• Challenges to sending money back home

Challenges to sending money back home

This paper explores the relative importance of remittances in India’s economy and identifies factors responsible for this exponential gain, focusing on the effects of government and commercial bank policies, the profile of recent emigrants, and the strength of the Indian economy.
 
The paper finds that factors responsible for the growth in reported remittances include:

• the diminishing role of unofficial channels
• shifting emigration patterns to high-skilled technology jobs
• greater competition in the money transfer market and
• the strength of the Indian economy

However, while remittances exceed total government expenditures in health and education and have a noticeable impact on per capita income in regions of the country with high rates of migration, the Indian government has not instituted any policies specifically aimed at increasing the remittance flow.

The author points out that policies have instead focused on encouraging deposits into NRI (Non- Resident Indian) bank accounts in India. Thus, while the NRI deposit schemes have received the attention of policymakers, remittances are the real success story of the last decade.

Government policies have also not addressed potential links between remittances and socioeconomic development. Research and analysis on policies to leverage remittances for development in India are sorely lacking.

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