Study: Domestic remittances double of foreign | delhi | Hindustan Times
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Study: Domestic remittances double of foreign

delhi Updated: Jul 28, 2011 02:06 IST
Chetan Chauhan
Chetan Chauhan
Hindustan Times
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India’s domestic remittance is almost double than the foreign cash flow even though Kerala, is the second largest remittance receiver in the world after Tajikistan in terms of impact on Gross Domestic Production (GDP).

The Indian Institute of Management, Bangalore, in a new study released on Wednesday said domestic remittances generate Rs 32,500 crore every year as compared to Rs 17,000 crore from Indians working abroad.

But, ironically, the remittance does not help in financial inclusion and in fact leads to increase in poor rich divide. "Around 50 % of the remittances went to top consumption quintiles suggesting that remittances can be leading to inequality in the society," said the IIM study done by Chinmay Tumbe, released at a seminar of National Sample Survey Office (NSSO).

India is world’s largest generator of foreign and second largest, after China, of domestic remittances. But, its impact on overall India economy is very less as it is just four percent of the national GDP as compared to 11 % for Bangladesh and Philippines.

But, when impact of foreign remittances on state wise GDP is take, an interesting picture comes into fore. The IIM study said that this flow of foreign money into India contribute about 43 % of the GDP of Kerala, which is second to Tajikistan, where remittances contribution is 50% of the GDP.

Other Indian states, in the top 15 global list were Goa and Punjab. Kerala receives 47.8 % of the total Indian remittances and Punjab 17.2 %.

“Indeed, Kerala and Punjab are significantly more populous than most of the countries in the list and therefore should be counted as major international remittance dependent regions,” said the IIM study done by Chinmay Tumbe, released at a seminar of National Sample Survey Office (NSSO).

The IIM analysis based on NSSO sample survey of 2007-08 also highlight that unlike foreign remittances the domestic market is run by informal remitters, also known as tappawallas in Orissa.

"A recent survey in Mumbai and Delhi shows time delivery as the most important attribute that migrants look for in a remittance product and the informal sector provides it," the study said. Only half of the money remitted back home is through formal sector and post office.