That money transfer from a relative abroad is adding up to mega bucks?and it is growing like never before, thanks to the growing ranks and changing composition of Indian emigrants. Inward remittances, which totalled around $11 billion in 2001-02, touched $27.2 billion in 2006-07 and are expected to cross $30 billion in 2008-09. Today, India accounts for one in every ten dollars remitted home by immigrants worldwide.
Harsh Lambah, regional director of South Asia with MoneyGram India, says that the Indian remittance business is growing by 15% a year. ICICI Bank, which has a quarter of the Indian remittance market, expects business to continue growing at 12% a year. ?We expect this growth to continue over the next three to four years,? said a senior executive with the bank.
Most recipients are relatives or partners of those who have migrated overseas. But Kerala, which has traditionally received the highest amount of inward foreign currency remittances so far, may soon lose its place to states like Gujarat, Punjab, Tamil Nadu, Andhra Pradesh and Maharashtra.
That?s largely due to changes in profile of migrants, who now include traders and professionals like techies, bankers, fund managers, doctors and lawyers who have emigrated to the US, Europe, Africa, Hong Kong and Singapore. According to one industry source, an estimated $12 billion came from the US alone in 2006-07.
?North America is a major contributor to remittances, overtaking Gulf countries. Today, 44% of the remittances into the country is from North America, followed by the Gulf at 24% and European countries, which contribute 13%,? said Lambah, whose company has increased its marketshare from 1.6% in 2002 to 4% in 2006.
Remittances from countries like the UK, Australia, New Zealand and Canada are also rapidly catching up because of the demand for skilled Indian labour, say those in the business of money transfers.
Western Union Financial Services, one of the largest players in the remittance business with a worldwide marketshare of 17%, also expects the boom to continue.
?India is one of the fastest growing remittance markets in the world largely due to the number of Indians migrating to developed countries. The Indian remittance market has been growing at 20% annually since 2001,? said Anil Kapur, managing director, South Asia, with Western Union.
According to one senior ICICI Bank executive, NRIs are also investing heavily in real estate and equity markets through mutual funds, besides deposits that are also gaining popularity due to higher domestic rates. Currently, the remittance business accounts for 3% of India?s GDP. While the worldwide remittance business, which is growing at 8% a year, stood at $269 billion in 2006-07.