NRI Real Estate and Property Investment in India
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India among Top recipients of Remittance Inflow
Wednesday, September 3, 2008

India has consistently been among the top recipients in terms of remittances over the last 14 years. Total remittance flows into India increased to US$36 billion in 2007 from US$13 billion in 1997. In 2007, in terms of absolute amount of remittances inflows, India is ranked number one in the world. As a percentage of GDP, India received 3.3% of remittances in 2007 compared with an average of 1.8% for developing countries. NRI remittances have shot up to US$40.8 billion (3.5% of GDP) as of F2008 (12-months ended March 2008), compared to US$12.3 billion (2.7% of GDP) as of F2000. NRI remittances were about 2.6 times net foreign direct investment and 1.4 times portfolio investment in F2008. One of the major reasons for the increase is the rising population of NRIs. The total NRI population could be easily larger than 20 million. Even if assume a conservative income stream of US$10,000 per capita, the total annual income of this population should be above US$200 billion.
The average utilisation pattern of remittances sent to India includes maintenance of families of migrants in India (54% share in total), bank deposits (20%), investment in land/property (10%), investment in equity shares (3%) and other uses (13%).Remittances have been in narrow range of 2.5-3.6% of GDP over the last 10 years. Over the years, easier norms for international labor mobility have been one of the key factors supporting the rising NRI population. In addition, an improving domestic macro-environment has attracted NRI finance in the form of remittances for application into investments. The government's measures implementing gradual capital account convertibility and the relaxation of norms and procedures for speedier transfer of funds into the country have also helped to attract more inflows.

 

 

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