The Dubai debt debacle may not have an immediate impact on the inflow of remittances — money which is sent home by immigrant workers abroad — into India. Remittances from United Arab Emirates into the country is about $2 billion or Rs 9,300 crore — a drop in the ocean compared to the $52 billion that Indian expatriates from the world over send back home.
Dubai is home to about one million Indians.
MD Mallya, chairman and managing director, Bank of Baroda said there is unlikely to be an immediate impact on remittances. “The current situation is just a fallout of what has been happening for the last few months, so in a way, it is a continuation of the economic process and therefore there should not be any significant impact on remittances,” he told Hindustan Times.
The bank has an exposure of about $2.1 billion (Rs 9,800 crore) in the UAE.
States that get the maximum remittances include Kerala, Maharashtra, Gujarat and Punjab.
Industry body FICCI said it is too early to assess the depth of the crisis and its impact on India. Amit Mitra, secretary general, FICCI, said, “In view of the fact that the crisis appears to involve some companies owned by the Dubai government and that Abu Dhabhi is expected to intervene in this matter, it is too pre-emptive to set an alarmist perspective.”
UAE is India’s largest export market, and has a large Indian population. Indian products worth $24 billion were bought by UAE in 2008-09.
The finance ministry is bound to examine the larger impact of the crisis on the Indian economy. Finance minister Pranab Mukherjee has earlier said the recovery of the Indian economy would depend largely on the global recovery and how export markets perform, which makes Dubai’s financial health crucial for India.