia, Qatar, Kuwait, the US, and Britain account for over 80% of the total remittances. 
• Fall in remittances: widens the current deficit, and lowers demand and raises unemployment.
• World Bank estimates fall in remittances to 23% i.e around $64 billion in 2020.

Reasons behind fall in Remittances 

• Gulf countries effort to reduce their dependence on foreign labour and hire locals:
• Kuwait’s proposed draft bill: to reduce the Indian expats to 15% of the population.
• Oman: proposed a phased reduction in expats. 
• Saudi Arabia: introduced a quota system in 2011for Saudi hiring at private firms.

Adverse Impact of Falling Remittances

• Slowing economic activity: in India, coupled with lower oil prices, would reduce the import bill and exports of goods, services and labour.
• Pressure on jobs: returning migrants could displace other workers, including internal migrants. 

Conclusion: Ensuring entrepreneurship through an enabling ecosystem could release the pressure on jobs due to returning migrants and falling remittances.