NRIs May Rival MNCs As Investors In Indian Economy

The single-largest source of foreign capital into India, non-resident Indians, may one day become the prime source of investment in the domestic economy. A new report on remittances to India says NRIs now see India as an investment destination and are already leaving their mark in real estate and the stockmarket. Muzaffar Chishti of the Migration Policy Institute, author of The Phenomenal Rise in Remittances to India: A Closer Look, says the most striking evidence of the fact that NRIs are seeing the Indian economy as an opportunity is the rise of so-called private transfers.

There are two main types of NRI remittances. The most well-known type is inward remittance i.e. when an NRI wires or sends money to an individual in India, usually a relative. The other type is private transfer i.e. when an NRI deposits foreign exchange into a rupee account and then spends it inside India.

The little-noticed trend, says Chishti, is how fast private transfers have grown. Between 2000-01 and 2005-06 private transfers grew by 88 per cent, more than double the rate of inward remittances. The former exceeded the latter by $ 2.3 billion last year.