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26th June 2024

The movement of people from one domicile to the other, either within the state/country or even across the borders, in search of better economic conditions and a more secure environment, is as old as human history. The orbit of movement may be from one state to the other or from one country to another and it may be that of individuals, family or even in a larger group. This movement of people from one destination to the other, with an intention to settle temporarily or permanently, can be regarded as migration. Migration, in fact, profoundly affects the migrants and it gets directed towards significant economic and social transformation.

Access to wealth and money, especially by the poor and vulnerable groups, is an essential requisite for employment, economic growth, poverty alleviation and social upliftment.  “ The idea that people of necessity are permanently located in one national entity, that the distribution of the world’s population is complete forever, and only temporary anomalies now occur are also being challenged. It would be a curious outcome if the size and composition of the labour force of each country were exactly optimal, requiring no exchanges”. (Nigel Harris, 1999: p 268)1

Kerala is recognised as the “Gulf of Migrant workers”. In a state where the plethora of trade unions and the lingering memories of indefinite strikes, union strikes, these migrant workers are effectively surviving with success stories. The govt of Kerala has implemented many welfare schemes like insurance schemes to migrant workers initiated by the labour department. The workers will have to pay the small portion of the premium. But in fact with these schemes and policies are not able to include migrant workers of Kerala in the formal financial system. There is a shortage of studies deals with the financial inclusion of migrant workers in Kerala. Hence this study focuses on the financial inclusion of migrant workers in Kerala considering the effectiveness of Govt. initiatives as well as banks initiatives.


 Due to the out-migration of labourers from Kerala to gulf countries, Kerala faces a severe shortage of labours in unskilled and semi-skilled sectors like construction, agriculture etc. this excess demand leads to the migration of labourers from various states of India to Kerala. Better job opportunities and high wages are the major attractions for this migration.

The structure of Kerala economy is no more dominated by agriculture since the service sector has super-ceded it. The growth requirement necessitated by both public and private services to facilitate the high remittances from abroad is identified as a major reason for this shift. Since the manufacturing sector doesn’t make any charm for the entrepreneurial class in Kerala. Service sector which is not fully exploited and remains unorganised has emerged as a potential channel for investment.

        The explicit structural imbalance in the labour market regarding nature and the quantity of labour demanded and supplied has assumed significance. Migration of casual workers from other states of India became a necessity. Migration of labor to Kerala has happened primarily due to higher wages, better and safety employment opportunities and resultant better living may also be due to the distress factors at home which propelled the labor to move out of his/her native state, thus both push factors and pull factors seems to be the cause for migration of labourers to Kerala.

The state of Kerala with an unemployment rate of 7.4 percent, which is high when compared to other states, is accommodating 5 million migrant workers. When higher literacy and education deter the Malayalees from opting various job opportunities in the state, higher wages compared to their home state, prompt payment of wages, free medical aid available from government dispensaries, facility for timely delivery of wages to hometowns etc. the migrants to stick in Kerala soils, for their regular earnings from work.  (NSSO Survey 2011-’12).2

It is reported that the state of Kerala is not able to create enough jobs suitable for an increasingly larger number of youngsters with high levels of education. Though a scientific study in 2011 projected downward trend in migration within 3 -4 years, the enumeration from 2011 –‘14 period, covering   14,575 households distributed across Kerala, made a disagreeing note and reported that inability of the state to provide suitable jobs, increasing number of the educated youths and image associated with gulf emigration, tempted the youth in Kerala to try their luck abroad. The number of migrants (in lakhs)  came to 13.62 in 1998, 18.38 in  2003, 21.93 in 2008, 22.81 in 2011 and 23.63   in 2014, evincing an upward growth since 1998 and the growth between 2011 and 2014 was about 81,000,  marking an acceleration in remittance by 46 per cent.   (K C Zachariah and S IrudayaRajan, 2014).3

The reports delivered by the Department of Labor and Skills of govt. of Kerala indicate that the migrant labourers from other states of India, Bangladesh and Nepal in came to 2.5 million in 2013. This has increased to 4 million in 2016, with an annual arrival rate of 2.35 lakhs with a sum of Rs 25,000 crores going outside the state each year as wages to the migrant workers.  (M. P. Joseph, D. Narayana and C. S. Venkiteswaran, 2016).4

