March 31: A crackdown by Saudi Arabia to enforce a rule that requires companies to hire sons of the soil is sending shivers down the spine of Kerala, whose economy is dependent on expat remittals or "Gulf money".
Panic, rather than an informed assessment, is driving the debate in the southern state in the immediate aftermath of the Saudi clampdown that began on Wednesday.
Over 5 lakh people from Kerala work in the kingdom and some have expressed fears that at least 1 lakh could be affected by the Saudi sweep that is being described in the state as "Saudiisation".
But it has come as a wake-up call for a state that scores high on social indices but has done little to forge a political consensus on how to generate jobs ' a predicament that is facing Bengal, too.
If the worst-case projection of 1 lakh expatriates returning to Kerala comes true, it will have implications for the eastern states, too, which are now supplying wagon after wagon of unskilled labour to feed the Gulf-fuelled construction boom in the tiny state.
The first ripples of the desert storm struck Kerala when raids were launched after a deadline to comply with a scheme called nitaqat expired on March 27. Under nitaqat (which means zones), firms have been classified into four coloured segments with red denoting non-compliance.
The nitaqat rule of June 2011 requires business establishments to reserve 10 per cent of jobs for Saudi citizens. The scheme does not apply to units employing less than 10 workers.
Although economists have been warning that Kerala is riding high on petro-dollar stilts that can collapse without notice, few gave too much of thought to the Saudi announcement.
However, matters began to change three months ago when around 25,000 small and medium enterprises were placed in the "red" category. After the March 27 deadline, workers in these units have little option but to return as the work permits of those in the red zone will not be renewed.
Since a work permit is a mandatory requirement for getting iqama (residence permit), they have overnight become illegal immigrants. The raids are aimed at detecting and deporting such immigrants. Reports from the Gulf said thousands of expatriates from various countries were "hiding" in their rooms.
In the last two days, 48 people have returned to Kerala ' 16 on Friday and 32 on Saturday. Their passports have been stamped with the exit visa, which makes re-entry to any of the Gulf countries impossible.
The clampdown strikes at the root of a racket called "free visa" that was used by many to reach the Gulf states. Under "free visa", which is illegal, an Arab who sponsors a foreign national allows the expatriate to take up a more lucrative job elsewhere in return for a monthly fee.
Indians make up the biggest chunk of expatriates in Saudi Arabia and among them, the people from Kerala or Malayalis top the list. A 2011 study put the number of Malayalis in Saudi Arabia at 5.74 lakh, making the kingdom the favourite destination after the UAE that has 8.83 lakh people from Kerala.
For Kerala's Gulf-dependent economy, which received Rs 46,695 crore in remittances in 2011 (around 31 per cent of the state domestic product), any sudden influx will mean an unprecedented crisis. The worst hit will be Malappuram district in the north, which accounts for almost 90 per cent of the Malayali workforce in Saudi Arabia.
Vayalar Ravi, the Union minister for overseas Indian affairs, has said there was no need to panic. He added that no one had so far approached the Indian embassy in Saudi Arabia to report job losses.
But passengers who arrived yesterday at the Karipur International Airport in north Kerala from Riyadh, the Saudi capital, spoke of a fear psychosis. "The raids will resume tomorrow after two days of holidays. Many small shops run by Malayalis have already shut. The workers there have either fled or were spending time cooped up in their rooms fearing arrest," said one of the passengers.
The state is ill-prepared to take back or employ the expatriates, many of who are semi-skilled or unskilled. The state government admitted yesterday that it did not have data on how many people could lose jobs in Saudi Arabia.
The void left by the outflow to the Gulf decades ago has been filled by labourers from states like Bengal, Odisha and Bihar.
Kerala has nearly 25 lakh migrant workers and 60 per cent are employed in the construction industry. As much as 75 per cent of the labourers come from Bengal, Bihar, Odisha, Assam and Uttar Pradesh.
George Bruno, an activist associated with the migrant labourers, said: "The question is not whether the returning Malayalis will replace the 25 lakh migrant labourers. The maximum number that may return is 1 lakh. But the worrying fact is that the return of expatriates will adversely affect the construction industry in which most of the migrants find employment."
The construction boom in Kerala has always been fuelled by investments made by the Malayalis in the Gulf.
C.K. Saji Narayanan, the national president of the Bharatiya Mazdoor Sangh, raised another issue. "This is going to create an upheaval. If Saudi has done it today, other countries in the Gulf Co-operation Council will be the next."
Narayanan's fears may not be entirely unfounded. Kuwait has now announced that it has plans to restrict foreign labour in the next 10 years.
But T.P. Srinivasan, former Indian ambassador to the UN, feels that it would be difficult for Saudi Arabia to implement the plan. "The order may have come from the top. But I'm sure that at the lower levels, they will find it difficult to enforce. The question is 'who will replace the workers?' The Saudis are well-to-do people and it will be difficult to find people to do menial jobs. It's difficult to implement. This is beyond them and I have a feeling that the government there may give a reprieve or extension. I don't expect an exodus," Srinivasan said.
"This panic was spoken of earlier also ' at the time of the economic depression in the UAE. But nothing happened. I had then warned that we should have schemes ready to face such a situation, should the need arise, but no one listened," Srinivasan added.
G. Vijayaraghavan, the founder CEO of the state's biggest IT cluster, Technopark, is optimistic. "I personally feel the issue is being exaggerated. What is happening is that Saudi Arabia is targeting illegal immigrants…. I think this crisis should force the Malayalis to sit up and think whether they can rely forever on foreign jobs. Perhaps they should now strive to create the environment here."