http://www.voipphilipines.com/images/img_remittance.jpgNRI remittances may mean valuable foreign exchange for India, but for many households, it is a means of making two ends meet. Whether it’s a semi-skilled laborer in the Gulf or a software professional in Silicon Valley, every other NRI sends a part of his or her earning back home.

India leads in inward remittances

According to the World Bank’s data, India was leading China and Mexico at number one amongst countries receiving maximum remittances in 2006. In the same year, the remittances were more than three times India’s foreign direct investment. In a state-wise analysis of immigrants remitting money, Kerala and Tamil Nadu were the forerunners with almost 50% of the total immigrants belonging to these states, closely followed by Karnataka, Gujarat, Andhra Pradesh, Maharashtra and Punjab. As per the Reserve Bank of India’s Balance of Payment information, NRI remittances touched $8.6 billion in the first quarter of 2007-08 as compared to $5.9 billion for the same period in 2006-07. So should India produce more NRIs?

What are remittances used for?

According to a survey conducted by RBI, almost 13% of NRI remittances in 2006 were invested in equity and real estate. With the stock market swinging upward and a real estate boom across India, this statistic comes as no surprise. With private sector banks offering numerous NRI-friendly products, 20% of the remittances found their way into bank deposits. The major chunk of the remittances, a significant 54%, were used up for meeting family related expenses. Are these remittances veiling sacrifices by NRI families?

Families in India – usually comprising aged parents, dependent siblings, spouses and children — use the remittances to cover monthly expenses. These remittances provide immense financial security to the dependents. Regular remittances mean better education for children or siblings and good health care for aged parents. NRIs also remit funds to help ease the burden of major expenses related to marriage, higher education, or investment in property. In some instances, NRIs’ remittances also serve as start-up capital for acquaintances’ small but feasible enterprises. Wanting family members to live a better life, NRIs often fund everything ranging from expensive home appliances and automobiles to house repairs and surgeries.

Is it a feeling of indebtedness or genuine concern that makes each NRI remit part of their earnings back home? Though some families sustain themselves and others flourish because of these remittances, does money fully make up for the NRIs’ absence?