Daybreak - In Kerala, remittance built a world that war can now undo

Episode Date: March 17, 2026

Every great Indian enterprise has a story worth telling in full.With The Intermission, The Ken's flagship long-form podcast, hosts Rohin Dharmakumar and Seetharaman G do exactly that—tracing the origins, turning points, and defining strategies of the companies that shaped modern India. Built on exhaustive research and proprietary interviews, each episode unfolds as a richly reported narrative. The first episode drops on March 23! Stay tuned!In 1955, a man from a small village in Kerala paid 500 rupees for passage on a crowded boat to Abu Dhabi. He told no one he was leaving. He wasn't the first, and he certainly wasn't the last. Over the decades, millions followed  — and the money they sent back quietly rebuilt everything: houses, schools, entire towns. Today, remittances make up over a fifth of the state's economy. Which means when war broke out across the Middle East last month, Kerala isn't just watching from a distance. The hurt is closer home.Tune in. Want to work with The Ken? Apply here!Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories. 🚨The Ken's Zero Shot podcast is hosting a live event! This is a speculative yet realistic discussion built around one premise: what happens when AI agents take off in India? How will they rewire existing habits, business models and profit pools? Since nobody knows for sure, we won't pretend to have all the answers. Instead we are going to break the narrative. Click here for details. 

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcast, you've probably heard me. My interruptions, my analogies and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production.

Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd. To get alert, as soon as we release our first video. episode, please follow intermission on Spotify and Apple Podcast or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. In 1955, a man from a small village in Kerala swam onto the shores of Abu Thabi. He told no one at home where he was going.

Before his trip there, he had tried to set up a business in his village, Failing that, he tried again in Bombay. Failing that, he decided to pay 500 rupees for a passage on a crowded launch, a journey that would have been at least eight days long with little food or water. At the end of the journey, when the launch could go no further, its passengers were dropped off in the shallow waters around Abu Dhabi, leaving them to finish the trip on their own. After his brief swim to the shore, at a nearby marketplace,

he found other Malayalis who, as he later recalls, approached him with offers of food and shelter when they recognised a fellow Malayali. This man's name was Kuny Kutti Haji. He narrated his story to Prema Kureen, a sociologist who was documenting his and other early migrant stories during field work in the Malapuram district in Kerala in the late 1980s. When he left in the 1950s, Kuny Kutti had left behind a village that had been incredibly poor. Through her research, Kureen describes an area overgrown with scrub and populated by wolves. Her interviewees from the village, like this elderly man named Mohamed Ali Haji, also painted a pretty sad picture. Kacha houses with patched roofs, families who could afford just one meal with rice every day, and only about 10 houses out of 50 with smoke rising from the chimneys.

But 70 years later, Malapuram looks very different. concrete houses, two-storied with tile roofs, gold shops, travel agencies and department stores in what used to be a rural market. Virtually no visible signs of poverty. And a lot of this transformation is thanks to the descendants of that first migration event. Nearly 2 million Carolites across the Gulf send home crores of rupees. For example, in 2023, they sent more than 200,000 crore rupees or more than $23 billion. followers as remittance. That sum is exactly as huge as it sounds. It accounts for nearly a quarter of Kerala's entire economy. So when the United States and Israel launched coordinated strikes

on Iran on February 28th, it didn't feel like a distant event for Kerala. As Iran closed the Strait of Hormuz and launched its retaliatory attacks on U.S. basis in the Gulf, the whole area was plunged into war. And with it, the millions of migrants staying there. Now, I don't know if you know, but India happens to be the largest recipient of remittances in the world. They account for more than 3% of the country's entire GDP, which is actually higher than the share of exports to the US, and that stands at 2%. See, there are about 9 million Indians based in the Gulf countries, and they contribute to nearly 38% of the country's total remittance inflows, and that amounts to about 15%. billion dollars. Economists have already started flagging that a continued conflict will most likely dent

the remittance flows enough to impact the economy. But while the impact would be hard on India, for Kerala, whether remittance makes up more than 20% of the state's net state domestic product or NSDP, the hurt would be impossible to ignore. Welcome to Daybreak, a business podcast from the Ken. I'm your host, Rishi Bergeese, and every day of the week, My co-host, Nita Sharma and I will bring you one new story that is worth understanding and worth your time. Today is Wednesday, the 18th of March. So what does more than 20% of a state's NSDP actually look like?

