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Media Information
Indian expats remittances increase despite global slowdown

Published & Updated as on - 2010-04-18

Indian expats remittances increase despite global slowdown

Remittances by Indian expatriates rose by over $ 1 billion to $ 27.51 billion (around 1,22,420 crore) during April-September 2009, unfazed by the global financial meltdown, a RBI survey has said.

The remittances increased from $ 26.37 billion during the same period in the previous year, as India provided much better returns.

"inward remittances in India have not been impacted significantly by the global economic crisis," RBI said in its latest monthly bulletin.

It further said that the rise in remittances may be attributed to a number of factors, including depreciation of rupee resulting in the rise in inflows through rupee denominated NRI accounts to take advantage of the depreciation and hike in interest rate ceilings on NRI deposits since September 2008.

RBI said that it was feared that the global recession could impact migrant workers more severely.

"Even if there is no lay-off, workers would often have to accept lower wages as employers worldwide are seeking to cut costs in an attempt to cope with the financial crisis," it said.

The survey, which was conducted in November 2009, said that North America continues to be the most important source region of remittances to India despite its share in total remittances falling to 38 per cent (44 per cent during the 2006 Survey).

This is in line with the fact that a large proportion of migrants to North America (US and Canada) work in software and other Information and Communication Technologies (ICT) related areas which have relatively higher average earning levels.

The Gulf region accounts for an average of 27 per cent of the total remittance inflows to India, with major source countries being the UAE and Saudi Arabia.

While Kochi and Mumbai receive above 50 per cent of their remittances from the Gulf region; Ahmedabad, Bangalore, Chandigarh, Delhi, Hyderabad and Kolkata received more than 60 per cent of their inward remittances from North America and Europe together.

It further said that while the larger numbers of the bank branches that were surveyed have reported negligible impact of global crisis on flow of remittances, responses have been mixed across the regions.

"Majority of the respondents in Delhi and Chandigarh centres said that ongoing recession led to decline in the remittances, while in Ahmedabad centre, the majority of the respondents did not see any significant decline in the flows of remittances in the region," RBI said.

Source: ET 18/4/10

India’s budget yet again demonstrates to NRIs that investing in their homeland is probably the best option right now. The West is still struggling to climb out of one of its deepest recessions and provides low returns, while India’s growth story promises healthy returns. Surely, it’s time to wake up and smell the Indian coffee. Soon after the budget was read, the Indian stock exchange gave it a thumbs-up sign without delay as the market climbed up by a hefty 175 points. The return on Indian equities in the past year has been calculated at 87.4 percent by The Times of India. If an NRI invested in real estate stocks for the last year, the returns would be a whopping 139 percent.

The auto sector was not far behind as the returns on wheels was 184 percent. Again, consumer durables and the IT sector would have raked in returns at 150 percent and 125 percent respectively. Now, where would an NRI get his investment almost doubled in one year? As far as returns on fixed deposits are concerned, NRIs can reap much higher returns of eight percent for term deposits if they convert their currencies into Indian rupees. This compares with two to three percent when they keep their funds in hard currencies in India or abroad. Considering that over 100 banks have failed in the US following the meltdown and a number of British banks were also shaken. NRIs hastily sent their savings to India and the country’s foreign exchange reserves are hovering at a bulging $280 billion now.

Source : Indian Realty News 24/3/10

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