Question

What was a major source of State Domestic Product in Kerala, facilitated by historic contact with Arabs?

• A. Income from oil exploration
• B. Revenue from tourism
• C. Remittances from migrant workers in the Middle East Countries
• D. Taxation on agricultural exports

Answer 1

Answer:

C. Remittances from migrant workers in the Middle East Countries

Economic Significance of Remittances in Kerala

• Remittances refer to the money sent back home by migrant workers to their families in their native country. In Kerala's context, these are predominantly from the Middle East (Gulf) countries.
• Historically, Kerala (especially the Malabar Coast) has had extensive trade and cultural relations with Arab countries dating back centuries, even before the advent of Islam. This long-standing contact, driven by the spice trade, laid the groundwork for future social and economic interactions.
• The oil boom of the 1970s in the Middle East created a massive demand for labor in construction, services, and other sectors. This led to large-scale migration from Kerala to countries like the UAE, Saudi Arabia, Qatar, Kuwait, Bahrain, and Oman. This phenomenon is often termed the 'Gulf Migration' or 'Gulf Boom'.
• Remittances from these migrant workers became a crucial and major source of State Domestic Product (SDP) for Kerala. At its peak, remittances accounted for a significant portion, often estimated to be over 30% of Kerala's SDP, significantly boosting the state's economy.
• These funds have played a vital role in improving the living standards, education, healthcare, and infrastructure in Kerala. They fueled a consumption-led growth model and contributed significantly to poverty reduction and the overall economic well-being of the state.
• The reliance on remittances is a distinctive feature of the 'Kerala Model of Development', which is characterized by high social development indicators (such as literacy, health, and gender equality) despite a relatively lower level of industrialization and per capita income from traditional sectors compared to other Indian states.
• Key Fact for Competitive Exams: Kerala consistently receives the highest share of remittances among Indian states, reflecting the vast number of Keralites working abroad. The Department of Non-Resident Keralites' Affairs (NORKA Roots) is a state government department specifically established to address the needs of non-resident Keralites.
• While remittances have been a boon, Kerala also faces challenges related to this dependence, such as economic volatility in the Gulf, issues concerning return migration, and the social impacts of family separation.