India has consistently been among the top recipients in terms of remittances
over the last 14 years. Total remittance flows into India increased
to US$36 billion in 2007 from US$13 billion in 1997. In 2007, in terms
of absolute amount of remittances inflows, India is ranked number one
in the world. As a percentage of GDP, India received 3.3% of remittances
in 2007 compared with an average of 1.8% for developing countries. NRI
remittances have shot up to US$40.8 billion (3.5% of GDP) as of F2008
(12-months ended March 2008), compared to US$12.3 billion (2.7% of GDP)
as of F2000. NRI remittances were about 2.6 times net foreign direct
investment and 1.4 times portfolio investment in F2008. One of the major
reasons for the increase is the rising population of NRIs. The total
NRI population could be easily larger than 20 million. Even if assume
a conservative income stream of US$10,000 per capita, the total annual
income of this population should be above US$200 billion.
The average utilisation pattern of remittances sent to India includes
maintenance of families of migrants in India (54% share in total), bank
deposits (20%), investment in land/property (10%), investment in equity
shares (3%) and other uses (13%).Remittances have been in narrow range
of 2.5-3.6% of GDP over the last 10 years. Over the years, easier norms
for international labor mobility have been one of the key factors supporting
the rising NRI population. In addition, an improving domestic macro-environment
has attracted NRI finance in the form of remittances for application
into investments. The government's measures implementing gradual capital
account convertibility and the relaxation of norms and procedures for
speedier transfer of funds into the country have also helped to attract
more inflows.
