Gulf returnees in Kerala are beaten back by the system when they attempt to start their own businesses & suffer crippling losses
Kerala is a state that runs largely on two sources of revenue – tourism and money orders. In this series on The Lede we focus on the latter – the dreams of oil wealth from the Gulf that lured many of Kerala’s youth and the boom gone bust which is forcing them to come back to a homeland that is not quite what they imagined it to be.
“In the stretch of land by the highway from Ramanattukara to HiLite mall in Calicut, 26 hotels have wound up and shut shop because of reduction in footfall,” says Vinodh Paul, a senior marketing consultant based in Calicut known as a prominent hub of Gulf returned Keralites.
“Most of them naturally were owned by returnees or those in the Gulf,” he adds.
The GCC (Gulf Corporation Council) crisis has had a chilling effect in Calicut where malls are empty, eating out is claimed to be on the wane and construction industry has gone silent according to Vinodh.
“With too many similar ventures all thronging the same locality, business gets split so much that all become unsustainable at once,” he reasons.
“You can split business with two, maybe even three or four but what happens when more and more new ventures begin offering the same services? Who can sustain?” he asks. “They don’t think about it that way.”
“Life in Kerala is very expensive,” says 50 year old Pradeep Kumar, a recently returned former Gulf expat now living in Kannur. He is a native of Thirumeni village in Kannur district. He has two children, a boy studying in Standard 11 and a girl studying in Standard 9.
Pradeep, a civil engineer by profession had passed out in 1989 and emigrated to the Gulf in 1999. Having worked in Saudi Arabia for twenty years, Pradeep had to return home 10 months back after the GCC crisis forced a reduction in government spending, costing him his job. “My two children are studying in a school here now.”
Pradeep hasn’t found a job as yet and rules out a return to the Gulf. When the question of what next hit him, he said he took a very considered view. “I have been conscious not to fall into other people’s ideas and waste my savings on thoughtless ventures. Too many people I know have failed, I am honestly scared,” he says.
“What I am really looking for is a small investment enterprise or a job. Otherwise I am afraid I will end up like all those many others before me. It is always either a bakery, restaurant, textile shop, mobile shop or a convention centre,” Pradeep lists out the most common ventures started in Kerala by those in the Gulf or by Gulf returnees themselves.
“I believe it is best to do what I can hold in my beak myself, something really small, something I can manage by myself.” Pradeep has very valid reasons to fear that any venture he might start can burn him bad.
The case of 49 year old Sajan Parayil from Anthoor in Kannur district who built a 35,000 sq feet convention centre at an expense of Rs 15 crore had recently caught the attention of the entire state. Having failed to get the necessary certificates to get the centre up and running, Sajan committed suicide; leaving behind his wife Beena and their two children Parthiv and Arpita, both in school.
While many have been rightly talking about the red-tapewhich thwarted Sajan’s attempts at starting a venture, the trend of starting similar if not same ventures by NRIs returning home is seldom raised.
“Ideally, the person who returns should decide what is best for him,” says retired Justice P Bhavadasan, the founding Chairperson of the NRI Commission for Kerala. “But what happens is that they decide these things based on what others tell them.”
And these advisors need not always be bonafide. “Even when they have no vested interests, they might have no knowledge of what they advise on.” The result is ventures and enterprises which are clones of successful undertakings or results of a seemingly creative idea born in someone’s mind. 51 year old Zachariah is the owner of one such venture.
51 year old Zachariah CT had been in Saudi Arabia for 22 years and returned to Kerala a few months back ending his life as an expat.
Zachariah was 28 years old and a native of Pantharangadi in Thirur, Malappuram district, when he went to the Gulf. He was teaching in a Parallel college and earning Rs 1200 monthly back in 1995. It was then that he paid SAR 6000 or approximately INR 2 lakh to an agent and travelled to Saudi in search of a better life.
“My first job there earned me SAR 1200, equivalent to INR 30,000 then, a considerable change in income. The currency conversion was the main attraction for me,” he says.
