New Delhi rolls out the red carpet to its diaspora once every year. This carpet is now getting frayed at the edges. The government trots out a clutch of ministers to make the right noises to a motley audience of non-resident Indians shivering in Delhi’s freezing January. The accumulated prodigals, on their part, are principally interested in getting a Person of Indian Origin card that allows them an easier run of the place. The Pravasi Bharatiya Diwas jamboree is as exciting to the mainstream media as a Gandhi Jayanti and the tokenism on display is far removed from the fanfare that accompanied its launch. A cynical acceptance that India’s labour exports will keep sending money home come what may has replaced the desperation of a time when every incoming dollar mattered. Why chase the NRI’s piggybank when World Inc comes knocking?
It’s not love alone for the old homestead that the Indian diaspora will send across upwards of $55 billion in 2010-11, one of the largest flows of remittances on the planet. India offers among the best returns on investment to its emigrant workforce. A decade of the economy growing at above 8% has spawned fabulous profits for India Inc, and the fastest growing tribe of dollar billionaires; there’s no reason why this fact should escape the attention of the maid in Muscat or the doctor in Devon. So long as they have something to save, it makes sense for them to remit it back home. The flight of capital following the 2008 crash neatly sidestepped remittances, which continued to grow from $43.5 billion in 2007-08, just before global credit markets seized up, to $46.9 billion in 2008-09 and to $53.9 billion in 2009-10.
Yet this steadfast income stream has lost some of its sheen in India’s economic policy establishment. Not because it is not growing, but because other flows are growing much faster. Between 2003-04 and 2007-08, remittances by India’s exported labour pool doubled from $21.6 billion to $41.7 billion. Over the same period, foreign direct investment (FDI) in the country jumped six-and-a-half times from $2.3 billion a year to $15.4 billion while portfolio investment grew two-and-a-half times from $11.3 billion to $29.5 billion. In April-October 2010-11, FDI had already crossed $14.9 billion and portfolio investments $52.6 billion. What, however, sets remittances apart from investments is — as the last two years have amply demonstrated — that it does not change direction even under extreme provocation. This should qualify it for more nurturing by New Delhi.