Nov. 22 – Remittances into India are set to reach US$70 billion this year, outstripping China’s overseas remittances of some US$66 billion. These figures cover inbound monies sent by their respective diasporas back to their home country. The general trend across developing countries is seeing remittance inflows on the rise, with levels this year set to reach US$406 billion and projections indicating growth of 8 percent in 2013. This is further set to increase incrementally over the next few years and reach a total of US$534 billion by 2015.
Indians abroad, especially in the United States and Europe, have tended to fare rather better than their Chinese counterparts, and are also aided by the fact that greater transparency, a more highly-developed sense of entrepreneurialism, and freer movement of the rupee when compared to RMB restrictions all make the ability for NRI’s to out-compete their Chinese equivalents.
There is also the sense of greater returns on investment in India, where the country is experiencing a construction and infrastructure development boom similar to that seen in China some 15 years ago. By comparison, it is extremely difficult to disperse, reinvest and ultimately repatriate invested money out of China, where restrictions on currency movements have stymied the ability for Chinese nationals to invest properly. The result in China has been over-inflated property prices, and massive investments into luxury goods – simply due to the fact that there is nowhere else for the money to go. A lack of adequate social security networks in these countries also enhances the need for overseas nationals to send money back home, as has also long been the case with domestic workers returning money to their families in the Philippines, Pakistan and Bangladesh.
Nonetheless, some of the Indian money is also returning as it is easier to make family investments into infrastructure projects in India than in China. One issue remaining in this phenomenon concerns wireless capabilities and the explosion of mobile phone use among many nations’ diasporas. Mobile remittances fall into a regulatory gap between financial and telecom regulations, and with moves to align banking and mobile communication network providers more closely together, remittances in the future may play a significant part in many emerging Asian and African economies.