Economic Cooperation between India and Bahrain: Performance and Prospects

Abstract

70 Journal of South Asian and Middle Eastern Studies Vol. XLI, No.1, Fall 2017 Economic Cooperation between India and Bahrain: Performance and Prospects Muhammad Azhar* Two and half decades of uninterrupted and sustained economic reforms have transformed the Indian economy into the world’s fastest growing economy in recent years. During 2014 Indian economy grew by 7.3 percent.1 Since the slowdown in Chinese economy, India has overtaken the Chinese economy. India ranks at the 9th position in the global economy and generates 2.6 percent of the world’s gross domestic product.2 Thus India has been fast becoming the land of economic opportunities. India is rich in mineral resources. But the hydrocarbon resources are very small as compared to her requirements. Rising growth and expanding economy has resulted in substantial rise in the demand for oil and gas. This in turn has necessitated in ever increasing imports of oil and gas mostly from the gulf countries. India has second largest population and the second largest labour force in the world.3 It has also vast reserves of skilled workforce. Millions of Indian expatriates’ workers are employed in gulf countries including Bahrain. And these workers are very important source of massive *Muhammad Azhar is Professor (Economics) at the Department of West Asian and North African Studies, Aligarh Muslim University, Aligarh (India). He obtained his M.Phil and Ph.D from Jawahar Lal Nehru University, New Delhi. His area of interest includes energy economics, finance, economic, trade cooperation and research and methodology. He has contributed several articles in various international and national journals. Prior to joining A.M.U., Muhammad Azhar worked as Reader at the Academy of Third World Studies, Jamia Millia Islamia, New Delhi. he worked as a Research Associate at the Gulf Studies Program, Centre of West Asian and African Studies, School of International Studies, Jawahar Lal Nehru University, New Delhi. he also worked as Consultant at Indian Council of Research in International Economic Relations, New Delhi. 1 “IMF says India Still Fastest-Growing Economy”, The Economic Times, New Delhi, 12 April, 2016, p.11 2 World Development Indicators Database, World Bank, Washington, (accessed on 17 February, 2016). 3 Ibid. 71 remittance earnings for India. It must be mentioned that India is the largest remittance earning country in the world.4 As far as Bahrain is concerned, it is smallest among the member countries of Gulf Cooperation Council. However, it is also a rich country in terms of history, culture and economy. It has been the seat of the ancient civilization of Dilmun. In the ancient times it used to serve as a trading link between Indus Valley Civilization and Mesopotamia.5 Prior to the discovery of oil, the main economic activities concentrated on fishing, boat making and repairing, exploring and trading pearls, diving and some agricultural and commercial activities.6 Bahrain had been first among the Arab countries to discover oil in 1932.7 Consequent to the discovery of oil and its exports, Bahraini economy was thoroughly transformed. Since then all economic development in Bahrain depended on oil export revenues.8 However, Bahrain has very small oil reserves and also some gas reserves. Bahrain’s oil & gas reserves have been estimated at 0.01 percent and 0.05 percent of the global oil and gas reserves respectively.9 Bahrain is a member of Organization of Arab Petroleum Exporting Countries (OAPEC). In contrast to its neighbours, oil reserves in Bahrain are estimated to exhaust very soon. This is why Bahrain exports very little of crude oil. It exports refined oil and other petroleum products. The exhaustive nature of oil reserves was never out of sight for the Bahraini planners. This is why Bahrain launched its economic diversification program very early and prepared for the post oil era. Bahrain has been developing other sectors of the economy to reduce its dependence on oil revenues.10 The aluminum industry has been crucial in Bahrain’s diversification strategy. Bahrain has 4 www.worldbank.org/prospects/migration and remittances (accessed on 01.02.2016) 5 John H. Neidercorn, “A Reconstruction of the Pre-History of Bahrain, the Landing Place of Noah”, in Jeffery B. Nugent and Theodore H. Thomas (Ed...