New Help for Migrant Workers From India

DUBAI - A new program introduced by 's Ministry of Overseas Indian Affairs aims to encourage the country's migrant workers in the Gulf to put aside savings for their inevitable return instead of sending all their earnings home to their families.

Five million Indians live and work in the Gulf on temporary employment or contract visas, mostly on construction sites, in hospitals and as household servants. Remittances by migrant workers to India totaled $64 billion in 2011, according to the World Bank, making India the leading receiver of remittances in the world, and Indians in the Gulf accounted for about 30 percent of that. But most of the money that they periodically send back is spent by their parents, wives and children; little gets saved.

“Gulf money has raised the standard of living for millions of families in India,” said K.V. Shamsudeen, chairman of the Pravasi Bandhu Welfare Trust, an organization that helps troubled lower- and middle-income nonresident Indians. “But I always ask the workers: Can you maintain your family's new and improved lifestyle if you return to India? Their response is always no.”

The new Indian government program, the Mahatma Gandhi Pravasi Suraksha Yojna, opened its first enrollment center in July in Kerala, the Indian state that is home to the largest number of Indians working in the Gulf. Its first overseas operations are expected to begin in the this month.

Social activists have long highlighted the urgent need for a pension or other financial plan that protects workers.

Sanjay Verma, consul general of India in Dubai, said: “Why has it taken so long is a difficult question to answer. There have been attempts in the past to introduce a few insurance policies specifically for the workers, but they didn't take off.”

“For a worker to understand that giving up 1 rupee today is a wise investment for his future takes a lot of time,” Mr. Verma added. “How do you generate a pension out of temporary work over three to five years?”

The program is open to workers in the Gulf aged 18 to 50 who have “Emigration Clearance Required” stamped on their passport. Holders of such passports are subject to additional checks when going to selected countries on a work visa.

“It's the government's way of protecting the worker - ensuring he or she is on a valid and legal contract and understands the contract,” Mr. Verma said.

Workers who sign up for the program can benefit from a pension that would vary based on the amount of their savings and the time over which it had been built up; a return and resettlement savings benefit from UTI AMC, a public-sector financial institution; and a free life-insurance benefit from the ministry through the Life Insurance Corp. of India. In case of death by accident, the subscriber's family would receive 75,000 rupees, or $1,350, while a permanent partial disability from an accident would give the subscriber 37,500 rupees.

“The premiums are not very high, but it's too early to predict a reaction to the scheme,” Mr. Verma said. “Naturally, a lot of communication and engagement with the work force must take place to make them understand the modalities.”

“In time, if there's a higher demand and depending on the response,” he said, “the premiums and numbers could change.”

Women, representing 20 percent of all Indian migrant workers, who save 5,000 rupees under the plan can expect a contribution of 3,000 rupees from the ministry each year. Men would receive 2,000 rupees from the ministry. The ministry's contributions would continue up to five years as long as the individual is working in the Gulf.

“Any effort by the Indian government to look after the interests of this important group of people is always welcome,” said Mr. Shamsudeen, who since setting up his social organization in 2001 has conducted dozens of financial planning and guidance seminars for unskilled nonresident Indians and their families.

“Our workers are barely literate,” he said. “To expect financial literacy of them is like asking for the moon. They send money home and their families spend it without any accountability on wasteful and extravagant items - mobile phones, clothes, weddings, electronics and unnecessary food.”