The annual contribution by way of remittances by the non-resident Indians (NRIs) is about three per cent of GDP now. These are in addition to export of services, especially software which are of the same order, said Reserve Bank of India governor YV Reddy.
According Reddy who was speaking at at the World Leaders? Forum, Columbia University, New York, on Tuesday following sustained higher growth in India, a reverse process of brain flow has also commenced by way of foreign nationals and expatriate Indians expressing their interest for pursuing more fruitful ventures in India.
Indian corporates, based on account of their own commercial judgements, take investment positions and merge or acquire other undertakings in other countries. Public policy neither provides incentives nor disincentives for such market based initiatives by the Indian corporates, said Reddy
India?s external trade in goods and services as a percentage of GDP is more than that of the US (at 48% and 29 %, respectively), and is indicative of the extent of trade integration with the global economy.
?India is fully convertible on the current account, but we do have requirements of repatriation and surrender of export earnings to ensure that capital account transactions do not take place under the guise of current account,? he added.
Capital account is almost fully open to non-residents, well regulated financial institutions, and corporates. In regard to residents, capital account is almost fully open to resident corporates and partially open to individuals and financial intermediaries. In brief, we partner with the global economy fully on the trade and the current account while there is progressive liberalisation of the capital account, consistent with the progress in reforms in the real, fiscal, and financial sectors.
The country?s main challenges are eradication of poverty, efficient use of water, reviving growth in agriculture, improving physical and social infrastructure, upgrading human skills and, above all, fiscal empowerment coupled with the increasing real sector flexibility.
?Our strengths mainly are the demographic dividend, the stability of the political system, and the emergence of a growing entrepreneurial class, which has a penchant for innovation. In overcoming the challenges and taking advantage of the strengths, our engagement with global economies, in particular with the US, is bound to play a very critical role?.
