Projected Remittance Loss Giving India More Headache In Pandemic Crisis

By Shakir Husain NEW DELHI, Sept 10 (Bernama) -- A projected remittance loss may give India more headache in its efforts to overcome the economic shock from the COVID-19 pandemic, as the energy-rich Gulf region -- a major source of remittances for India -- is caught up in serious business disruptions due to pandemic as well as the low oil prices, resulting in significant job losses among migrant workers. Prior to the pandemic, there were nearly nine million Indian migrants in the Arab region, but now, thousands of non-resident Indians (NRIs) continue to return daily after countries that relied on foreign labour face shrinking economic opportunities. In a report last month, the Asian Development Bank (ADB) said job losses stemming from the COVID-19 crisis are hurting households around the world, and the effect on Asia-Pacific's 91 million migrant workers -- which accounts for one-third of the global migrant workforce -- is particularly severe. The ADB estimated that the region, which received US$315 billion (US$1=RM4.17) in remittances in 2019, would face a shortfall of between US$31.4 billion and US$54.3 billion. According to Fitch Ratings, sectors which employ migrants are likely to be particularly affected during the pandemic. "We expect flows to weaken in the coming quarters, even though recent amounts have been surprisingly robust in some countries due to temporary factors," it said on Tuesday. The rating agency said it expected a 12 per cent decline in fund flows across the region in the second half of the year, when these "temporary factors", such as migrant workers transferring their savings in preparation to return home, starts to fade. Although just two per cent of households receive remittances in India, the country is the largest recipient of global remittances. According to a World Bank report, India received US$79 billion in remittances from its diaspora in 2018, and a huge chunk of this came from the Arab region, supporting India's balance of payment situation, boosting domestic consumption and relieving job market pressures. When India imposed the initial lockdown to curb the spread of the coronavirus in March, tens of millions of jobs were lost as the informal economic sector, which provides jobs for 90 per cent of workers in the country, was the hardest hit. Nearly 19 million salaried workers lost their jobs since April, with five million rendered unemployed in July alone, according to the data from the Centre for Monitoring Indian Economy (CMIE). More than 1.3 million Indians have returned on India-based carriers since the government launched a scheme on May 6 to bring home its citizens who had been stranded abroad, and this is likely to increase the local unemployment stress. As such, India has launched an initiative called Skilled Workers Arrival Database for Employment Support (SWADES) to create a database of qualified returnees and to utilise their skills locally. The government has also lifted the harshest of measures it had imposed in the early days of the pandemic in order to revitalise economic activities, and Metro rail networks have resumed limited services in major cities, including Delhi, with various infection-control measures in place. However, despite government efforts to check the economic slide, the financial forecasts are depressing with the rise in COVID-19 cases. The number of total reported cases increased by 89,706 on Wednesday, bringing the total to 4.3 million, more than double the figure recorded a month ago. India Ratings and Research, a credit rating agency, said on Tuesday that the country's economy would shrink 11.8 per cent in the current financial year. Its downward revised prediction comes after government data showed a 23.9 per cent gross domestic product (GDP) decline in the second quarter. -- BERNAMA