The past decade has witnessed the Non-Resident Indian making a significant impact on both the country of residence as well as on India's economy. We explore the United Kingdom as a case in point to analyze the NRI diaspora's impact on her.
'India in the UK: The Diaspora Effect' report, released recently compiled a list of 654 Indian diaspora-owned companies out of an estimated total of over 65000 diaspora-connected companies in the UK. The selected companies meet the criteria turnover of at least 100,000 GBP.
Shining light on Indian diaspora’s contribution to the UK economy, here are the key takeaways:
The report, produced by Grant Thornton UK jointly with the Indian High Commission in London and the Federation of Indian Chambers of Commerce and Industry (FICCI UK), identified top 5 employers in the UK
The report also finds sector-wide domination by diaspora-owned firms.
As per the report, the total contribution to the UK economy including India-owned companies is a combined turnover of around 85 billion GBP, with over 1.7 billion pounds paid in taxes and close to 280,000 employees.
Contribution of NRIs in the UK to the Indian Economy
India is one of the top remittance-receiving countries from the UK. As per the World Bank report on bilateral remittance, Indian received a total of $3941 Million, second after Nigeria ($4119 Million). Out of a total of $26,801 Million remittances from the UK to the world, India accounted for around 15%.
For many Indians working and studying in the UK, sending money home to their loved ones is common. Money sent from the UK to India could be for several reasons but the prominent one is: family maintenance. Millions of Indian households depend on these remittances for day to day living expenses.
Remittances have had a multiplier effect on the Indian economy. It has also played a crucial role in shaping the economies of several Indian states like Kerala, Goa, Punjab, and Gujarat positively.
Remittance on GDP
During the global financial crisis of 2008, remittances accounted for over 4% of the total GDP of the Indian economy. Remittance as a percentage of GDP in India has been nearly 3% consistently and 2.9% in the year 2018.
Remittances come in the form of foreign exchange and addition to India’s foreign exchange reserves. The remittance received by the home country represents the largest source of external finance for many developing countries like India ahead of Foreign Direct Investment (FDI). Foreign exchange reserves in India touched an all-time high of USD 466.693 billion in the month of January 2020. In the light of declining export earnings and high important expenses, Remittances have been the saving grace in balancing the balance of payments by reducing current account deficits.
The inward remittances sent by the Indian diaspora around the world pivotal in financing the trade deficit of up to 43% in the year 2018 as per the Reserve Bank of India.
Where does the remittance money sent by the NRIs go?
Remittances directly increase domestic consumption by putting the money into the hands of the people the money is intended to reach in the first place. Several academic research have concluded that remittance has a direct and positive impact on key sectors like healthcare, education, and entrepreneurship. NRI sends money to India for different reasons, from family financial support to investments.
Many NRIs also transfer money to their own overseas accounts in India, bank deposits accounting for 20% of the total remittance amount. It could be for retirement purposes or investment.
Fact-Check: Did you know that it is illegal to own a domestic Indian account if you are an NRI? This is what you should know when sending money home - Sending money to an NRE account
If you are an NRI planning to return to India soon, know how to manage your money and enjoy your homecoming. If it is investment options you are looking for in India, we have everything on Where NRI's Can Invest.
Contribution of CompareRemit to the Indian diaspora around the world
Remittance depends on a host of factors including the macroeconomic and political conditions in the host countries, the total population of the migrant community, oil price dynamics, availability and competition of the remittance service providers. It has been observed that the cost of sending money is the key factor while deciding on sending money from the UK to India. Some even opt for informal channels that are risky and illegal. The cost of sending money depends on multiple factors:
At CompareRemit, we are committed to bringing transparency into the remittance industry by allowing users to compare the top remittance services providers side-by-side in real-time for free on a single platform. Typically, our users around the world save around 5% on every transfer.
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