Dubai debacle would have cascading effect in Kerala, if not India

By O.J.George

Anand Sharma, the Commerce Minister, may be right in making a comment on the macro side of the fall-out of the Dubai debacle. On the whole, Indian economy, which is resilient, may withstand such pressures, but the economic recovery in full could be delayed.

It has been reported that 24 per cent of the remittances from abroad are from the UAE, Dubai being not the least unimportant.

Much of the remittances to Kerala are from the Gulf countries, no doubt, and the chaos in the construction sector in the UAE could have deleterious effect on the worker class of people from Kerala.Consequently, their remittances would come to a halt.

Already, the Dubai's financial health has come under scrutiny after Dubai World, a major, government-owned investment company asked for a six-month delay on repaying its debts.


Dubai World, which has total debts of $59bn (£35bn), is asking creditors for postponement of its forthcoming payments until May next year.

Dubai World has also appointed global accountancy group Deloitte to help with its financial restructuring.

The company has been hit hard by the global credit crunch and recession.
It was due to repay $3.5bn of its debts next month.

At one stroke, trading in the stock exchanges fell by over 500 points in India. Investors are scared of pumping in funds.

Incidentally, inimitable Chief Minister V.S.Achuthanandan has bluntly commented that Tecom, a Dubai company, which is dilly-dallying on setting up the Smart City project in Kochi, is short of funds and it is finding alibi to delay the work.

Tecom authorities do not agree with this view, but is there a grain of truth in the CM’s averment, now that the Dubai World has turned red?

The situation is not rosy, which makes it obligatory on the part of the government to implement supportive measures for the survival of the affected people.