“There you can earn SAR 5000 in an average job which comes to close to INR 1 lakh. Here in Kerala to make INR 50,000 a month one has to be in a very good job.”
“All the time we spend there, we spend it thinking about returning to Kerala,” he says. “Yet one is never prepared for what we face when we are back here.”
“Unless one is particularly well off, everyone has a hard time adjusting back home,” he adds. “By the time we return, we ourselves and our dependents all would have been leading a life which becomes difficult to afford or maintain.”
These lifestyle changes range from the food and dressing habits to the modes of transportation and more. The social standing and the status accorded by virtue of being in the Gulf is an added trap. “A common man always suffers after return. There are no job opportunities that suit a Gulf returnee and since they have to do something, they start a bakery or hotel or whatever seems the most plausible.”
In the case of Zachariah, he had planned and invested in a venture for the eventuality of his return while in Saudi Arabia itself.
While Zachariah was right in his idea to start a small venture before returning, the idea he put his money on was not well thought through like many others investing from the Gulf.
On 05 July, 2017, Zachariah along with two other partners invested a total of Rs 15 lakh, putting Rs 5 lakh each, to start a laundry. The laundry, located in Pantharangadi in Malappuram district has been anything but a success. Two years down the line the enterprise is “still running”.
With no profit nor much business, Zachariah and his partners, one of whom is still in the Gulf is mulling whether to wind it up and reduce the loss by selling the machinery before it depreciates further.
Asked if they had done a feasibility study to see whether a market existed for laundry in a comparatively less urban area, Zachariah says, “it happened once when I came on leave. A friend told the idea, seemed good to me. We put in the money after going back that is how it was. Who thinks of doing feasibility studies.”
“Even when we are there we think about business ideas that can be implemented here,” he adds. And that is sometimes the problem, what works there and seems a plausible idea from there may not work at all in Kerala.
“After returning at 45 or 50 years of age what happens is we are still young enough to work,” Zachariah explains his considerations. “For instance, I was working in an office back in the Gulf but my experience there can’t get me a job here. With kids still growing up I have to find something to do and put my money in. The risk is in finding out what to do,” he says.
40 year old Navab M who had worked in a company making electronic weighing scales for 13 years had returned to Kerala two and half years ago and was advised by many of his acquaintances to start a bakery or a hotel.
“The company wasn’t making profit and my salary had stagnated for the last ten years. I put in my papers in 2011 and had to wait for five years before I was released. Even my dues have not been settled fully,” he laments about his previous life.
After returning home to Karunagapally in Kollam, northern Kerala, Navab got an offer about an investment opportunity from a very respectable person who said he could arrange machinery to make paper cups and plates along with the finance needed to start the venture.
The offer was that if he chose to invest in that, MUDRA loans could be arranged to finance his business. Nawab, new to the place, considered it seriously and was grateful to the person for his helping heart.
“I went to Coimbatore along with that person to see the machinery. Things were rolling fast. Given my small investment target of Rs 3-5 lakh it suited well into my target of something small and simple,” says Navab. “The entire loan was to be Rs 6 lakh with which I would be able to get the entire machinery needed to start production along with a production centre, and all the formalities of availing loans would be completed too.”
It was by sheer luck that he says he thought of going to the market and enquire about the costs of paper cups sold. “To my surprise I realised that the cost of paper cups being sold in the market were cheaper than what my production costs would entail me to sell at. Those cups were being produced in Tamil Nadu at a much cheaper rate.”
Further enquiries revealed more bitter truths. “The machinery and set up being financed to me for Rs 6 lakh were in fact only worth 4 lakh. I learned my lesson.”
“When you return you don’t know the nature of the people here. Some have no shame skimming money through such schemes from people they know or are related even,” observes Navab. “We believe them and think that they are genuinely trying to help.”
“The difficult thing for returnees is that the business climate here is different, market is different, basically everything is different. If the cars are driven in the left in the Gulf here it is on the right, that is how different everything else is too,” continues Navab. “Returnees trust those who may seem like good hearted people here and end up falling for frauds and get conned off their hard earned money.”
