Family Sending Money to India Help to Bolster Indian GDP
As India continues to top the charts for money remittance, their economy is experiencing a healthy recovery. Money transfer to India has been a stabilizing force for their economy in a number of ways. In 2014 alone, $70 million American dollars were sent to India. Not only was this money a welcome contribution to households depending on money sent to them due to lost wages, this cash infusion has positively affected the Indian economy on a macro level.
The Indian government has encouraged foreign investment into their economy by loosening and deregulating claims on non-resident ordinary (NRO) and non-resident external (NRE) accounts. The cost of sending money to India also remains low when compared to rates charged by other countries. Indian banks benefit from the foreign remittance accounts in many ways, and the money that Indian banks earn from interest on these remittances helps spur economic growth.
Quicker Payment Infrastructures
Banks are looking for ways to improve efficiency of money remittance. Many banks are currently in the process of setting up service centers at key locations for increased convenience. By offering better service for non-resident Indians, more customers are likely to be attracted in the long term.
The strength of the American dollar compared to the Indian Rupee makes sending money to India even more effective for helping struggling Indian families and improving the Indian economy. The value of the U.S. dollar has risen steadily increasing in value from 50 to 60 Indian rupees.
Fighting the Current Account Deficit with Money Remittance
India continues to experience the threat of an increasing national deficit due to diminishing net foreign assets. India’s current deficit is effectively counteracted by money remittance, however. Each person that sends money to India effectively boosts the Indian economy as foreign remittance is considered part of India’s Gross Domestic Product. Recent numbers reveal that remittance makes up nearly 4 percent of India’s GDP. It consequently played a huge role in its 5.7 percent growth in 2014.