Non-resident Indian (NRI) deposits could take a hit in the second half of the current fiscal as a result of tumbling crude oil prices globally, especially in oil-rich West Asia, where most of the migrant Indians live and remit money from.
NRI deposits stood at $10.82 billion during the April-November 2015 period, up from $8.17 billion in the corresponding period in the previous year, according to a Reserve Bank of India update released on 11 January, 2016.
The worrying part is the deposits have been growing at a slow pace in the past few months â€” from $10.05 billion during the April-September 2015 period, translating into an increase of just 7.66%.
During the corresponding period last fiscal (2014-15), the remittances grew from $6.47 billion (April to September 2014) to $8.17 billion (April to November 2014), a sharp increase of 26.23%.
"Bulk of the Indians in the Middle East are spread in Saudi Arabia, the UAE, Bahrain and Qatar, while those close to the conflict region have returned to relatively peaceful places. With severe economic pressure in all these oil-producing nations, expatriates mostly in low-income and labour-oriented sectors like construction, hotels, restaurants, etc, would feel the heat in terms of wage cut, layoffs and the terms of employment deteriorating," industry body Associated Chambers of Commerce & Industry of India (Assocham) said in a press statement on 10 January, 2016.
There are about 2.5 million NRIs in the UAE, while the overall NRI population in the six GCC countries (Saudi Arabia, the UAE, Kuwait, Oman, Qatar and Bahrain) is about 7 million.
India received the maximum remittances globally in 2014, with NRIs sending about $70 billion, according to an April 2015 World Bank report.
The top five remittance-recipient countries, in terms of value of remittances, were India, China, the Philippines, Mexico and Nigeria.
The World Bank had warned in its report that growth in global remittances, including those to developing countries, would slow sharply this year due to weak economic growth in Europe, deterioration of the Russian economy and the depreciation of the euro and rouble.
But it had not factored in the sharp fall in global crude oil prices, to almost $30 a barrel these days. While countries like India, which are net importers of oil, have benefited in terms of lesser dollar outflows, the flip side is in the form of lesser remittances from migrant workers from oil-producing and exporting countries.