The Gulf where millions of Indians are employed, many from Kerala, is undergoing a job crisis.
A labour crisis in the Gulf is pushing Kerala towards recession, a worried Left government in the state has said as it completes hundred days in power.
A massive 35% of Kerala's Gross Domestic Product or GDP is made up of remittances or money sent back to their families by people working in West Asia. With countries like Saudi Arabia initiating austerity measures after a fall in oil prices, thousands of Indian workers have lost their jobs. A big chunk of them are from Kerala.
"For the first time since the Gulf boom started, we may have negative growth of remittance this year," Kerala Finance Minister Thomas Isaac told NDTV.
In fact, he said, for the first time in the last three decades, Kerala's growth rate for 2015-16 has been below the national average, sparking fears of a "regional recession".
Mr Isaac said Indians returning from the Gulf after losing their jobs will find it difficult to reintegrate into Kerala's economy, because remittances drying up also means jobs dwindling in the state. In the real estate and construction business for instance, which is driven largely by remittances from the Gulf.
"I have incorporated some bold measures in the budget to deal with this, said Mr Isaac, who has announced an anti-recession and investment package of Rs 20,000 crore to boost the pace of investment in Kerala. "We are hoping this will give a big push to the growth pace in Kerala," Mr Isaac said.
The state government, he said, was closely observing the situation in West Asia and "preparing ourselves for the worst".
The Left Democratic Front or LDF came to power in Kerala in May this year, defeating a Congress-led coalition that had ruled the state for the last five years with a razor-thin majority. Chief Minister Pinarayi Vijayan's government inherited an economy with a revenue growth of around 10% and his Finance Minister says they aim to increase it to 20%. The Gulf crisis has hit those plans.
Finance Minister Thomas Isaac, 63, shot to the limelight not long after taking over, when he introduced a "fat tax" of 14% on branded fast food chains in the budget he presented in July this year.
The fat tax, he said, "was not a resource mobilisation measure. It was an experiment to see if fiscal policy can be used to change dietary patterns, with a focus on public health".