With the fall in crude oil prices and the fading away of the glorious years of Gulf countries, there has been significant drop of about 98 per cent in net deposits by Non-Resident Indians (NRIs) in April-August this fiscal, says a report of industrial body Associated Chambers of Commerce and Industry of India (ASSOCHAM).
It said, “The NRI deposit flows have nosedived to USD 434 million in April-August from USD 3.84 billion in the same period of previous fiscal.”
Consequently, the aggregate outstandings of NRI deposits have dropped to USD 118.46 billion as on August end, 2017 (the latest data point) from USD 130.16 billion a year ago.
The industrial body added, “With fading away of the glorious years for the oil-rich countries in the Gulf following crude prices battling to inch up, the NRIs net deposits inflows have seen a huge drop of 98 percent in the first five months of current financial year over the same period of 2016-17.”
Notably, NRIs put money in different accounts like Foreign Currency Non-Resident (Banks) FCNR (B), Non-Resident External Rupee Account( NR(E)RA) and Non-Resident (Ordinary) accounts , the largest being the NR(E)RA.
Assocham added, “The NR(E)RA has witnessed more than 50 per cent decline in the deposits to USD 1.53 billion during April-August this fiscal against USD 3.3 billion in the same period of 2016-17. Under the other heads, there has been a net outflow, rather than inflows.
Listing various factors for nosediving of the NRI flows, the ASSOCHAM paper said, “While there are various factors responsible for the NRI flows, including the interest rates, but the most plausible at this point of time seems to be economic problems in the Gulf countries, the largest source of NRI remittances, particularly for the low-income expatriates. Remittances have been affected for states like Kerala, Uttar Pradesh and Bihar, in particularly which have a large number of its people making living in the Gulf nations.”
Contrary to popular perception, there were more people going to the Gulf nations from UP and Bihar in the past few years than Kerala.
Commenting on the development, the DS Rawat, ASSOCHAM Secretary General, said, “While easing of oil prices by more than half has helped the Indian macroeconomic by slashing of the import bill, our work force overseas has suffered the collateral damage.”