Sakthikulangara means "the coast of strength" in the local language. But the hundreds of migrant workers in this fishing village in India's southern state of Kerala who have been forced to return home from the Gulf in recent months due to the global economic crisis have never felt more vulnerable.

Everyday they gather in an open ground behind the unusually grand village church, modelled on St Peter's Basilica, for a game of rummy. None can afford to wager money; but the card game provides an opportunity to meet others, exchange news from the Gulf, and keep spirits from flagging.

All the villagers had taken a big gamble in the past when they sold their fishing boats, borrowed money at usurious rates, and went off to work on construction projects in the Gulf.

But the building boom stalled last year - according to Morgan Stanley, real estate projects worth as much as £263bn have been delayed or scrapped in the United Arab Emirates. The knock-on effects are being felt across south Asia, which has provided formidable legions of labour to the emirates.

"Around 1,500 to 2,000 fishermen from Sakthikulangara were employed in prestigious sea reclamation projects in the UAE, such as Palm Island or the World," said John Cyril, a local businessman assisting the Gulf returnees. "Due to the recession, almost 90% are back."

The return of labourers from Dubai to India is just one manifestation of a mass movement of people who have lost work because of the global recession and have to return home. China is seeing vast numbers leave industrial cities for the countryside as factory closures sweep through urban centres. Several other southeast Asian countries are experiencing similar movements, as well as witnessing the return of some of their now-unemployed expatriates.

The concern is not just that mass unemployment will lead to unrest, but that local economies will suffer as remittances from expatriates dry up.

About two million people from Kerala work abroad, almost 90% of whom are in the Gulf and in Saudi Arabia. Many are poor, semi-skilled labourers who have taken loans of up to £2,000, often from moneylenders, to pay recruitment agents for overseas jobs. They work 12-hour days, live without their families in harsh conditions, earn between £500-£1,000 a month, and send most of the money home.

Every year migrant workers remit some £5.5bn to Kerala, money that has helped transform the state, and metamorphose places like Sakthikulangara. The first time the coastal village saw a rise in its fortunes was in the 1950s, when a Norwegian aid project helped modernise traditional fishing. But as the seafood business dried up due to overfishing in the 1990s, the Gulf provided a much bigger bonanza. Testimony to this are the brightly painted concrete houses that have replaced the traditional thatched dwellings in the village.

"We can always find some work here, but to improve our lives, to build a nice house, we have to go to the Gulf," said Peter Benziger, who was forced to return last month after working for four years as a construction worker.

The communist-led state government in Kerala is deeply concerned at the sudden influx of its own, and has announced a £15m rehab package for returning workers. "We could end up with half-a-million coming back in the months to come," finance minister Thomas Isaac told India Today weekly.

Some experts are discounting a massive exodus of Indian workers from the Gulf, but are warning that the replacement rate for workers will fall. "There's been a 50% drop in passenger traffic to the Gulf since December," said KV Muralidharan, president of the Kerala Association of Travel Agents. "Newspaper ads by recruitment agents have also dropped by half."

The World Bank predicts a 5% fall in remittances worldwide this year. In 2008, it ranked India as the top recipient with $45bn in remittances.

"The retrenchment is really bad only in the construction industry," said KV Shamsudheen, who runs a workers' welfare trust in the Gulf. "But the UAE, especially Dubai, has a habit of converting a crisis into opportunity, and I feel they'll do it again."

The fishermen of Sakthikulangara haven't given up hope, either. "I'm going back after Easter, as my Gulf visa is still valid," said Lenin Aloysius, his name testifying to the village's mixed Catholic-communist heritage. "If I don't get a good Gulf job then I can't give a good education to my two sons, which is my first priority," he said.

Aloysius worked for two years as a dredging helper in Dubai until he was asked to go home in November. Ever since, like the other returnees, he has worked on a fishing boat earning £3 a day. But like the others, he expects an economic revival in the Gulf soon.

Benziger said: "Everybody standing here believes this recession will end soon, at the most in six months' time."