Steep fall in oil prices takes a toll on remittances
Mumbai: India’s most stable source of dollar inflows, remittances from expatriates or expats, is showing signs of slowing down, reflecting the flip side of the sharp fall in global crude oil prices, which otherwise is a big positive for the country.
A large part of these remittances flow from West Asian countries that are bearing the brunt of the decline in oil prices. If prices remain low for an extended period, as is widely expected, the fall in remittances could prove to be more than a one-off, say those involved in the business of private money transfers.
Indians remitted $15.8 billion during the third quarter of fiscal 2016, the lowest in 18 quarters, data from the Reserve Bank of India (RBI) showed. Remittances in the preceding quarter were at $16.99 billion and that in the corresponding quarter of fiscal 2015 were at $17.4 billion.
In the absence of a meaningful rebound in oil prices, these could taper off further.
“Overall, there has been a fall in remittances in the third quarter. This is because you have incomes under strain because of oil prices falling. In the coming quarters, we could face more challenges,” said Ashutosh Khajuria, executive director at Federal Bank, which sees remittance flows from West Asian countries.
India was the largest remittance receiving country, with an estimated $72 billion in 2015, followed by China ($64 billion), and the Philippines ($30 billion), according to a 18 December World Bank report. Remittances to India from West Asia are the highest, forming nearly half of the total flows, added the report.