Impact of gulf war indian economy that occured during 1991
Answers
Explanation:
First, the good news. Gulf nations continue to host a large number of Indians but this number is down from its 1995 peak, and is sliding each year. The socio-economic relationship between Indian immigrants and these nations has come under stress since the 1991 Gulf war. There are increasing visa restrictions, falling wages and a larger shift towards Arabization of these economies. Added to that is Indias huge foreign exchange reserve. Consequently, while hard-currency remittance from these Indians was a domestic multiplier in the past, in states such as Kerala, it is no longer a critical national economic lifeline.
As a sign of changing times, a temporary ban issued two years ago by the United Arab Emirates government on further import of South Asian labour, which normally would have become a major issue, was ignored by much of the Indian press. The Gulf countries of Saudi Arabia, Oman, Bahrain, Qatar, UAE, and Kuwait have already become a lesser consideration in the Indian foreign policy calculus, visibly so.
Now the bad news. As India becomes that much more integrated into the global economy, the fallout of the Iraq war will likely be felt in more ways than initially realised. First, there is our huge petroleum import bill. The government may have allayed immediate fears by disclosing reserves enough to last a three-month supply disruption but the medium-term picture is less rosy. India is the worlds eighth largest net petroleum importer at 1.2 million barrels per day. It is already ahead of China, and is probably set to overtake Korea, France, Italy and Spain in the next few years to become the worlds fourth largest importer. Despite disparate moves in recent years to reduce reliance on Gulf oil, this dependency remains a fact of life. In the medium term, and especially given the demands of 6 per cent growth, our dependence on imported oil and gas will only grow. In the immediate context, there is real danger of extreme volatility in oil price expectations, if not the prices themselves, leading to unexpected and ultimately unprofitable oil contracts. All this risks inflation coming right back with a bang.And so, what we have are dubious benefits, probable oil insecurity and almost certain western economic gloom. Whats the good news for India
The author is an analyst of Indian political and business trends and the editor of India Focus, a political risk report for international investors