Nature of remittance flows into India from the Indian diaspora
Overseas Indian Affairs Minister Mr Vayalar Ravi has informed the Lok Sabha that the country received remittances to the tune of approximately US$ 40.8 billion (around Rs 204,050 crore) during the period April to December 2009.
Significantly, deposits in Non-Resident Ordinary Rupee Account (NRO) increased to US$ 4.77 billion in 2009 by 71% from US$ 2.79 billion in 2008, according to the latest bulletin (End-March) released by the Reserve Bank of India (RBI). In this respect, the findings from the recently released (April, 2010) RBI Survey-Remittances from Overseas Indians: Modes of Transfer, Transaction Cost and Time Taken- conducted in November 2009, reveal that inward remittances (including the deposits in NRO accounts) in India from overseas Indians have not witnessed any significant negative impact, on the back of global economic crisis. The trend has been impressive owing to several factors such as:
* Depreciation of rupee resulting in the rise in inflows through rupee denominated NRI accounts to take advantage of the depreciation
* Hike in interest rate ceilings on NRI deposits since September 2008
* Uncertainties in oil-prices, which might have encouraged the workers to remit their money to India as a hedging mechanism due to its relatively better growth prospects; and
* The attractive returns in Indian capital market, which are often cited as a key factor for higher remittances to India
Noteworthy takeaways from the survey have been:
* A major portion of the remittances received (61%) in India, are utilised for family maintenance
* On an average, about 20% of the funds received are deposited in the bank accounts. A relatively major portion of remittances are put in bank deposits in centres such as Ahmedabad, Chandigarh, Delhi, Jaipur and Kochi
* About 4% of the funds received are invested in land/property/ equity shares, while 3% funds were invested in equity shares
* Geographically speaking, the region of North America continues to be the most important source of contributing remittances into India (which is about 38% of the total remittances), while Asian region (Gulf and East Asia) contributes about 32% of the total remittances
* While Kochi and Mumbai received more than 50% of their remittances from Gulf region; Ahmedabad, Bengaluru, Chandigarh, Delhi, Hyderabad and Kolkata received more than 60% of their inward remittances from the regions of North America and Europe, together
Effectively, these pointers serve as indicators for the current economic scenario that is prevailing in and around India.
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