The customers from Qatar had decided to cancel orders a few months ago, which helped the eight long dhows worth of 6-9 crore each, to stay at the shores of Beypore, Kerala.
“Qatar had plans to order some 100 wooden long boats. Some of the orders had come to us also… But these started getting cancelled after crude prices fell and Qatar-Saudi Arabia relations soured,” Abdulla Baramy of Baramy Ship Builders stated.
Founded in 1954, Beypore-based Baramy Ship Builders have manufactured approximately 110 dhows for the customers in the UAE, Oman, Kuwait, and Qatar. But lately, their order books have recorded very little entries. “We make small boats for local fishermen these days. We also do odd repair jobs,” said Baramy.
After the economic decline, there was an unusual fall in the price of crude oils and a slowly rising geopolitical tension in the Persian Gulf, which are sending shock waves to the other side of the Arabian Sea.
India is the largest remittance receiving country in the world. The major NRI remittances to India are from the Gulf Cooperation Council countries (GCC) which comprises of Bahrain, Oman, Qatar, Kuwait, UAE, & Saudi Arabia. These remittances have seen a steep decline recently.
As stated in the World Bank report, India has witnessed close to 9% fall in the NRI pay-in flows which nears to $62.7 billion in 2016. Inward remittances have declined by 12% to Rs 3.66 lakh crore (2016) from Rs 4.38 lakh crore in (2014-15), as per RBI scrolls. Most of this shortfall is said to result from the economic slump in GCC states
“It is a case of an overall economic slowdown in the Gulf; lower oil prices have resulted in an economic slowdown in that region,” says Madan Sabnavis, chief economist at CARE Ratings. “The slowdown in that region has also resulted in paycuts and job losses. The IT slump may have impacted remittances from North America too.”
Inward remittances form just 3% of the nation's GDP. But at the sub-national level, they have a significant role to play. For example, Kerala has Lion’s share of the remittances from the Gulf countries, here they form about 36% of the state domestic product.
Economists say this is not a point of worry, but during the times of higher trade deficit, remittances play a crucial part. Trade deficit refers to the cost of a country’s imports exceeding the value of the country’s exports.
“Remittances provide a cushion in times of higher trade deficit. The impact of lower remittances would have been higher had global commodity and raw material prices been higher,” says Devendra Pant, chief economist at India Ratings. “If there’s a slowdown in India, our current account deficit may creep up. Without adequate remittances, the rupee could come under pressure as well.”