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  Recession a rude wake-up call for NRI-rich villages 

MADHAPAR | BANGALORE: Around 3,000 families live in Madhapar, but the villagein Gujarat’s Kutch district holds Rs 5,000 crore as savings in bank and post office

accounts — a staggering Rs 1.7 crore per family.

(Source: - http://www.oifc.in/news_dec09_07.asp )

Down south in central Kerala, the slightly larger Kumbanad-Kozhencheri belt has Rs

5,400 crore parked in bank deposits.

During the boom years, the largely enterprising communities from these two diverse

regions poured in money earned in West Asian and North American destinations into

these towns, building plush homes and a raft of businesses. But that has now received arude jolt. The crores are flowing out, and for once, the shoe is on the other foot.

As the global financial crisis tipped the West into a painful recession, and with the Dubai

crisis now making things worse, the dollar-dirham rich non-resident Indians belonging tothese towns are now dipping into these reserves.

The local business networks in these small towns that has developed over years catering

to these NRIs’ urge-to-splurge are scrambling for survival.

Anandbhai Patel returned to Madhapar from Dubai last month after this employer — a

construction company — asked him to go on leave.

“I don’t know whether if I will get my job back when I return,” he says, adding that he is banking on the savings back home to finance the loans he had incurred in Dubai. His

 banker RV Jain, senior general manager at Bank of Baroda, says that in the last one year,foreign remittances have halved from Rs 120 crore a month to Rs 50-60 crore.

“Earlier, we had people queuing up to make deposits. Now, people come here mostly to

withdraw money,” Mr Jain says.

The borrowed prosperity shows in this village, 3 km off Bhuj, the hub of a devastating

earthquake in 2001.

Plush bungalows and offices of a dozen banks, many with cash machines, dot the canal

which separates the modern settlement (Navo Vaas) from the centuries-old original

village (Juno Vaas).

According to the last Census, residents of Madhapar have the longest lifespan in India

with an average age of 69 years. Many still live off farms, though the village is sprinkledwith internet cafes, retail stores, restaurants, inns and even cab rentals.

“Now, it seems that the curse of the recession has finally fallen on us,” says JadhavbhaiVarsani, 70, who owns a retail store.

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In Kerala’s forex belt, the worries are much more. With 44.3 emigres per every 100

households, the elderly make up a bulk of those who have stayed back in the Kumbanad-Kozhencheri belt.

Among them is A Koshy, 70, a resident of Thiruvalla. Remittances from his son in Dubaihave stopped coming, and Mr Koshy is now dipping into his personal savings to pay for 

house and car loans.

“My son had to give away his luxury car for a pittance, and might have to do the same

with his apartment,” he says.

The remittance economy had spun off its own business offspring in the jewellery,automotive and realty segments. That money had driven down enthusiasm for traditional

cash crops such as rubber, coffee beans, cocoa, pepper and ginger, and the clock has

come full circle now.

(Source: - http://www.oifc.in/ )

“There has been a drop of 30 to 35 per cent in sales in the mid-segment category,” says

the manager of a car dealership. With gold prices rising and inflows down to a trickle,

 jewellery shops are struggling for customers.

Real estate development, the most visible sign of recent prosperity that provided jobs to

25 lakh people in the state has also come to a halt. Hoardings at city junctions announce

the arrival of a whole new market for affordable housing.

 Nonetheless big builders are worried. “A lot of investment had been planned there on the

 basis of projected demand linked to the expansion of the technology parks. And thencame the crisis in the US economy and now Dubai. Our target was the NRI segment, but

it is precisely them that is facing a hard time,” says SN Raghuchandran Nair, president of 

the Confederation of Real Estate Developers.

In Madhapar too, the worst hit are the same sectors. Ditto with Ena, another NRI hotspot

village near Surat, which is dotted with plush villas and streets populated with BMWs

and Mercs. Here too sales executives say snob value is now a distant memory.

Local jeweller Mohan Khokhani says that on an average an NRI used to spend about Rs

4-5 lakh on marriage purchases. “Now, they are not buying for investments as gold pricesare high and have cut down budgets for marriages too,” he says.

The Patels of Madhapar started emigrating during the 1960s and ‘70s to work abroad, andin true Gujarati spirit, set up their own businesses, The Kutch Madhapar Karyalay was

formed in London in 1968 and there are other Madhaparian associations in other cities as

well.

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 Navinbhai Patel, 57, who had emigrated 20 years ago, one such active Madhapari in

London, where he runs a groceries shop and his wife runs a boutique in Neasden in north

London.

Patel comes to India every winter, but says this year is different. “Forget about bringing

in foreign money, this time around I have even cut down my expenditure by around80%,” he says.

That’s bad news for the village as a large chunk of small businesses here are dependenton the so-called ‘NRI season’, when the rich non-residents come home and splurge on

food, travel and entertainment and buying jewellery, clothes or on family weddings.

The local economy has been hit badly forcing some 100-odd locals to diversify into

making china-clay for construction.

“The men have to find out an alternative to make a living,” says Varsani.

While Kutch witnessed brisk industrial activity after the Gujarat earthquake in 2002,Madhapar remained untouched because it was perceived as prosperous and self-reliant,

says Rajesh Bhatt, president of Bhuj Chamber of Commerce and Industries.

That image is taking a hit, and Madhapar will have to now look within.

Ref: - http://www.oifc.in/newsarchive.asp