Study: Domestic remittances double of foreign

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).

Updated on: Jul 28, 2011, 02:06:01 IST

Hindustan Times | By Chetan Chauhan, New Delhi

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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.

ABOUT THE AUTHOR
Chetan Chauhan
Chetan Chauhan is the National Affairs Editor looking into all aspects of news and features from across India. A Chevening scholar with over three decades of experience in reporting and news management, Chetan has extensively covered all important aspects of the social sector, political economy, environment and climate change nationally and internationally. He did a journalism course at the Reuters Institute of Journalism in Oxford and Digital Media training at Nanyang Technological University in Singapore. He started as a reporter with The Statesman in 1996 and joined the Hindustan Times in 2000 in the metro bureau covering environment, crime and Delhi politics. He covered hot local news, from the Jessica Lal murder case to the rebellion of Delhi Congress MLAs against then Chief Minister Sheila Dikshit, to the replacement of toxic vehicle fuel with cleaner compressed natural gas (CNG) in the national capital. Some of his stories on air pollution became part of the Supreme Court’s landmark MC Mehta versus Government of India case in the National Capital Region (NCR), forcing the government to take corrective measures. As part of the national political bureau since 2004, he covered important central sectors such as environment, education, social justice, labour, rural development, water resources, renewable energy, agriculture, broadcasting and the Planning Commission for more than a decade producing several exclusive and investigative breaking stories. His specialisation is the environment, having covered at least a dozen United Nations global conferences on climate change, biodiversity and wildlife including climate summits in Paris, Copenhagen and Bali. He also covered India’s two five-year plans ---11th and 12th and reported on drafting and execution of right based laws such as Right to Education, Right to Information and rural job guarantee law, MG-NREGA, now being introduced in new format as VG-RAM-G Act. He has in-depth knowledge of social sector issues. He was one of the first to report on tigers vanishing from Sariska and Panna wildlife reserves in 2004 and 2008, respectively, leading to the setting up of the National Tiger Conservation Authority (NTCA) and the introduction of stringent penal provisions for poaching. He has written extensively on the rising human-animal conflict in India and the degradation of India’s biodiversity hotspots because of mining and other activities. Since 2004, Chetan has covered Parliament comprehensively and participated in training on the nuanced coverage of Parliament proceedings. He has travelled extensively across India to cover national and provincial elections since 1998, especially in the Hindi heartland states, considered India’s road to power. He writes a regular column for Hindustan Times, Ecostani, on important national politics, economy, Himalayan ecology and environmental issues. His other responsibilities include providing inputs for edits and edit page articles for the publication, apart from managing news flow from across India.Read More

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