India has pipped China and Mexico to become the top remittance receiving country in the world, as the latest data released by the World Bank corroborate. NRI Remittances in 2006 from Indians overseas totalled $25.7 billion (roughly Rs 1,28,500 crore) followed by Mexico ($24.7 billion), China ($22.5 billion) and the Philippines ($14.9 billion).

The magnitude of the remittances can be judged by the fact that they exceed over three times the foreign direct investment in the country in 2006.

Even India’s total income tax and wealth tax collections together are less than the remittances received. However, while the remittances make up only about 3% of India’s GDP, in other countries, remittances form a bigger share of the national economy.

Among the Indian states, Kerala and Tamil Nadu are the biggest contributors, providing almost half of the total immigrants remitting money to India, followed by Karnataka, Gujarat, Andhra Pradesh, Maharashtra and Punjab. In Moldova, for instance, remittances equal 38% of its GDP.

Other countries with remittances of over 20% of GDP include Tonga, Guyana, Haiti, Lebanon, Tajikistan, Honduras and Jordan. Nepal and Bangladesh form 15% and 9% of their respective GDPs.

It is statistically confirmed that over 25% of households in Kerala have at least one person working abroad. The World Bank study also estimates a number of Indian immigrants to be 10 million.

Also, toppling a pre-conceived notion is the fact that the bulk of remittances come from workers in routine jobs, wage employees and service providers, and not by highly skilled professionals like doctors or software engineers.

The growing number and relatively higher skill levels appear to be driving the growth in Indian remittances. Better means of transferring funds, like electronic transfers are aiding the rapidly increasing remittances. Supporting the fact is the upbeat business of wire transfer companies with estimated revenues of $15 billion in 2006, and up to 30% profit margins.

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