West Asia conflict: Call for adopting short-and long-term measures to reduce impact of crisis

With no end in sight to the Iran war, the call for adopting short-term and long-term measures to mitigate the impact of the West Asian crisis has grown louder in Kerala, whose economy is heavily dependent on the NRI remittance. The Kerala Migration Survey (KMS) 2023, done by the Gulati Institute of Finance and Taxation (GIFT) with technical support from the International Institute of Migration and Development (IIMAD), estimated the total remittances from expatriates at a record Rs 2,16,893 crore in 2023, up from Rs 85,092 crore in 2018, an increase of 154.9%.

“This means a disruption in the Gulf region’s economy is a major setback to the economy of Kerala,” said S. Irudaya Rajan, Chair of the International Institute of Migration and Development. With close to 3.5 million Keralites in Gulf countries, the State government should urgently constitute a panel to assess the gravity of the crisis and adopt short-term and long-term measures to reduce the impact of the crisis.

“The current crisis has more depth than the Gulf War in the 1990s, which saw the Indian government evacuating around 2 lakhs Indians. I would say the present crisis can be compared to the combined effect of the global economic meltdown in 2008 and the Covid-19 outbreak in 2020,” said Mr. Rajan.

According to K.P. Kannan, a noted development economist, the present short-term impact will be minimal due to the relatively strong private economy in the State. The devaluation of currency against the dollar will help the expats to send more money to Kerala for the time being. However, if the war persists, the situation would not be the same, and Kerala’s economy would be the worst-affected, as the State is currently meeting its expenses by taking short-term loans to tide over the crisis, he said.

The State should also hold a campaign to sensitise people about the need to tap other modes of energy sources to meet their burgeoning energy demands. For instance, the promotion of induction cookers and using locally-produced bio-gases for energy needs in the kitchen can to some extent insulate the State from the impact of the changing global geopolitics, added Mr. Kannan.