| Notes that Kerala is more vulnerable to external shock |
Recession may hit job opportunities
Further cut in oil prices may have negative impact
Reduction in oil price and sustained low-level reduced investments in Gulf countries can have a negative impact on the job opportunities as well as the income of Non-Resident Keralites (NoRKs).
According to a study conducted by the Centre for Development Studies (CDS) on the impact of the economic recession in the State, Kerala is more vulnerable to any external shock, including the slowdown since it is integrated with the rest of the world.
In spite of the liquidity concerns about the banking sector of Saudi Arabia, United Arab Emirates (UAE) and Qatar, the economies of the seven Gulf countries, where majority of the NoRKs are located, continue to remain unaffected owing to the steps taken for improving the liquidity position.
But further reduction in oil price and investments can have a negative impact on the job opportunities and their income., the study says.
About 32,000 people employed in the coir industry are likely to lose jobs owing to 20 per cent decline in coir exports. The job loss in the cashew sector has been estimated at around 18,000 due to 15 per cent fall in exports and imports becoming costlier. Marine exports may go down by 25 to 30 per cent to all major destinations except South East Asia. In the short run, a one-third fall in exports can lead to a loss of 20,000 jobs in the sector.
Handloom units have reported 20 per cent dip in sales. A short-term reduction in export by 15 to 20 per cent is expected in handloom goods and that may further increase if the recession prolongs. The value and quantity of pepper export have come down by 50 per cent between September 2008 and the same month last year. The price of rubber has registered a 40 per decline due to the fall in demand from the tyre industry.
The major software export companies are yet to feel the pinch of the crisis but IT and ITES companies at the national level expect 50 per cent reduction in growth rate. The companies in the State have not yet got a full exposure to the crisis due to their relatively lesser engagement with financial services.
Being a consumer State, Kerala can benefit from the reduction in prices of oil, steel, cement and such others as it will also reflect in the cost of manufactured goods too. The growth rate of the State’s economy may decrease by 2 to 3 per cent and it can also lead to an increase in revenue deficit, the study says.
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