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UAE top source of inward remittances in 2016-17: RBI
Why in the news ?
- According to the Reserve Bank of India’s survey of inward remittances for 201617, the United Arab Emirates (UAE) has emerged as the top source of inward remittances.
- Also, among the Indian states, Kerala has received the maximum funds sent from abroad.
Details
- UAE’s share in total remittances was 26.9%, followed by the United States (22.9%), Saudi Arabia (11.6%), Qatar (6.5%) and Kuwait (5.5%).
- Eight countries — UAE, the U.S., Saudi Arabia, Qatar, Kuwait, Oman, the United Kingdom and Malaysia contributes 82% of the total remittances received by India.
- Among destinations, Kerala has the highest share with 19%, followed by Maharashtra (16.7%), Karnataka (15%), Tamil Nadu (8%) and Delhi (5.9%).
- Only four states-Kerala, Maharashtra, Karnataka and Tamil Nadu together received 58.7% of total remittances.
- As per the survey, more than half of remittances received by Indian residents were used for family maintenance, i.e., consumption (59.2%), followed by deposits in banks (20%) and investments in landed property and shares (8.3%).
- The rupee drawing arrangement (RDA) is the most popular channel of remittances which accounts for 75.2% of remittances, followed by SWIFT (19.5%), direct transfers (3.4%) and cheques and drafts (1.9%).
- Private banks got the lions share in total remittances with 74.1%, while public sector banks share was 17.3% and the remaining with foreign banks.
Remittances and India
- Remittances essentially represent household income from foreign economies arising mainly from the temporary or permanent movement of workers to source economies.
- Remittances may have a significant impact on poverty reduction and can finance economic growth in receiving economies.
- Remittances are mainly derived from two items in the balance of payments framework:
- Income earned by workers in economies where they are not resident (or from non-resident employers) and
- Transfers from residents of one economy to residents of another.
- India is the largest remittances receiving country in the world ($ 69 billion in 2017 ) followed by China ($ 64 billion) and the Philippines ($ 33 billion).
- Indian citizens working in other countries send money back to the relatives in India.
- This remittances is the second largest item in the country’s invisible account.
Source
The Hindu, Indian Economy.