The amount of money sent by Indians working abroad to their family in India rose 19% last year to $66 billion, according to numbers collected by industry body Assocham.
In rupee terms, the rise would be even higher as the value of the dollar has risen by about 25% (versus the rupee) over the last one year.
India received NRI remittances of US dollar 56 billion in 2010-11 and US dollar 54 billion in the fiscal 2009-10.
India depends on money sent by Indians working abroad to meet its trade shortfall. India is heading for a shortfall of about $200 billion this year on account of the mismatch in its goods trade with the rest of the world.
The country exports about $250 billion worth of goods while importing about $450 billion worth of it. More than half of the trade-gap is due to oil imports.
In addition to the $66 billion from remittances, India also earns about $100 from the services Indians do for foreigners, such as hotels (in India), BPO and software exports.
Assocham said the depreciation of the rupee seems to have encouraged Indians to send more money home, even though the economic conditions in the U.S. and Europe have been uncertain. This year’s number may well cross US dollar 75 billion in 2012-13, Assocham said.
“”There are two reasons why the NRIs would continue to send funds back home. One, expensive dollar results in better yields for them when the foreign currency gets translated into the Indian currency and second, the liquidity in the western markets are likely to improve. This, in turn, would find way into India as well, also through the remittances route along with the foreign institutional investors,” it said.
“A robust repatriation of money by the Indians abroad prove a great support for India’s current account deficit, which otherwise remains a matter of concern in view of continuous and worrisome deceleration in exports of merchandise goods,” said ASSOCHAM President Rajkumar Dhoot.
According to RBI data, North America, the Gulf countries and Europe are the major sources of the repatriation of money from Indians abroad. Though there is a big chunk of emigrants to the Gulf countries, the funds from North America, including Canada, are greater because of different profiles and the higher income level of Indians employed and engaged in these regions.
However, the remittances from Europe are very likely to come under pressure as the wage levels and the rate of unemployment increases in the troubled area, especially in the Eurozone, excepting Germany, the industry chamber said.
The situation in North America would not change much, excepting that Indians would tend to save more while the Gulf the demand for Indian labour force would remain stable, the ASSOCHAM said.