India’s current account deficit has narrowed to $22 billion in April-December 2015 from $26.2 bn for the same period of the preceding year, continuing a trend of decline from the record $88.2 bn level of 2012-13. Much of this is, of course, courtesy oil, the imports of which may fall to below $85 bn this fiscal from $164 bn in 2012-13. But amid all this improvement in the balance of payments (BoP) — foreign exchange reserves have hit an all-time-high of $356 bn — there is a less-noticed, yet disquieting trend: Net private remittance transfers, at $15.3 bn in October-December 2015, are down to their lowest in 18 quarters. Given that remittances constitute the country’s second largest export item — with annual earnings of $66.3 bn in 2014-15, only behind the $70.4 bn from software services — there are BoP implications as well.
But the real impact, not as easily quantifiable, is human. Currently, there are some 15 million Indian migrant workers living and employed abroad, about half of them in oil-rich West Asian and North African countries. The crash in oil prices have sent these economies into a tailspin, wrecking public finances and forcing their governments to not just undertake spending cuts but also restrict employment opportunities for expatriates. There are reports that up to one million foreign workers may have to leave Saudi Arabia by this year-end, as the kingdom, grappling with a $98 bn budget deficit in 2015 and an official unemployment rate of 11.5 per cent, seeks ways to ensure enough jobs for its own citizens. Similar pressures are building up in the United Arab Emirates, Kuwait, Oman, Qatar and Bahrain, which are all suffering reversal of a decade-long economic boom primarily fuelled by oil. At the receiving end of the forced retrenchments are the millions, including from India, now facing the prospect of returning.
