PROSPEROUS INDIA 25

Working in distant lands, Indians make the highest remittances

Indian economy is enriched by contributions from different sections of people. Many of them go unnoticed and some of them are not properly understood. As a result they are not recognized and appreciated for the good work they are doing. In this connection, it is pertinent to note that the contributions of Indians working abroad remain to be studied in detail with regard to their significance.

Ministry of Overseas Indian Affairs of the Government of India mentions that there are nearly 22 million Indians living or working in different parts of the world.  Of them around 12 million belong to the category of  Persons of Indian Origin,  while the remaining 10 million come under the Non – Resident Indians. The Persons of Indian Origin are citizens of other countries having their roots in India, whereas the Non-Resident Indians are Indian citizens who have gone out of the country in search of better opportunities. Most of the Persons of Indian Origin are the descendants of the forced labourers who were transported to work in the European colonies during the first half the nineteenth century.

Beginning from the 1950s, sections of people started moving out sensing opportunities outside. But their numbers were not much. In this connection, we can identify two distinct phases of migration on a large scale. The first one began during the 1970s when the unskilled and semi-skilled people started moving to the Gulf region where the oil-exporting countries needed them for different jobs.  The second phase commenced during the 1980s when the educated and the professional sections began moving out to the western countries to brighten their prospects. The numbers increased during the 1990s, and people started moving in different directions following the changes in the global environment.  

It is a matter of pride that Indians enrich places wherever they go, giving a good name to the country. It is significant to note that of all the people from different countries working outside their national boundaries, Indians have remained as the ones who send the highest amounts as remittances to their home countries during the recent years.  The estimated figures released by the Migration and Remittances of the unit of the World Bank for 2011 confirm the pattern. The table given below presents the position.  

Top four recipients of migrant remittances

(Amount in $ billion, 2011)

Countries	Remittances
India	64
China	62
Mexico	24
Philippines	23

World Bank figures show that the officially recorded remittance flows to developing countries have touched $ 372 billion during 2011. It means that Indians with a contribution of $ 64 billion (around Rs.3, 52,000 crores ) have alone sent more than 17 per cent of the total migrant remittances in the world. It is a tribute to the great culture of India that encourages hard work, high savings and giving the maximum to the families. This shows that even in external environments where people around them spend much of what they earn, Indians keep up the tradition of higher saving habits.   

Study of the historical data reveals that the remittances have been continuously increasing since the 1970s. It also shows that there was a remarkable increase in remittances during the 1990s. The upward momentum is being continued to a large extent during the subsequent years. Even the global economic crisis during 2008 could not impact much on these inflows. Reserve Bank of India notes that the remittances have increased from Rs.42 crores in 1951-52 to 2, 43,102 crores (estimates) during 2010-11.

 The remittances help the nation in many ways. At the micro-level, the families get funds.   These funds are used by the family members towards consumption, saving and investments. It is important to know that such inflow of funds helps not just the families that receive them, but also the localities and the regions in which the families live. Kerala is a well-known example in this respect. Besides, the remittances help the economy in other ways.

India’s current account balance has remained in deficit most of the time since Independence. Increase in remittances reduces these deficits. In this connection, the remittances have helped the country to improve the balance of payments positions over the last three decades.  Singh and Hari note that remittances as a percentage of current account deficits have always remained more than 10 per cent since 1976-77, except during two years. They were more than 13 per cent during 2008-09. During 1996-97, they remained 22.56 percent of deficits. The importance of remittances in India’s external transactions could be understood when we realize that their share is more than 14 per cent of imports and 40.86 per cent of trade balance during 2010-11.

Remittances are a very important source of the external finance to the country. They remain higher than any other external inflows, including the foreign direct investments or foreign portfolio investments. Besides being the largest source, they are stable and very cheap. Poonam Gupta and Karan Singh ( in Ibrahim Sirkeci and others)  note: “More remarkably, net remittances are significantly more stable than the net inflows on account of net export earnings from goods and services, portfolio investments, foreign direct investments or NRI deposits.” 

Remittances constitute a significant share of foreign exchange reserves and contribute an important part to the saving and capital formation in the country. Reserve Bank figures show that remittances constitute 17.86 per cent of foreign exchange reserves during 2010-11. They were more than 39 per cent of the   reserves during 1992-93. The share of remittances as a percentage of Gross Domestic Saving is 11.01 per cent during 2010-11. As a percentage of Gross Domestic Capital Formation, remittances are 10.17 per cent. It may be useful to note that remittances form 4.59 percent of the Gross Domestic Product (at constant prices).

Thus the remittances have been playing a crucial role in the economy all these years.  Many believe that the inflows would continue in spite of the slowdown in the western economies, though the remittances are subject to many unexpected events. Poonam Gupta and Karan Singh note: “Looking ahead, recent developments in the global economic conditions are not likely to slow the flow of remittances to India even if the current global weaknesses persist or deteriorate further.”

It is the inherent qualities of the Indians who live in distant lands, with many of them staying away from their families, which are helping the nation to go forward by providing the much needed foreign funds to the maximum extent. They are assisting the country to meet the foreign account problems to a very significant extent due to their remittances. Hence these Indians deserve to be recognized. Many of them are from very ordinary backgrounds with lesser qualifications.  They are toiling outside to earn for themselves and the nation.   

References:

1.    Dilip Ratha and Anil Silwal, ‘Migration and Development Brief 18’, Migration and Remittances Unit, World Bank, April 2012

2.  Ibrahim Sirkeci and others (eds.), Migration and Remittances During the Global Financial Crisis and Beyond, International Bank for Reconstruction and Development, Washington, 2012

3.     Handbook of Statistics 2010-11, Reserve Bank of India, Mumbai

4.     Sunny Kumar Singh and K.S.Hari, ‘ International Migration, Remittances and its Macro-economic Impact on Indian Economy’, Indian Institute of Management, Ahmedabad, 2011

( Yuva Bharati, Vol.40.No.2, Vivekananda Kendra, Chennai, Sept.2012)