“Another idea that came to me was that of mobile phone shops. By the time I had been here for six months and I saw through it. There were far too many shops already, I didn’t see any reason to add one more.”
Navab with his electronics background then decided to start an electronic weighing machine assembling and manufacturing unit. Given his 13 years’ experience in automation & electronics he thought he will get a head start.
“When I researched I found that there was already a well-established maker in Thrissur who had been doing it for a very long time and with good reputation and quality.” He decided against venturing into stiff competition but not before speaking to him in person.
“He had been doing it since before the technology had really arrived in India,” recalls Navab. But his travels would open to him the possibility of LED video walls and scrolling display boards.
Soon he would travel to Kochi, Calicut, Mumbai and then Delhi to learn more about the supply chain. “I realised if I were to import directly, I could make decent profit,” he says from his shop. “Also, I knew the working of the system. I could do it myself,” and so he went ahead with the plan.
“I sold my wife’s gold and started a small set up. Instead of the worst quality that is imported and sold in India, I started importing the better quality LEDs.” Quality showed and Navab started getting work orders slowly.
“The biggest problem here is the settlement cycle. If I ask for cheques, people laugh at you. I am learning still. But work is steady now.” Navab has now given order for making a customised video van which is now 80% complete. “I can rent it out to advertisers. There is demand in the market,” he says.
“I have to get Small Scale Industries registration and GST registration,” he looks back at his journey so far. “I am trying to figure out the paperwork involved,” he says.
“For making Rs 1 lakh here you have to do Rs 2 lakh worth of work. In the Gulf you can make that with Rs 10,000 worth of work,” he explains the currency advantage and the problems with the ecosystem.
“Moreover business in the Gulf is not comparable to a small place like Karunagapally. One is a cosmopolitan centre and other a small town. A mistake many make is starting business that seems viable in a bigger set up,” he says.
“What works there needn’t necessarily work here in Kerala, most returnees don’t understand that. It may work in a city like Bangalore or Hyderabad or Mumbai though.”
Navab has seen many bakeries come up and lose business in his vicinity. “80% of Gulf returnees start ventures which are doomed to fail from the start. If you have Rs 10 lakh and invest two and half lakh and if the business goes bust, one can manage, but if you have Rs 10 lakh and borrow 5 more to start a business which you know nothing about, God has to help you to stay alive.”
“I call it the Gulf returnees complex. Every returnee wants to be an owner of an enterprise, the CEO in a good dress. There are many opportunities in the market, one has to look carefully and get dirty. The entire population of Saudi Arabia is less than 4 crore. Here in India we have 130 crore,” he reasons.
“There if you get 200-300 enquiries, here you can get 1000s. I was lucky in that I didn’t have the money to start a bakery or hotel. If I had had it, maybe I too would have taken the easy way out,” he sums up.
“At one time, almost everyone working in the Gulf was taking loans to buy Toyota Innova cars to be run as taxi,” recalls retired Justice P Bhavadasan, founding Chairperson of the NRI Commission of Kerala.
“How many Innovas do we need?” he asks. “NORKA ROOTS had to stop helping them with such loans.”
Established in 2002, NORKA ROOTS is the arm of the Kerala state government to promote and execute welfare activities for the non-resident Keralites across the globe.
“Gulf NRIs are the easiest to fool,” he says. “Since many gulf NRIs are Muslims and cannot take interests from banks, many go and put money into ventures run by friends and family in return for a fixed income from the profit or as partners even.” While the money is paid on time for the first few times, later, citing one reason or the other the payments stop. “Months and years pass before those conned even realise that the plan was supposed to fail from the beginning.”
“How hard is it to take Rs 10 lakh from someone and then pay them Rs 50,000 a month for three-four months?” he asked amused at the simplicity of the schemes. When not conned by the friends and family, returnees fall foul of the system which is designed to be apathetic to those who seek help.
“The 2-3 suicides that have come to public notice are only the tip of the iceberg, there are innumerable stories of people like Sajan Parayil from Anthoor,” he says.