Now, that's the number last documented by the Kerala Migration Survey of 2023. And on ground, it materializes in a lot of different ways. First, real estate. Towns across the state are peppered with huge villas, some even spanning 3,000 square feet. They're all made by people who were making so far as or working at restaurants in the Middle East, saving half of their monthly wages over decades and then sending it back home. Locals say that this kind of a phenomenon actually triggers a kind of rivalry,

where migrants silently compete amongst themselves to have the biggest house in the neighbourhood. Middle East Eye reports that in 2018, nearly $4 billion out of the $12 billion in total remittances was spent on construction alone. Other than real estate, a lot of remitence spending, according to the KMS 2020, goes into debt repayment, education and savings. About 14% of remittances is allocated to loan repayment

and 10% for education. In fact, a study found that remittance receiving households showed an increased demand for English medium and private education, especially when state education began reducing in quality. The probability of children enrolling in private schools actually increases by nearly 45% when they come from remittance receiving families. Studies have highlighted that even though remittances are received at the household level and not the state, they indirectly contribute to the economy and support public finances.

Increased household disposable income leads to higher savings, reducing reliance on government-sponsored welfare programs and lower state-level public borrowing requirements. Also, increased consumption from remittance inflows contribute to greater tax revenues, which reduces the state's dependence on debt-financed expenditures. In fact, an editorial piece from the Centre for Public Policy Research stated that in the 1990s, the supermarkets and malls that started popping up in Kerala were owed to beneficiary investments from remittances. Even a lack of investment options in the late 90s and early 2000s resulted in family members of migrant workers setting up small and medium enterprises, eateries and clothing stores in the state. Ronnie Thomas Rajan, a professor at the Department of Economics at the University of Kerala, said that Kori Kod, another major town in Kerala, saw massive development owing to the migration process.

In the 50 years since migration properly began, the city's road network has increased in size by nearly 10 times, the number of hospitals by three times and factories by seven. All of this is now at stake. And Kerala hasn't bothered with mincing its words with regards to this crisis. Early in March, Pinarai Vijayan, the Kerala chief minister, called the U.S. and Israel rogue nations, who are worsening the crisis through their reckless actions. It wasn't just your everyday statement of political dissent.

Like I mentioned earlier, for Kerala, the war might as well be at its doorstep. As Vijayin said, and I'm quoting here, the state's concern is that lacks of our brothers and sisters are living in the Gulf countries. And today, they find themselves in a deeply insecure situation. Now, deeply insecure is still perhaps a bit of an understatement. Stay tuned. But before we go further, my co-host, Snigda Sharma, has something to tell you. Okay, quick break and this one is relevant if you are a data person. You are listening to daybreak, which means that you will be able to.

already know what we at the Ken do. Deeply reported business journalism for people who want the complete picture. The Ken is hiring an analytics lead and this is not a bill reports for the quarterly review kind of a rule. You would be the person that every team comes to editorial, product, business, when they need to know what's actually working. You'd be shaping what stories get told, what products get built and where the company bets its energy next. It is a Bangal-based full-time job and honestly, this is a kind of role that does not come around too often. The link is in the show notes. And now, back to Rachel.

Indian migrants in the Gulf are already facing difficulties with their employment. A CNBC report mentioned that experts stated that Indian workers in the Gulf are mostly working in oil services, construction, hospitality and retail sectors. All of these are industries that are particularly vulnerable to the disruption caused by Iranian attacks. Al Jazeera reported that several oil and gas firms have already shut operations amid the Iranian attacks. In some parts of the Gulf and beyond, there are cases of delayed wages in construction and hospitality. Some analysts even fear hiring freezes for newer immigrant workers. Of course, workers worry that if the situation continues, they are more than likely to lose their jobs. Even several blue-collar workers and professionals across the Gulf

are reportedly fearing potentially losing jobs if the war escalates further. A source who works in the health sector based in Qatar also told the Ken that several European and American multinational companies have given their workers work-from-home options so that they can return to their home countries and work from there until the situation stabilizes. The same source also claimed that restrictions on Ramadan gatherings and celebrations have hit the hotel industry severely.

