21. Impact of Global Economic Recession on the Livelihood of Di Amond

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  • Topic: Diamond, Unemployment, Recession
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  • Published : August 29, 2011
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Impact of Global Economic Recession on the Livelihood of Diamond Workers: a case study of Gujarat, India

Sarbeswara Sahoo 1 Assistant Professor (Economics) Mahatma Gandhi Labour Institute Ahmedabad

Diamonds may be forever, but apparently Diamond buyers are more Fickle

Gujarat is one of the most economically progressive provinces of the Indian Sub-Continent. Diamond Industry and the Diamond Workers have played a significant role in the high economic growth estimated at 12% SGDP per annum.It is estimated that Surat city alone employs 4.5 Lakhs in the diamond industry and roughly around 1 million people work in the diamond industry. Rough and cut diamonds worth of $43 Bn are imported from Antwerp to Surat and other cities of Saurastra region of the Gujarat State and are polished here and again export to countries like US and other European countries. On the onslaught of Global recession especially in the US the fate of million of these workers became uncertain who lived a dignified life .The plight of the workers were reported in the media and even the film industries captured the woe of the life of the workers. Most of the diamond units closed in the mid of 2008 and virtually the whole diamond industries closed down during the early 2009 .Workers migrated back to their village and fall back upon cultivation and other non-farm activities like weaving, vegetable vending, sewing and stitiching,embroidery and so on. Interestingly the workers cope with the changed situation by taking up alternative employment. Keeping the grim situation of the workers, present paper would try to understand the impact of Global Recession on the livelihood of the Diamond workers through a primary field study of Saurastra and South Gujarat. The study will also try to find out means of coping strategy of the workers and impact of employment guarantee and other social safety measures initiated by the Government. In any case recession reoccurs; what precautions the diamantaries, the workers and the Government has to take in advance.

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Assistant Professor of Economics, Mahatma Gandhi Labour Institute, Government of Gujarat, Ahmedabad, India, Email:sahoo@mgliahd.org.

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Introduction The global financial crisis started in 2007 and continuing until now is one of the worst recessions witnessed by Global Economy since the Great Depression of 1930s 2 .The impact of the present Global Recession rooted especially in the United States of America has spread to other economies and sectors of the world directly or indirectly depending on the U.S. Economy. Both the formal as well informal sector of the economy as well as employment has been deeply influenced by the crisis. Many financial institutions like the Lehman Brothers and others were deeply impacted by the ongoing crisis. Many financial institutions closed down and others approarched the U.S. government for bail out. The real estate market, the stock market has suffered a lot. It contributed to the failure of key businesses, declines in consumer wealth estimated in the trillions of U.S. dollars, substantial financial commitments incurred by governments, and a significant decline in economic activity. The crisis rooted in the real estate and housing market in U.S. that collapsed in 2006.This affected the value of securities tied to the real estate market and hence impacting the global financial institutions negatively. Questions regarding bank solvency, declines in credit availability, and damaged investors confidence had an impact on global stock markets, where securities suffered large losses during late 2008 and early 2009. Economies worldwide slowed during this period as credit tightened and international trade declined.3The impact of present recession is huge especially in U.S. and has implication for other economies in the world. The is because as reported by the brooking institution that says U.S. consumption accounted for more than a third of the growth in global consumption between...
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