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Why India should be more thankful to non-resident Indians

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Tina Edwin
Tina EdwinApr 15, 2015 | 18:32

Why India should be more thankful to non-resident Indians

India has once again emerged as the top receiver of remittances, thanks to the large pool of migrants working across the world. India is estimated to have received $70.4 billion on 2014, according to the World Bank.

Five fascinating facts about the remittances received by India:

India, top recipient for 20 years: That’s right. India has been the largest recipient of remittances since 1994, displacing countries such as Egypt, France, Germany and Mexico. The country lost that position only three times since then. In 1998, France inched past India by a small margin. Then in 2005 and 2007, China managed to get a little more than India. Since then India has remained on top of the pile. India shall hopefully retain its number one position in 2015 too, though China has narrowed the gap receiving $64.1 billion in 2014.

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Every eighth dollar remitted comes to India: India got 12.1 per cent of all remittances made worldwide in 2014. The World Bank estimates the $583.4 billion was remitted by migrants to their home countries in 2014. In 1975, India got 4.5 per cent of the all world’s remittances. Migrants remitted $9.5 billion that year to their home countries, of which India received $430 million.

Remittances to India grew faster than average: Remittances to India grew at compounded average growth rate of 14 per cent between 1975 and 2014. Between 1975 and 2014, India received $688 billion in remittances. In comparison, global remittances grew only 11 per cent during the same period. The best growth year for India was 1980 when remittances jumped almost 92 per cent from the previous year. Last year was not too encouraging, remittances grew only 0.6 per cent. The World Bank has predicted 2015 to be another slow year for remittances worldwide due to weak economic growth in Europe, deterioration of the Russian economy and depreciation of the euro and ruble.

El Dorado in West Asia: More than half of the remittances received by India in 2014 were made by migrant workers and professionals working in West Asian nations such as the United Arab Emirates and Saudi Arabia. The UAE is the biggest source of remittances for India at $12.6 billion and Saudi Arabia was the third biggest source accounting for $10.8 billion. The UAE, Saudi Arabia, Kuwait, Qatar, Oman and Bahrain together accounted for about $37 billion of remittances in 2014. About $11.2 billion of remittances for India originated in the United States.

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NRIs are more reliable than FDI and FIIs: Remittances are more reliable than foreign direct investment and foreign institutional investments because NRIs bother a lot less about the investment climate in the country. This is because remittances are made mostly to maintain families living in India. Remittances do increase when exchange rates become favourable for the remitter and when Indian banks pay higher interest on money deposited in non-resident accounts. Adverse global conditions can hurt remittances but that impact is limited as we saw during the financial crisis and economic slowdown of 2008-09. Remittances shrank only 1.5 per cent in 2009.

Last updated: April 15, 2015 | 18:32
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