Migration will dip sharply, affecting capital inflows and jobs
Updated: Apr 24, 2020 19:24 IST
it is now inevitable that migration will be much reduced(Sameer Sehgal/Hindustan Times)
A combination of pandemic-induced recession globally and travel restrictions, says a World Bank report, will see India’s remittances fall by nearly a quarter next year. Given that the bulk of remittances come from the Persian Gulf — which is also seeing the impact of the crash in oil prices — India will become more vulnerable. The fate of the highly-skilled worker will also be under question if the United States’ (US) temporary block on immigrants is extended to H-1B visas. It is no surprise that a virus — which requires social distancing, has stopped air travel and caused enormous demand destruction — would have a disproportionate impact on migration. This year will also see a large drop in cross-border student movement as the academic calendar gets disrupted. The pandemic has greatly accelerated anti-migration trends already developing thanks to a slowing global economy and nativist politics. The Persian Gulf and the US remained among the few destinations where Indian migration numbers were still growing. That is now unlikely to continue.
Overseas migration benefits India in three broad ways: Capital, social release and knowledge. When it comes to the first, the predicted fall in Gulf remittances will partially offset the gains to the balance of payments (BoP) offered by lower oil prices. North America provides another substantial segment of India’s remittances but as immigrants there are more middle-class, these remittances are less likely to fall. Gulf remittances, while remaining an important foreign exchange buffer, have been declining in importance to India’s overall BoP. The region was arguably more useful because it provided badly-needed jobs for working-class Indians, initially from Kerala, but increasingly from Uttar Pradesh and Bihar. This will be a much-reduced safety valve.
The role of the diaspora in the West in funnelling know-how to India is under-appreciated. This should be the least affected as knowledge and its business applications can temporarily be managed online. The flow of students will also resume at some point. But it is now inevitable that migration will be much reduced. New Delhi may have to leverage its geopolitical influence with the Gulf emirates. It should also contemplate including migration in its trade and investment agreements and working out health certification protocols for Indian travellers. A mitigation strategy is in line for one of the world’s largest labour-exporting nations.
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