Remittances or private money transfers from
non-resident Indians (NRIs) have
been rising steadily despite a slowdown of the global economy and have become a
more reliable source of funds for many Indian families compared with the
tangible volume and benefits of foreign direct investment
Official data for the past three years show that while
FDI inflows fluctuated
and even dipped, inward remittances were upwardly mobile.
In 2011-12, NRI remittances
were $66.13 billion ( Rs.
3,42,884.05 crore), against an FDI inflow of $46.84 billion into the
country. Inward remittances have been on an upswing over the past three years,
unaffected by factors, such as a fragile global economy and boosted by a falling
rupee, of late.
The Gulf countries (West Asia) and North America are the two top sources of
remittances to India, with Europe placed a distant third.
A Reserve Bank of India study finds that 30.8% of total foreign remittances
came from West Asia, while 29.4% came from North America and 19.5% came from
Europe.
The study also said that 40% of all such remittances were used for household
expenses.
These remittances now account for around 4% of gross domestic product
(GDP).
Kerala, Tamil Nadu, Punjab and Uttar Pradesh are among the top
remittance-receiving states in India.
In 2011, remittances to Kerala clocked R49,965 crore, accounting for 31.2% of
its GDP, according a Kerala Migration Survey, conducted by the Centre for
Development Studies (CDS) for the ministry of overseas Indian affairs.
In other words,
remittances were more than six times the money Kerala gets in
Union government assistance.
According to World Bank estimates, in 2011, the other major inward remittance
beneficiary countries were China ($57 billion), Mexico ($24 billion), the
Philippines ($23 billion), and Pakistan and Bangladesh ($12 billion each).
However, compared with the Indian official figure, the World Bank's figure
for India was $58 billion.
Although, the amounts are different in the two estimates, India tops the
chart for top remittance-receivers in the word.
The Indian official figure states that remittance to the country was $55.62
billion in 2010-11, which rose from $53.64 billion in 2009-10.
When compared with remittance figures, there was no great cheer on the FDI
front in 2010-11.
That year, India received an FDI of $34.84 billion, which was lower than the
corresponding figure of $37.74 billion in 2009-10, according to data from the
industrial policy and planning department.
Government officials also say a depreciating rupee and higher interest rate
for deposits are driving NRIs to park more of their money in the country.
"The interest rates our banks offer are more than that of developed countries
and even the Gulf countries, where over six million Indians work," an official
said.
"This trend of
rise in remittances is here to stay. Indians prefer to park their money back
home, which they find a very safe option. The falling rupee has also been a
windfall for them."
Courtesy - Mr.Jayanth Jacom , Hindustan Times , 8th October 2012
