The second episode dealt with the globalisation of the labour market. In the early seventies, as the oil prices soared by more than four times, the Gulf economies experienced a boom. This led to a surge in the demand for skilled and unskilled labour. It is intriguing to note that while India was definitely following an inward-looking policy then, there was no bar on the movement of labour. What could be the reason for so much of ‘openness’? In the fifties and the sixties, the elite was already sending its children to the UK and the US. They first went for higher education and then, invariably, stayed on. Thus, there was no bar on the movement of educated labour — even though the government had given education at almost zero cost to these young people and there was a scarcity of skilled labour within the country. Probably this was because when the demand from the Gulf economies came, it was perceived just as an extension of the earlier movement of labour and was therefore allowed. While the movement of labour to the advanced economies did not help the Indian economy in any way, movement to the Gulf led to a surge in remittances. These continue to be a strong component of India’s forex earnings today. Whatever may be the reason, India took the opportunity available in the Gulf economies and benefited from it. It is important to note that there was nothing obvious about this then. Many economies like China, the erstwhile USSR, all the Eastern European economies and some Latin American economies, although similarly endowed in terms of labour as India was, did not take advantage of this boom. This experience in the movement of labour has stood us in good stead — the issue has assumed significance at the WTO negotiations.

... contd.