At a time when the country is reeling under the pressure of a weak rupee, non-resident Keralites are laughing their way to the banks with remittance inflows crossing the year-end target of Rs. 75,000 crore in just six months of 2013.
Kerala has set a new record in remittances this year by already reporting a whopping 36% year-on-year spike in inflows as of June-end at Rs. 75,883 crore.
This is a net incremental addition of Rs. 20,220 crore over Rs. 55,663 crore in June 2012, according to data provided by the State Level Bankers Committee (SLBC), which is 32.8% of the total bank deposit in the state.
The over 2.5 million Keralites living outside the country contribute over 35% of the GDP of Kerala, where companies hawking premium products and luxury cars are reporting brisk sales during the ongoing Onam season, the largest festival of the state, while elsewhere in the country, barring Punjab, which is another NRI bastion, they are down in dumps.
In the last fiscal at Rs. 60,000 crore, the remittances contributed to a third of the state GDP. If the inflows continue, this fiscal it could well be about 40% of the state's GDP.
The rupee lost nearly a quarter of its value till date this fiscal against the US dollar.
In FY'11, total remittances were Rs. 50,000 crore.
The total bank deposits in the state as of end June this year were Rs. 2,39,214 crore, an incremental addition of Rs. 29,724 crore, out of which Rs. 20,220 crore are from state's NRI deposits. Such deposits constituted 31.8% of the total bank deposits in the state.
The main reason for this massive spike in remittances is the falling rupee, which also fell against all the Gulf currencies.
Most of the Keralites staying abroad are in the Gulf countries – nearly 40% of the state's NRI are in the UAE and 25% in Saudi Arabia. As of May 2012, there were 21.9 million Indians living outside the country, out of which NRIs constituted 10.04 million, PIOs (persons of Indian origin) 11.87 million.
There were media reports that NRIs were borrowing money from credit cards and bank loans and pumping them back to the country to make arbitrage income, as interest rates are low in those countries coupled with the steep plunge in the rupee.
According to a report by the Migration Unit of the Centre for Development Studies, Thiruvanathapuram, remittances today account for 1.6 times the revenue receipt of the Kerala government, 6.2 times what the state gets from the Centre as revenue transfer, and is more than twice the government's annual expenditure.