The Anthoor case has been a turning point of sorts in the discussions surrounding the plight of returning expats. But what it opens up is also a question on the larger governmental culture in India.
“I have disposed of cases where plans to start poultry farms have been stuck for two years on end because of non-issuance of completion certificates,” shares Justice Bhavadasan.
“A pig farm owner was being denied permission to start working, two years since completion and having put Rs 10 lakh into the venture. There has even been a case where a person who applied for permission to build a compound wall was made to wait for three years!” he adds.
“That man eventually asked me why there is no action against the many walls which are built without any permissions but it is him who is being made to run from pillar to post. How do we say it is not about him, it is how the system works,” he asks.
“When they first ask for permission to start construction all the permits are issued without checking anything, then later it is when the person comes back for completion certificate and fitness certificate that perusal of documents and plans are started,” he explains the root cause of most such red tape troubles.
“Having invested all the money they have and some more, the returnees become restless.”
Officers points out mistakes or shortcomings in the buildings or plans one after the other and asks them to rectify them in order to get approvals. “Think about all the time and money that gets wasted.”
But that is how the system works.
“Meanwhile if an officer gets transferred, the new incumbent may ask for more changes and so the cycle continues.”
While there is no denying that there is a culture of corruption in the system which tries to milk the returnees to the maximum, the clean and honest officers are of no help too.
“Many of these officers are afraid to take decisions. What they tell us privately is that if the Commission gives an order, we will do it.”
They have their reasons, agrees Justice Bhavadasan. “They are afraid that in the future if some issue crops up, their names would be dragged through the dirt in the name of enquiries and their pensions stopped. It is a very valid fear,” he reasons.
“Nobody can follow all the laws all the time. Over the course of official duty some oversight will happen.”
“If ten years later someone wants to push me around, they can always look into whatever I have done on official capacity and initiate a vigilance enquiry against me on some pretext or the other. The question really is, where does one draw the line,” he asks.
“Do you become so conscious as to not take any responsibility or do you go beyond the fear and use the authority given to you to help people?”
“This should be a matter of general concern as well. Out of the 60,000 odd writ petitions filed every year, 60-70% of them are to direct the government servants to do what they are supposed to do.”
While the returnees expect straightforward single window permit systems like they are used to in the Gulf, back in Kerala - “The single window system opens up multiple new windows,” says D Dhanuraj of Centre for Public Policy Research.
The problems faced by the enterprising returnees according to him are borne out of the fact that “Kerala is not an entrepreneurial state”.
“Transparency is low in government systems and the ego of those involved takes centre stage far too often.”
Another problem is the manner in which PRI (Panchayati Raj Institutions) have come to be run in India. “Political decentralisation has not worked as it was planned out to be,” says D Dhanuraj.
“Panchayati Raj systems are not independent of the political leadership as was envisaged,” he explains. “On the contrary, they have come to be dependent on the political leadership inspite of the financial powers given to them.”
This is reflected in the manner in which PRI elections too have come to be seen as referendums on political parties.
Politicisation of PRI institutions has meant that, the elected office bearers become insulated from the concerns of the people and instead become dependent on the party leadership for support.
In the case of Sajan Parayil, it was factionalism within the ruling CPI(M) which proved to be his obstacle.
“For most of these people who return, their ventures are their only source of revenue. All their hope rests on them. Hence they approach the system with the weight of anticipation and dreams. When the dreams fail without even taking off, they break,” Dhanuraj sums up.
Kerala State Planning Board Member KN Harilal says things have to be seen in the corrective perspective. “It is not just NRIs who face these issues, even the local entrepreneurs go through the same. It is just that they sort of know what to expect.”
Returning home, often after being left with no other choice and deprived of livelihoods, Gulf returnees become disenchanted with the land of their nostalgic dreams faster. Reality hits them harder.
“They need counselling before entering the country and even afterwards,” adds Harilal. “None exists to my knowledge.”
(In the final part of this series, part four, we look at the road ahead for these Gulf returnees who are crumbling from within.)