Remittances to India touch $22 billion

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Remittances to India touch $22 billion

Oct 25 - Remittances to India have touched $22 billion, up from $14 billion in 2004. The total corpus is likely to further go up to $30 billion in the next two years, industry analysts said.
Money changing in India as well as abroad, is, however, primarily carried out by small players who enjoy about 80% marketshare, while the organised sector comprising Western Union, MoneyGram apart from banks have the remaining 20%.
“The number of Indians going abroad is increasing every year and the money coming into the country in the form of remittances is also swelling,” MoneyGram International country manager Harsh Lambah said.
Invest India Economic Foundation director Gautam Bhardwaj said a sizeable chunk of remittances is not directed through any financial channels or banks. “A large number of households get cash directly from their relatives or visitors which is unaccounted for,” he added.
Primarily remittances are flowing in from the US, UK and also from the west Asian countries. The size of each is, however, comparatively small from the Gulf countries as most of the non-resident Indians (NRIs) in that region form the labour class. Size of each remittance from the US and European countries is larger.
“NRIs who go to the US or UK generally hold relatively good posts in the corporate world and naturally the size is larger,” Lambah said, adding the number is all set to increase. The number of households receiving remittances in the southern part of the country is relatively high compared to the north. “Though the size is small, number of households getting remittances is very high,” an analyst pointed out.
Apart from India, remittances are also high in China and Mexico. China receives remittances to the tune of $18-20 billion annually, while it is $17-18 billion in Mexico.

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Diaspora pumped in $22 bn last year

WASHINGTON: After the noted 'reverse brain drain' of talented Indians who have returned home from Silicon Valley to fuel the country's tech boom, the money has now begun to follow the people, more quietly, the American magazine Newsweek said.
Newsweek International reports the story of India and its diaspora, likening it to "a Bollywood script about two brothers, the younger one rich and successful, the older one poor but closer to the family. And now, not too late in life, they are reconciling."
As recently as a decade ago, overseas Indians were viewed either as cash cows to be milked or as traitors who'd taken their highly subsidised education and abandoned the motherland to get rich abroad, it said in its forthcoming Nov 13 issue.
As India has evolved from agrarian torpor to high-tech vibrancy in recent years, the newly self-confident country has also begun to re-evaluate its relationship with its expatriates, it said.
At the same time, members of the diaspora have begun looking homeward for the same reason they originally left - the pull of economic opportunity.
"The mindset of India changed in the 1990s," it said, citing author Gurcharan Das, whose book India Unbound charts the country's rise. "The minds of young Indians, especially, became decolonised."
Though overseas Chinese, not to mention overseas Filipinos and Mexicans, are much more famous for sending cash home, Indians now lead the world in this category. According to the World Bank, cash remittances from Indians abroad have more than doubled since 1995, and totalled $22 billion last year.
China, at $21 billion, was close behind, it said, noting that over the past decade India's aggregate remittances totalled $154 billion - about 50 percent higher than what China received from its much larger diaspora.
With more than 20 million Indians overseas, including 200,000 millionaires in America alone, the diaspora could be a critical weapon for India in its effort to catch up to its archrival, Newsweek said.
A recent JPMorgan report says the diaspora is becoming "a powerful catalyst in helping India realise - perhaps even exceed - its aspiration toward 10 percent annual GDP growth."
Aside from remittances, the stock of bank deposits held by non-resident Indians, many of whom bank money in India to take advantage of preferential interest rates, topped $32 billion last year, accounting for a whopping 23 percent of India's foreign exchange reserves.
These large inflows have helped protect the value of the rupee and dampen inflation in a nation that, unlike China, runs a trade and government deficit.
And while it's not clear how much of the foreign money flowing into the Bombay Stock Exchange comes from overseas Indians, local traders assume the NRIs account for a good share of the incoming money that has driven up the market 300 percent since 2003, Newsweek said.
Over the same period, the Shanghai market has stagnated due in large part to China's reluctance to open it to hot money from any overseas source.
Newsweek noted other critical differences between the Chinese and Indian diasporas. Because overseas Chinese are concentrated nearby in places like Hong Kong, Singapore and Taiwan and largely earned their wealth in manufacturing, they're both better situated and more motivated to make direct investments in factories on the mainland.
In contrast, India's post-independence emigrants were mainly professionals - doctors, lawyers, scientists and engineers - or small shop and hotel owners, settled in countries far from India. Until recently they had neither the expertise nor the impetus to invest in their homeland.
That's a big reason, it says citing JPMorgan analyst Rajeev Malik, that to date overseas Chinese have sunk far more than their Indian counterparts have into new factories back home.
The overseas Chinese contributed as much as half of China's foreign direct investment in the 1990s, while overseas Indians chipped in only about 10 per cent of India's much smaller total. In 2000, for example, overseas Chinese pumped $32 billion in FDI into China, compared with $200 million for Indians. But this, too, is changing, Newsweek said.

