He is still the family angel, but lets say his wings are waiting to mend after the construction sector slowdown in Dubai, says Varghese, beaming about his two hectares of rubber estate and three hectares of cardamom. Compared to three years ago, rubber prices are up 300%. Even as the sons accountant job with an architecture firm is not earning enough to to afford a plump homeward remittance after meeting the growing costs of living in Dubai, the farmer is counting on the money trees in his home turf to put up a bright Christmas season wedding for his daughter.
In fact, we are persuading my son to quit his Gulf job and give a hand with rubber estate management. Cost of living in the Gulf is getting too hot for Gulf jobs to be worthwhile, says Varghese.
The escalating rupee has meant a nasty setback for Kerala expats, whose send homes equal nearly 20% of the states gross domestic product. Of the 18.5 lakh Keralites working abroad, about 60% are in Gulf countries. The rest are spread across the US, Germany, the UK and other countries. Compared to the West Asian currencies, the Indian rupee has gained 10% in the last four months. Against the greenback, it has gained 15%. While this may make for national pride, NRIs home remittance have lost a punchy 10-15%.
On the top of this, costs of living are rising in the Gulf. In Saudi Arabia, landlords are hiking rentals by 25% every year, in anticipation of a perceived property value hike. In Dubai, there has been a recent fall in rent costs, but the fall has not been commensurate with the 300-400% growth of the last 10 years. High school costs are in the range of 50,000-90,000 AED. What is worse is that salaries in the Gulf are not on a dazzling growth path. At the same time, opportunities in India are becoming better, says Anoop Sasidharan, HR executive in a Sharjah-based firm.
For the Kerala economy, used to living in the reflected glory of the Gulfs oil earnings and the earnings of nurses working in Europe and the US, one spin-off has been a strong taste for conspicuous consumption. Descriptions of garishly-built Gulf mansions in North Kerala are clichd, but often too real for comfort.
Big international brands are household names in Kerala middle-class homes. My younger brothers and sisters now expect Chanel-5 or YSL Perfumes, Kouros or Jimmy Choo shoes every time I take my home vacation. Sometimes, I think of staggering my home-trips to once in two or three years, says Deepti Kuriakose, who works as a senior theatre nurse in Frankfurt.
Tastes fostered by free-flowing remittances die hard. What is drying up faster is the interest tap. While interest on FCNR accounts was as sturdy as 6% in 2006, this is now nearly 3%. State Bank of Travancores FY2010 annual report says that as a consequence of the economic slowdown experienced in the Gulf countries, particularly UAE, NRI deposits were subdued during the year. Remittances by NRIs through Federal Bank stood at Rs 11,324 crore in 2009-10, down 9.68% from Rs 12,538 crore in 2008-09.
But todays Kerala story is not just about being down in the dumps. Even as NRI life lost lustre, the states cash-crop basket has blossomed as never before this season. One clear indication of this is the way jewellery shops are proliferating in Kerala, irrespective of any slowdown in remittances. Per capita consumption of gold by Tamil Nadu and Kerala is the worlds highest now. Within India, 30% of new consumer demand is from this region, says Aram Shishmanian, CEO, World Gold Council.
Obviously, where the long-serving remittances tapered, plantations moved into Keralas revenue columns.
Farm commodities from the state are fetching better prices this season. The state has been Indias biggest producer of rubber, pepper and cardamom. In the last year, it has improved its plantation output in value-terms too. From Rs 10,200 crore in 2008-9, the earnings from state plantations have grown to Rs 12,300 crore in 2009-10. The sector now contributes Rs 1.35 trillion to the state economy, according to the Kerala Planning Boards data.
Usually, the festival season in North India buoys cardamom demand. In 2008, cardamom prices averaged Rs 500 a kg. For the last two years in a row, cardamom prices have steadily sailed above Rs 1,000 a kg, except for some slightly worrying moments in September. In 2009, there was a spell when pepper farmers even went for replacing pepper with cocoa. This time, the price has raised the spirits in the hilly tracts
of Idukky and Wayanad, fetching over Rs 194 a kg.
The price of natural rubber (NR) hit a high point of Rs 190, growing from Rs 110 in 2009. The Rubber Board of India estimates that NR production in October 2010 alone could fall by over 15% because of the unexpected rains. Some growers expect the price to go up almost as high as Rs 210 per kilo. The biggest advantage of rubber earnings is that they are not reliant on exports but propelled by steady domestic demand. And unlike what happened during the last price boom ten years ago, rubber farmers are a bit hesitant to go on a white goods consumption binge this season, says Siby Monipally, general secretary, Indian Rubber Growers Association. Most planters are game to re-invest in plantations, he claims.
But then, the resurrection of the plantation sector drags in new dichotomies. The commodity boards only worry is about replanting old and ailing trees. Planters are yet to articulate a serious concern that a good many of the old and ailing farm labourforce also needs replanting by younger ones. At least 10% of the states able-bodied workforce is abroad, says a study in 2007.
Will the lacklustre NRI life and the greener home turf in cash crops set a reverse migration in motion The only move to assess this has been the commissioning of a Rs 30-lakh study that looks at all aspects of migration to Middle East. This would be a detailed study that would have researchers visiting Gulf countries to identify labour market changes, map emigration policies and assess future demand of various job categories, says S Irudayarajan, senior faculty, Centre for Development Studies, who is part of the research team.
The rapidly changing resource pie of the state is yet to be analysed with solution-centric enthusiasm. For its own reasons, the state government is fighting shy of acknowledging that reverse migration is happening, with all its attendant issues like the growth of white collar labour. Theoretically, the idling expatriate dependants are potential labour market assets. But then, it is not easy to wean people off their dreams of Louis Vuitton bags and Christian Dior watches to settle down with the birds and bees of the plantations. For starters, it needs political guts that the state government is shy of displaying in the run-up to the Assembly elections.