Remittance of funds by expatriates to their home country depends principally on the origin factors and destination factors . Non-resident Indians (NRIs) are, in some cases, big earners and in most cases inclined towards savings. These have resulted in India taking the leadership position in inward remittances from its expatriates. Will the momentum be retained or the surge continue? Let’s examine the factors. The US economy is passing through a recessionary phase which in turn is affecting most countries in the world. The financial sector is in turmoil with major banks and financial institutions (FIs) in a bad shape. These events have caused loss of jobs. NRIs too are affected by this. However, there are many Indians abroad who will be in jobs. NRIs in business overseas will continue to run them.
Compared to the major developed countries, the Indian economy is still on rails and is likely to sustain a 7% GDP growth in the current fiscal year. The banks and financials institutions (FIs) in India are in a much better and stable shape. Notwithstanding the volatile situation in the stock market, there are good investment opportunities in the country. Banks and FIs are offering attractive interest rates on deposits and other investments. The dollar is now exchanging at Rs 50 and moving up. The downturn in the real estate prices makes the sector attractive . NRIs are reported to be investing in large tracts of land, which are expected to yield reasonable returns in the medium/long term.
The destination factors look good compared to the origin factors. This is creating a surge in the remittances by NRIs back to India. So long as the investment opportunities are not safe and secure overseas , this trend will continue. The increase in the exchange rate of the dollar makes the situation attractive. While loss of jobs and consequent loss of source of income will somewhat reduce the momentum but this will also see NRIs returning to India. This will again result in a shift of their funds back to the country. The regular remittances , for family maintenance and festivals will anyhow continue. So, overall, these factors should help in the surge in NRI remittances to continue, at least in the short and medium term.
