Global Meltdown May Hit Kerala Hard

As the impact of the global meltdown hits Kerala, the state could lose about 150,000 jobs, mostly in the plantation and traditional sectors, the state finance minister said on Monday.

 

T M Thomas Issac told the assembly that the drastic fall in the prices of commodities produced in the state, like coconut oil, would mean loss of jobs in their thousands.

 

When the recession hits the Gulf countries, where lakhs of Malayalees work, remittances would suffer, hitting industries like construction hard leading to disappearance of employment, he said.

 

The depreciation of the rupee vis-a-vis the US dollar has affected the state critically, Issac said replying to a calling attention motion. The slowdown will also reflect on the growth rate, which will fall to 6%, he added.

 

Various sectors like tourism and IT too have taken a hit due to recession, he said. While in the tourism sector, the decline was 20%, this was 5% more in the IT industry, he said.

 

One reason, he said, was that prices of goods manufactured in the state had fallen while those imported to the state had not. Increased import of edible oils like palm oil also meant a drastic fall in price of the state's own commodities like coconut oil, he said.

 

He said the Centre should raise the cap on borrowing and allow the state to bring in more money for infrastructure development.

 

The industry reacted cautiously to Issac's statement. "As of now, I'm not really alarmed,'' said N Radhakrishnan Nair, chairman of the Technopark here, one of India's biggest IT parks. "Indications right now are that the meltdown has not seriously affected the IT industry. But in the next five to six months, we may also feel the heat. But at the moment we cannot say, which way it will impact.''

 

He said on the brighter side, the crisis may also prove to be a boon for the IT industry. "It may see more jobs being outsourced to India, especially to places like Thiruvananthapuram or Kozhikode because of their cost effectiveness.''

 

V K Mathews, chairman of IBS Technologies - a leading IT firm - said one could not underestimate the effect of the economic crisis. "The impact on India will be far less compared to the rest of the world and on Kerala's IT sector, it will be minimal.''

 

Stakeholders in the plantation sector feel the slowdown in the automotive sector will reduce the global demand for rubber. "There may be slowdown in exports of cardamom or cocoa too, but that will be known only in two or three months' time as the consumption slows down,'' said P T Joseph, vice-chairman of the Association of Planters of Kerala.

 

The tourism sector too reacted on similar terms. Says K C Chandrahasan, MD of Kerala Tours and Travels, "For those in the industry who were looking forward to the annual season, there is a slowdown. But that was mostly because they did not have a Plan B worked out. This has to be taken in a cool manner. There is no need for any knee-jerk reaction.''