Indians working abroad maintain their ties with Mother India if the World Bank’s latest Report on “Global Development Finance” is to be believed. Indian workers working abroad have remitted $10 billion in 2001, the highest of anywhere in the world. This means these workers send money to their families in India and the country as a whole has access to this huge income stream and foreign exchange reserves. Second is Mexico where workers remitted $9.9 billion in 2001, followed by the Philippines at $6.4 billion.
Though our fetish for attracting more and more foreign direct investment (FDI) continues, remittances from Indian workers abroad gradually emerged as a major source of external funds for development. For all the developing nations, remittance flow over the years have emerged as the second source of external fund behind FDI. In 2001, workers’ remittance receipts of developing countries stood at $72.3 billion, which is higher than total official flows and private non-FDI flows. The remittances to the developing nations equals 42 percent of the total FDI flows.
Spurred by the remittances of the Indian workers, the South Asian region received $14 billion as remittances in 2001 which went up to $16 billion in 2002. In both the years, the region was the second largest recipient of remittances after Latin America and the Caribbean. Other than India, the other South Asian countries which figure among the top 20 countries in terms of remittances in 2001 include Bangladesh (ranked 8th at $2.1 billion), Pakistan (ranked 14th at 1.5 billion) and Sri Lanka (ranked 20th at 1.1 billion).
The Bank has also further projected that the remittances to both South Asia as well as India are expected to rise in the year 2003. Taking a cue from the Persian Gulf war in 1990-91, when remittances to India were not affected, the report states that remittances would not be affected significantly by the recent Iraq war.
And which are those countries from where the workers are bringing in the money to their motherland? The top on the list in USA (from where $28.4 billion came out as remittance payments n 2001) followed by Saudi Arabia ($15.1 billion), Germany ($8.2 billion), Belgium ($8.1 billion) and Switzerland ($8.1 billion).
How reliable, as a source of funds, are the remittances from the workers? Going by the World Bank report, while capital flows tend to rise during favorable cycles and fall in bad times, remittances are less volatile.
For example, even in the times of the Asian financial crisis (during 1998-2001) while foreign direct investment and official capital flows declined, remittances continued to rise steadily.
