The government may have firmed up plans to evacuate 10,000 Indians stranded in Saudi Arabia, but it faces an equally worrying and more intractable problem of declining remittances from the Persian Gulf region due to low crude oil prices that have rendered a large number of expatriates jobless.
Remittances to India from the Gulf countries fell 2.2% in 2015-16 from that a year ago to $35.9 billion, declining for the first time in six years, officials told ET.
In 2015, according to World Bank data, Indians working abroad sent home about $69 billion, down 2.1% from $70 billion in the previous year. India is the largest recipient of remittances in the world and the Gulf countries account for more than half of this amount. The United Arab Emirates was the biggest source of remittances to India from the Gulf in 2015-16, accounting for 38.7% of the total inflow, followed by Saudi Arabia, with a 28.2% share. Analysts said India could see a further fall in remittances from the Gulf if oil prices stay low for an extended period or witness unexpected decline. This could emerge as a big challenge for the Narendra Modi government, which has expanded relations with the Gulf countries over the past one year with robust security, counter-terror and investment partnerships, they said.
While the PM visited the UAE, Saudi Arabia and Qatar between August 2015 and June 2016, the newly appointed minister of state for external affairs MJ Akbar has been tasked with bilateral relations with the Gulf as his primary area of responsibility.
Saudi Arabia, which has the highest number of Indian expatriates and is also India’s leading crude oil supplier, saw a continued decline of Indians travelling to the country in 2015 due to the declining oil prices and jobs.
While 434,124 Indians visited Saudi Arabia in January-March 2015, the number fell to 401,034 in the next quarter, 370,282 in July-September and 378,881 in the quarter to December. Meanwhile Saudi Arabia’s Nitaqat law, which allows the government to reserve jobs for the native people, is likely to make things harder for outsiders including Indians seeking jobs.
Indian expatriates are also worried about the possibility of the government imposing a tax on personal income. Besides, Saudi Arabia has unveiled plans to reduce its reliance on hydrocarbons and announced plans to sell shares in stateowned oil firm Saudi Aramco and place the funds raised into an investment fund. The Saudi monarchy could also bring in private players in service sectors such as like education, healthcare and airports.
Declining oil prices have also hit exports to the Gulf region, with goods exports falling 18.7% in 2015-16 compared to that a year ago. A fourth of Indian exports to the region are petroleum products.