India's migrants' remittances (Asian Century Institute, 2 marzo 2013)
India has been the top recipient of remittances in the world for 15 of the past 23 years and the past five years in a row, reports the BBC's Soutik Biswas.
In fact, this is not at all surprising. India has the two types of migrants that the world wants, high skilled and low skilled. And with massive poverty at home and opportunities abroad, there are plenty of reasons to go abroad.
The global financial crisis only resulted in a small and brief decline in remittance flows to India in 2009. While the crisis seems to have affected new migration flows from India, most of the stock of existing migrant workers stayed put. They cut consumption, saved on rent and continued to send money home. A large number of Indians working in the construction sector in Gulf countries moved to retail trade and building maintenance after the downturn there.
But how should we interpret India's impressive record in migrants' remittances?
It is clear that they help many poor Indian people survive. But there is very little evidence that they have improved India's investment and long-term growth performance beyond investment in real estate. There is also speculation that migrants' remittances might be associated with tax evasion.
In this regard, it is interesting to note that the highest recipients of migrant's remittances are also, according to Global Financial Integrity, the world's leading nations for illicit financial flows over the period 2000-2010: China: US$2.74 trillion, Mexico: US$476 billion, Malaysia: US$285 billon, Saudi Arabia: US$210 billion, Russia: US$152 billion, Philippines: US$138 billion, Nigeria: US$129 billion, India: US$123 billion, Indonesia: US$109 billion. and United Arab Emirates: US$107 billion.
There is likely to be some "round-tripping" of migrants remittances back home and off to tax havens like Mauritius. Moreover, the ripping-off of the nation's resources is one reason why public investment in poverty reduction is insufficient in these countries, making them dependent on the efforts of overseas migrant workers.
Organizations like the World Bank and the OECD need to do a lot more work to better understand and interpret the phenomenon of migrants' remittances.
REFERENCES:- BBC, Why India remains top of remittances league, by Soutik Biswas
- Global Financial Integrity