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NRIs park 46% of remittances in bank deposits, realty, stocks

India, With Total Remittances Of $24.6 billion, stands 3rd In global charts.
Only a slice of the money sent by the Indian diaspora goes towards maintenance of the family back home. A greater chunk flows into the stock market and other investment avenues.
A study on remittances conducted by the Reserve Bank of India (RBI) reveals 46% of the money is parked in instruments such as stocks, bank deposits and real estate. Of this, 20% is in bank deposits, 13% in real estate and shares and the balance 13% in other instruments.
In FY06, India received $24.6 billion as remittance. An extrapolation of the figures arrived at by RBI shows that families of the diaspora have invested $11.04 billion in various instruments. Of this, $4.92 billion or Rs 22,140 crore landed up as bank deposits, $2.46 billion (Rs 11,070 crore) went into buying property and $738 million (Rs 3,321 crore) chased equities.
The study — conducted in cities like Mumbai, Ahmedabad, Bangalore, Chennai, Chandigarh, Delhi, Hyderabad, Jaipur, Kochi and Kolkata — reveals an interesting trend. Families in Jaipur, Bangalore and Mumbai prefer to invest a higher share of what they receive from abroad.
Delhi (35%), Chandigarh (29%), Kochi (29%) and Mumbai (25%) account for a higher share of their total remittances going into bank deposits. However, families in Jaipur (25%), Bangalore (20%) and Hyderabad (11%) have a preference for land and property. As far as equity is concerned, Mumbai (12%), Bangalore (5%) and Kochi (3%) top the list.
Global remittance is concentrated in the sub-continent. India is the largest recipient of remittance after Mexico and China. Both Pakistan and Bangladesh figure among the top 10 recipients of remittance.
North America and the Gulf countries are major sources of remittance, together accounting for 68%, with a share of 44% and 24%, respectively. This is because over the years there has been a strong migration to North America with demand for highly-skilled technical professionals strong in the region.

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India received USD 45-bn remittances in 2008: World Bank

Washington, Mar 25 (PTI) India received remittances to the tune of USD 45 billion in 2008, making it the top recipient ahead of neighbouring China, according to a World Bank report.
However, remittances would decline by five to eight per cent this year to USD 290 billion, World Bank's 'Migration and Development Brief' said.

India received USD 45 billion in remittances last year followed by China, which got USD 34 billion, the bank said in a statement.

The other nations to receive high remittances include Mexico (USD 26 billion), Philippines (USD 18 billion) and Poland (USD 11 billion).

"Remittances will fall to USD 290 billion in 2009, from the last year's high of USD 305 billion.

"Even with a drop of 5-8 per cent, remittances will still outstrip private capital flows, expected to fall by half in 2009, and official development aid, typically around USD 100 billion," the multilateral lending agency said.

According to the World Bank, remittances flowing to developing countries from Russia, South Africa, Malaysia and India are "especially vulnerable to the rolling economic crisis".