In fact, they'd even hire skilled workers from Kerala just to cook evening snacks at scale. These workers would travel in for a month while being paid incredibly competitive daily wages, sometimes even $1,000, which is about $25,000. And then they go back home and spend their earnings on renovations or other major expenses. None of that happened this year.

For contract employees, of course, their jobs are contingent on whether the situation stabilizes or not. And obviously, companies would not be willing to support employees working from home indefinitely. And if the crisis continues, these employees worry that they will most certainly be let go. Also, it's not so easy to return to home countries. Reports say that more than 15,000 flights were cancelled or grounded in just the first week since the crisis began, across Middle Eastern air spaces alone. Speaking of leaving a war zone, there's another problem that migrant workers have to untangle.

Open Magazine reported early just this week that workers who work under the Kaffala system in which their legal status is tied to their employer cannot leave the country without their employer's permission. But there's also a question of what exactly they'd be coming back to. See, this particular situation with the potential loss of remittances and a sudden influx of unemployed people returning to their home state, isn't a first time for Kerala. In 1990, when Saddam Hussein invaded Kuwait, the instability reverberated across the Middle East. Several migrants had their salaries cut,

and newspapers in Kaila reported that remittances from the Gulf had gone up by several times as migrants hurriedly tried to send back their savings. Pema-Kurian, the sociologist I mentioned earlier, corroborated this incident with banks in the region in the same year. She also spoke of a big drop in spending by Gulf family. This affected businesses all over Kerala, but most noticeably in the pockets with the most migration. Korean happened to be carrying out her study on the sociological effects of migration in a village in Malapuram at the same time as people were returning. And here's her account of what she witnessed.

Families who had most of their money in Kuwaiti banks lost their life savings. In any case, the value of the Kuwaiti dinar had fallen sharply in the wake of the invasion. So, their bank accounts had become practically worthless. In some cases, families had not saved much because they were counting on obtaining a gratuity payment when they retired. Many had debts, others only had a big house and some land. Several had daughters to marry off with large dowries and children who were studying and expensive boarding schools in India.

I heard of the case of one man who tried to commit suicide after returning from Kuwait because he had three unmarried daughters and a lot of debts. The part where remittances went up is especially interesting, because the same thing has been happening over the last couple weeks in 26. Policy Circle reported this week that banks and remittance firms noted a spike in transfers over recent weeks. Their estimates suggest that inflows from the Middle East region in March were 20 to 30% above normal. So, the anxiety is real. And while the Kuwait crisis stabilized in a year, with migrants returning to the UAE by 1991,

this time the situation looks different. That conflict was largely limited to a smaller region. This time, all of the Gulf is a theatre of war, which means migrants have nowhere to go but back. Add to this the frailty of Kerala's infrastructure. A great example of this was a mass return during COVID. Unemployment spiked by 3% because the state had to be. no jobs for the returning population. A survey conducted in 2022

found that more than 70% of returnees remained unemployed. The same survey found that returnees largely belonged to the educated category and preferred white collar jobs, which unfortunately were not available enough in the local labour market.

So, if a mass migration has to happen this time, this is the same reality that migrants would be returning to. And every expenditure that was fuelled by remittances, will suffer. Loan repayments, real estate, school fees, none of it will flow as it used to. All of this is to say, Kerala needs to diversify its economy. Experts list ecotourism, renewable energy and innovation ecosystems as possibilities, especially to keep its younger population within the state.

But to make it happen, it will first need to stop relying on the remittance buffer. And perhaps, this crisis is a wake-up call for a new direction. Thank you.