Falling crude and Kerala

The oil crisis in the Gulf region is affecting Kerala pretty seriously.

We all laugh when someone says that Gulf is like a mini-Kerala but that is indeed a fact and today, with major downsizing happening in companies across the Gulf due to the oil slump, many Keralites are on their way back home, many losing jobs. 10% of Kerala’s population of over 30 million lives in the Gulf; every third house has a man working either in Bahrain, Dubai, Kuwait, Qatar or Oman. Every year, some Rs.1 trillion is repatriated from the Gulf to Kerala, making up for almost 35% of the state’s GDP.

There has already been a constant drop in remittances and the warning is that it could go down further this year, creating havoc in the state’s budget, which is already trapped in large debt. The drying up of Gulf money is already showing in falling realty prices and gold prices are also falling.

This is how it is in a globally connected world – you pull the blanket from one end, the other end lay exposed. While Kerala would be happy that crude oil price is down, obviously that is not good news for the economy of the state.