The push factors like poverty, unemployment, a density of population, bad yield from agriculture, low demand for labourers and other factors like raising up families, lack of civil activities in the residential area, disasters, wars, internal fights on basis of caste, creed, race affect the flow of migrants to Kerala. The pull factors like better employment opportunities, a standard of life in Kerala, high wages compared to other states, lesser communal clashes, high health indices, provision of education for children attract migrants to Kerala work as the pull factors which drive the migrant workers to Kerala.   (Manav Paul, 2008)5

The irony is that a state which made massive male population voyage to the Gulf in search of work is now witnessing a domestic story of mass migration. About the migration to Kerala, the linguistic, social and cultural differences of Kerala and the distance to be travelled by them makes it similar to international migration rather than internal migration.   (M. P. Joseph, D. Narayana and C. S. Venkiteswaran, 2014).6

The official estimates declare that when the number of Keralites working outside India is 1.6 million, the corresponding number of migrant labourers from different parts of India in Kerala is much larger.  In 2013, the number of migrant workers in Kerala was 10 percent of the local population. It is estimated that by 2023 the number is likely to cover 4.8 million.  When by 2023 the majority of the local population would have aged above 40 years, this could lead to a further increase in migration from other states. (M. P. Joseph, D. Narayana and C. S. Venkiteswaran, 2014).7

A study report delivered by Govt. of Kerala in 2013 point out the concerns about the education of children of migrant labourers, child trafficking, place in the state crime map, working conditions, long working hours and recommended that the government take steps to improve their housing, education, skill development and living conditions.Kerala is the first State in the country to enact a social security scheme for the migrant workers and the State is the first to provide benefits to the job-seekers from outside with the Kerala migrant workers welfare scheme set up in 2010. Apart from the Indian Institute of Infrastructure and Construction in Kollam, Kerala Academy of Skills Excellence (KASE), Government of Kerala is considering the development of a Skill Development Institute for migrant workers. Initiatives taken by SarvaShikshaAbhiyan  to enroll the children of migrant workers in schools,  schools for the children of migrant workers, design of specific teaching curriculum adaptable to migrants , capturing of biometric details, issue of ID cards, Awas  insurance scheme, free health care for all the migrant workers, official labor camp, plans to start kiosks and call centers, Migrant Suraksha Project implemented across the State are the attempts made by the government towards the welfare of the migrant labourers. (Kerala migration survey 2014)9

They use to spend the income derived from working overtime hours for his living expenses and that earned from regular work is sent home. As long as the migrants feel happy with the wages paid in Kerala, this migration process will continue. The earnings appear to be more than three times what they get in Bengal for the unskilled jobs. Meanwhile, the remittances from Kerala made rampant changes in the villages of Bengal. Besides the construction sector, they also find work in hotels and restaurants, manufacturing units, trade, and agriculture sectors. (Dr. Narayana, C.S. Venkiteswaran and M.P. Joseph,2011).10

Financial inclusion means the provision of affordable financial services by the formal financial system to those who tend to be excluded. Financial inclusion will enable the poor and the rustics of our country to open a bank account to save and invest, to borrow and to repay, to insure and to take part in the credit. This will enable them to break the chain of poverty. There are people who desire the use of financial services but are denied access to the same.

The financially excluded sections largely comprise marginal farmers, landless labourers, self-employed and unorganised sector enterprises, ethnic minorities, socially excluded groups, senior citizens and women. In this scenario, the need for financial literacy becomes more important than ever before as it determines the success of financial inclusion programs of every country. Both developed and developing countries, therefore, are focusing on programs for financial literacy education. Financial literacy means the ability of a person to understand financial matters. In other words it means the awareness, knowledge and skills of individuals to make decisions about savings, investments, borrowings and expenditure in an informed manner.(K C Zachariah and S IrudayaRajan, 2014)11

This paper is intended to portray a vivid picture of the migrant work force in the state, the functional aspects both at the pooling and delivery end of migrant labourers, their living pattern, impact of legislative measures on their welfare, income expenditure pattern, financial planning and major financing decisions, channels of savings and investment. In a nutshell, it is a study on the financial inclusion of migrant workers in Kerala, which can highlight and illuminate various socio-economic aspects of such labour force.

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