Kochi: The US-led war against Iraq has sent distress signals to thousands of homes in Kerala, which relies heavily on remittances from its people in the Gulf.

But according to the Planning Commission, the situation is not as bad as in the 1991 Kuwait War. While about 600 non-resident Keralites (NRK), mostly women and children, have come home from Kuwait since the war began, many of them say there is no need for panic.

Kerala’s reliance on Gulf remittances is so heavy that NRK funds account for half the deposits in commercial banks. According to state Planning Board vice-chairman V Ramachandran the present war is unlikely to cause a severe fallout in the state unless it gets prolonged.

According to State Level Bankers’ Committee (SLBC) figures, out of total deposits of Rs 56,093 crore in banks, NRE funds stood at Rs 27,467 crore in the third quarter of 2002-03. Experts fear that prolongation of war would leave a chain reaction on the state’s economy as it did in 1991.

In the first Gulf War, emigrants’ panic homebound flow had a telling impact on as diverse sectors as construction to small trade in foreign goods. It took some years for the state to recover from the situation.

As per official estimates, slightly over 11 lakh Keralites are employed abroad, of whom 95 per cent are in Gulf nations. According to a 1999 study, migrants constitute 3.6 per cent of Kerala’s population.