For all of you who are smarting due to the meagre salary raise this year, Kapil Gupta’s case will add insult to injury. The Singapore-based sales professional has received two salary hikes this year, the second one much more substantial than the first.
The reason why he is smiling all the way to the bank is because the rupee back home in India is falling.
“Due to the low rate of inflation in Singapore, salary hikes here are less than 5% on an average. However, due to the plummeting rupee, the savings I remit to India have seen at least 30% increase. I am treating it as a stupendous hike this year,” Gupta said.
Indians abroad send more money home than any other nationality in the world. According to the World Bank, remittances into India totaled $70 billion in 2012 (Rs 374,080 crore at an average value of Rs. 53.44 per dollar for the year), making it the biggest recipient of such flows.
NRIs are borrowing from friends and colleagues and taking loans to make the most of rupee slide.
“Till a few months back, my remittance of 1000 Bahraini Dinar translated into Rs. 1,30,000 savings in India. Now, the same sum gets me Rs. 1,60,000. I have taken a loan this month and will be investing it in India,” said Elma B, a media professional working in the Arab country.
Interest rates in the Middle-Eastern countries are much lower than the 9% rate offered in India which makes cost of borrowing cheaper.
Others, meanwhile, have used this opportunity to close their loans in India.
"Thanks to the increased savings in the last few months and a loan I have taken here, I have closed a home loan in India. If the rupee slide continues as is being predicted, I may invest in another property in my hometown Kanpur," said Anup Trivedi who runs a dry-cleaning shop in UAE.
And if NRIs are not saving, they are splurging the "extra income".
"We have a fixed sum that we send home every month. Due to the rupee crash, what we saved over and above that paid for our trip to Italy during the recent Eid holidays," said finance manager Sumit Sethi, who lives in Qatar.