IF THERE is one Indian state whose economy is crucially dependent on the well being of the Arab world, it is Kerala.
The southern state on the Arabian Sea has prospered over the years on remittances from its sons working in the Gulf.
Keralites, therefore, were not pleased when the Saudi government announced at the weekend that it would cut back further on jobs for foreign workers.
Given that there were over 1.3 million Indian workers in Saudi Arabia alone, a vast majority of them were from Kerala, it was natural for consternation to spread in the land of coconut groves, cashew gardens, rubber plantations and scenic backwaters.
As it is, Kerala’s economy was already in decline when the shock came from Riyadh that 21 different job sectors ranging from ready made clothing, children’s toys, auto showrooms, construction materials, electrical and household appliances would be barred to foreign workers.
The Saudi decision to phase out expatriates in these sectors came in the wake of a creeping decline in the rate of remittances back home by Indian workers from the rest of the Arab world.
The only Indian state to boast of 100% literacy has come to be so dependent on foreign remittances that it shudders at the thought of an economic slow-down in the Gulf.
Having failed to capitalise on its abundant natural resources, Kerala is in the throes of an economic crisis.
A recent advertisement in local papers for the post of a lone hangman for the Kerala's prisons elicited more than 10,000 applications, among them quite a few from unemployed university graduates.
A recent visit to the Kerala revealed how Keralites had squandered money on fancy houses and gold jewellery. Instead of directing the remittances into productive uses, they preferred to outdo one another in building exceedingly ugly mansions all along the winding roads that criss-cross the verdant land of cashew gardens and coconut groves interspersed with leafy spaces and enchanting backwaters.
Given that Keralites send home annually some Rs27,500 crores (RM22bil), its overall rate of economic growth is much lower than of some of the other Indian states which are not half as blessed with nature’s bounty as it is.
For instance, the tiny state of Haryana abutting the national capital of Delhi does not have the natural resources that Kerala boasts of.
Yet, Haryana has left Kerala far behind in economic development by offering attractive incentives to industrialists to set up units within its boundaries.
In sharp contrast, even though Kerala produces much of the raw rubber, one of the biggest tyre manufacturers in the country, who is a Keralite to boot, has his main production facility located outside the state’s borders.
Though more than 2.5 million Keralites live abroad, Kerala attracts much less foreign direct investment than such states like Haryana, West Bengal and UP. The remittances sent by Keralites to their families back home are frittered away on building mansions. Or on opening fancy stores.
What struck one most on a recent visit was the high number of jewellery arcades in Kerala. It seems an inordinately high percentage of Kerala households spends whatever surplus money they have on the yellow metal rather than on channelling it in more productive uses.
Of course, one of the main reasons for the poor industrialisation of Kerala was the deleterious influence of the left parties and their affiliates in the labour unions.
Till the 90s, the license-permit raj that straight jacketed country witnessed its most stringent implementation in Kerala.
Since Kerala alternated between a Communist-led coalition and a Congress Party-led coalition every five years, no politician was willing to take on the organised trade unions.
Given the fact that power changed hands in the highly politicised Kerala by a mere 1% vote difference between the two leading fronts, trade unions were a law unto themselves, dictating terms to politicians and refusing to countenance pragmatic economic policies.
Small wonder than no industrialist worth his name was willing to invest in Kerala.
Ironically, despite its optimum rate of literacy, Kerala was among the least computerised states in the Indian Union.
Trade unions protested the introduction of computers in the work place and even schools and colleges on the specious plea that it would lead to job redundancies.
Only now is the Kerala Government trying to make up for the lost opportunity that the information technology revolution offered in some of the neighbouring states, notably Karnataka.
So deep-seated was the Kerala mindset against private entrepreneurship that last year there was an extended protest against a well-known international soft drink brand when it set up one of its bottling plants in Kerala.
The workers picketed the plant for weeks on end alleging that the plant would deplete the water resources of Kerala by drawing underground water for its popular brand of coke and pure filtered water.
Most political parties came out in support of the workers, though eventually the matter was resolved through the intervention of the central government.
Admittedly, the Congress-led front now in power in Kerala has made conscious efforts to change the attitude of the people.
Chief Minister A. K. Antony, who enjoys a well-deserved reputation for personal integrity, a rare feat for an Indian politician, earlier this year organised a Global Investors Meet in Kochi which was inaugurated by Prime Minister Atal Behari Vajpayee.
Several Indian and foreign companies which took part in the said meet pledged to invest in Kerala. Tourism, IT and infrastructure were the three crucial areas earmarked for major investments.
As was to be expected, the Kerala Communists created a hue and cry, alleging that the Antony government was jeopardising the peoples’ interests by extending the red carpet to investors, domestic and foreign.
Such obstructionism has been the bane for Kerala which has subsisted on the remittances of non-resident Indians since the oil boom in the Gulf in the mid-70s.
Now that the oil boom was petering out, alarms bells were beginning to ring in most Kerala homes.