At a time when the global economy has been staring at across-the-board job and salary cuts, inward remittances by Indian expats have continued to surge. This reflects a flight to safety by the Diaspora on the back of the economy’s resilience amid the global crisis. The provisional balance of payments data released by RBI on Wednesday shows that overseas Indians remitted $55.06 billion in 2009, around 17% higher than what the World Bank had projected for the year. India has been the largest recipient of remittances by its expats for over a decade now. Unlike NRI deposits, which are repatriable, remittances are permanent transfers and hence, add to the external sector strength of an economy. According to the World Bank, India continues to be the top remittance receiving country in the world, having attracted significantly higher inflows of $ 51.6 billion in 2008 (followed by China with inflows worth $48 billion and Mexico with $26 billion) compared with $37.2 billion in 2007. The World Bank had, however, estimated that remittances would decline to $47 billion in 2009, reflecting a lagged response to a weak global economy. According to an RBI study on ‘Invisibles in the Balance of payments’ released earlier this month, higher remittance flows to India could be attributed to relatively higher growth of the Indian economy, making it an attractive investment destination, a hike in interest rate ceilings on NRI deposits since September 2008 and uncertainty in oil prices, which might have induced workers to remit their money to India as a hedging mechanism because of its relatively good growth prospects.
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