Overseas remittances to India at record $63.6 bn: World Bank.

Non-resident Indians (NRIs) have sent $ 63.6bn to India through remittances. Overseas Indians have sent more money than ever before. According to the World Bank, the increase in value of remittances is also due to a sharp fall in 2011 in the value of the rupee.

In 2010, India received $ 54bn in remittances.

This is the highest amount of money sent by overseas nationals to any country, according to the World Bank data. India has been the largest recipient of remittances since 2008 when it surpassed China.

China received $62.5bn in overseas remittances in 2011.

An overseas remittance is the money sent back to families by migrant workers. Indians living in US, Europe and the Middle East sent money to their families in India. Same holds true for China, Philippines, Mexico, Pakistan and others.

“Worldwide remittance flows, including those to high-income countries, reached $501 billion in 2011 and are expected to increase to $615 billion by 2014,” World Bank release said.

The flow of money from NRIs is important in the context of the rising current account deficit that hurts India’s economy. India imports more than it exports.

These remittances account for about 3 per cent of India’s $ 2 trillion gross domestic product or GDP. To put things in perspective, India’s current account deficit is 3.7 per cent of GDP for the financial year ended March 2012. This is despite such a high inflow of funds from NRIs. Current account deficit occurs when a country imports more goods and services than exports.

India imported gold and silver worth $60 billion in 2011/12, pushing up the trade deficit to near $185 billion.

Experts say that India needs to boost foreign investment to finance this deficit.

The high current account deficit is seen negatively by international investors. Standard & Poor’s, a global credit rating agency, downgraded India’s economic outlook to negative from stable. The International Monetary Fund on Friday cut India’s growth forecast to 6.9 per cent from 7 per cent 2012-13.

Source : profit.ndtv.com