This post was originally published on 15 October 2017 and the content may be outdated.
Net deposits by Non-Resident Indians (NRIs) dropped sharply by 98 per cent in April-August this fiscal due to fluctuation in oil prices, industry body ASSOCHAM said.
Net bank deposits — the difference between total deposits and not withdrawals — came in at USD 434 million in April-August this year, compared to a net deposit of USD 3.8 billion in the same period last year.
Gulf crisis hits remittances
“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,” the statement said.
“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.”
“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 per cent in the first five months of the current financial year over the same period of 2016-17,” it added.
50% decline in NRE account deposits
The Non-Resident External Rupee Account has witnessed over 50 percent decline in the deposits. NRIs put money into different accounts like Foreign Currency Non-Resident (Banks), Non-Resident External Rupee Account and Non-Resident (Ordinary) accounts.
The NRI deposits, have traditionally been a very stabilising factor on India’s overall balance of payment.
However, this time, it is the inflow of funds into the Indian stock markets and debt from overseas financial players that is helping the country keep up its foreign exchange reserves.
“While easing of oil prices by more than half has helped the Indian macroeconomic by slashing of the import bill, our workforce overseas has suffered the collateral damage,” ASSOCHAM Secretary General Mr D S Rawat said,