Kuwait is planning to enact an expat quota Bill that aims to reduce the expatriate community’s overbearing presence in the West Asian country from 70 percent to 30 percent. The financial impact thereof would reverberate across many countries with India slated to be the worst hit — by extension, Kerala has all reasons to brace for a massive impact, given the number of expatriates there. The population of Kuwait according to mid-year statistics of the UN was 4,270,571.
The UN data site worldometer that tracks country-wise population on a live basis admits Kuwait’s population is difficult to estimate given the overwhelming presence of non-nationals there. As per the 2011 census, Kuwait’s population was 3.1 million — 1.1 million citizens and 2 million non-nationals.
Coming to the present, the UN data sources says the local people or citizens of Kuwait have shrunk to around 30 percent, and consequently the expatriate community has grown to 70 percent—this includes 1.1 million Arab expatriates and 1.4 million Asian expatriates.
The Indian Ministry of External Affairs, also quoting the UN demographic data base, say there are 825,000 Indians in Kuwait, which is 19 percent of its present population. If the country’s aggregate expatriate population is actually 70 percent, then the numbers should add up to 2.99 million. There is an anomaly here as the Asian and Arab expatriates together add up to only 2.5 million, which would make its only 58.5 per cent of the total Kuwait population.
Be that as it may, this disproportionate share of expatriates has been a thorn in the flesh of the Kuwaiti government. The demand for an urgent solution to the problem reached a crescendo over the past few months, following the COVID-19-triggered economic slowdown.
Now, the news coming out through local media houses is 800,000 Indian are facing exit. In which case, almost the entire Keralite community, numbering about 400,000 as per figures available from NORKA, will be on its way back. If this worst case scenario plays out, apart from 33,914 already registered with NORKA to return from Kuwait, Kerala will have to gear up to accommodate over 350,000 more expatriates coming home for good.
There is no arguing that the new Bill, which proposes to repatriate about 40 percent of Kuwait’s population, will considerably reduce the Indian presence. This would be particularly true in the case of unskilled labour, which according to Kuwait Assembly Speaker Marzouq al-Ghanem is around 1.3 million. On the other hand, a 40 percent reduction of the country’s population would require packing off 1.7 million expatriates.
Either way, India has reason to be worried.
By extension, Kerala too, as it is already weighed down by the health cost arising from the single-largest source of COVID-19 positive cases, the Non-Resident Keralites. With only around 100,000 out of the 560,000 expatriates registered to beat the pandemic blues returning so far, the state is bracing for the economic onslaught that will be caused by the remaining 460,000, many of them jobless. Of the 444,800 NRKs registered to return home from the GCC countries through the Vande Bharat Mission, 33,914 are from Kuwait.
The state government’s own agency NORKA puts the figure at 5 million: 1.5 million in the United Arab Emirates, 1.4 million in Saudi Arabia, 0.4 million in Kuwait, 0.3 million in Oman, 0.3 million in Qatar, and 0.15 million in Bahrain.
If the Kuwait dream starts turning sour for its expatriates, over 350,000 Keralites would be looking to return home for good and such a huge repatriation is certainly going to be a big dent in the remittances this year, with no significant changes in fortunes seen next year.
According to a recent World Bank advisory, the remittance economy on account of the pandemic-triggered economic meltdown will shrink from $554 billion in 2019 to $445 billion in 2020. For India, which continues to top the world remittance pool, the drop will be from $83 billion 2019 to $64 billion in 2020.
Kerala’s share, which was $15.9 billion in 2019, seems set for a proportionate shrinkage, perhaps to about $12.25 billion. No state can withstand seeing $3.5 billion sucked out of its receivables. Given that the World Bank had not factored in the Kuwait crisis, one may have to factor in a minimum shortfall of an additional $0.5 billion, taking Kerala’s remittance meltdown to a massive $4 billion.
This is perhaps the worst nightmare for the Kerala government that was betting big on instruments like diaspora bonds along with the World Bank to skim a portion of the ‘low-interest bank deposits’ for this purpose. Crucially, when the state government is planning to showcase a clutch of high-investment, high-visibility projects such as the high-speed 532-km Silver Line rail project with a cost of Rs 63,941 crore, one can only wonder how the funds would be raised.
The Kuwait repatriation, as and when it happens, can only add to these woes.
The Market Podcast | Prateek Agrawal bets on chemicals, retail, IT, consumption amid COVID-19