The Global remittance Economy and India

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The Global remittance Economy and India

• Dr Prakash Hebalkar
• President, ProfiTech
• Strategy Consultants

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The Global Remittance Economy
Remittances, as this money is called, are not
new. What is now the Bank of America began more
than a century ago to help Italian immigrants in
San Francisco send money home. But recent
disruptions of the global economy have sent
remittances soaring. No one knows for sure, but
the total amount is probably close to 300
billion, which is almost three times more than
all official development aid in the world. These
remittances have become a lifeline for families
in Third World countries. Entire nations depend
on them. In the Philippines, remittances now
comprise some ten percent of the formal economy.
In Mexico, they are the number two source of
foreign exchange, next to oil................India
rose to the top slot with 30 billion leaving
all-time leader China trailing this time behind.
According to the new estimates, India, China and
Mexico maintained their positions as the top 3
recipients of remittances among developing
countries in 2008. Philippines, Poland, Nigeria
and Egypt are also on the top 10 recipients'
list.
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Sources of Remittances to India


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Table 1. Remittances to India as Percent of GDP,
1990-1991 to 2007-2008
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Issues

• Remittance Estimation Problems
• Only the formal economy is measured there too
  the figures are by inference
• Payments not reflected in the Trade statistics
• Withdrawals from NRI accounts are included for
  whatever purpose
• Net Capital flows or inter-account movements?
• Taken by RBI from Invisibles which includes
  services exports
• Hawala the big cloud of uncertainty over
  remittances
• A good reference
• The Rise in Remittances to India A Closer Look
• By Muzaffar Chishti, Migration Policy Institute
• February 2007