Gulf-based non-resident Indians (NRIs) continue to remit record sums of money back home despite the rupee holding up its own against the US dollar and the Gulf countries’ dollar-pegged currencies.
According to the Word Bank’s latest Migration Development Brief, India remains the largest recipient country in the world, with an estimated remittance amount of $75 billion in 2013, up from almost $70 billion that NRIs remitted home last year.
“In addition to large numbers of unskilled migrants working mainly in the GCC, India also has a large skilled diaspora sending money home, and their prospects in major sending countries (like the US, where the H1B visa quota was rapidly filled this year) are improving,” the World Bank report highlights.
According to the report, NRIs would remit up to $85 billion a year by 2015. This surge in remittances is occurring despite the Indian rupee holding firm below resistance levels of Rs15 vs. Dh1 (Rs55 vs. $1).
The Indian rupee has stubbornly stayed below the Rs15-mark against the UAE dirham this year, going above that magical number just for one day in 2013 on Tuesday, January 8.
In fact, unlike 2012, when the Indian rupee fluctuated widely between Rs13.23 (February 4, 2012) and Rs15.55 (June 23, 2012) against the UAE dirham, this year, the rupee has been much more stable. In 2013 so far, the Indian rupee has seen a high of Rs14.46 (February 7, 2013) and a low of Rs15.03 (January 8, 2013).
“India, China, the Philippines and Mexico remain the largest recipients of migrant remittances, though smaller developing countries, such as Tajikistan, Liberia, Kyrgyz Republic, Lesotho and Moldova receive the most as a share of GDP,” the latest World bank report notes.
And although currencies remain volatile, the World Bank maintains that the cost of remitting funds has remained stable over the past year.
“Remittance costs were stable over the last year, while the weighted average fell,” it said but noted that the cosy of funding must be brought down further.
“Progress towards reducing the cost of sending remittances appears to have paused over the past year, and more needs to be done on this key agenda. Remittance costs are a key determinant of resource flows to developing countries, and lowering these costs is an important policy objective, as affirmed by the G20 in their 2008 commitment to reducing the global average remittance cost by 5 percentage points in 5 years,” the report said.
“In the first quarter of 2013, the global average total cost for sending remittances was 9.1 per cent, as measured by the World Bank’s Remittance Prices Worldwide (RPW) database. The global average decreased steadily between 2008 and 2010, reaching a low of 8.7 per cent in the first quarter of 2010. Since then, however, remittance prices have risen again and have been broadly unchanged at around the 9 per cent level over the past 12 months.”
However, as Emirates 24|7 reported earlier this year, the UAE is the world’s most economical country from which to remit money. Read: It’s cheapest in the world to remit money from the UAE: World Bank.
It takes less than 3 per cent of the total transaction cost to remit $200 (Dh735) from the UAE to Pakistan (2.46 per cent), and a little more than that to Sri Lanka (3.18 per cent) and the Philippines (3.23 per cent), which makes the world’s cheapest country to remit money from.
“The most expensive sending markets of those surveyed are Tanzania, South Africa, and Ghana. The cheapest sending markets are those in the Gulf – UAE, followed by Saudi Arabia, and Spain,” the World Bank report said.
The world’s most economical country for remitting money to India is Singapore (4.16 per cent), followed by the US (4.35 per cent).
With an estimated expat population of up to 80 per cent in the country, remittances from the UAE form a big chunk of an expats’ monthly financial dealing.