India took the top spot on remittances received in 2017. Remittances increased by about 10% last year over 2016, although this comes on a favourable base considering that remittances had decreased by 9% in 2016. Shouldn’t higher crude oil prices this year lead to a rise in remittances?
We typically receive a large proportion of our remittances from the Gulf region and 2017 was no different. Chart 1 alongside shows the countries from where remittances flowed to us last year. A big chunk coming from the Middle East means that the pattern or flow of remittances closely aligns with crude oil prices. Chart 2 has the details.
Unfortunately, the trend cannot be taken for granted. Nationalist sentiments are on the rise in the Gulf region and this poses a risk to the remittances flow into India, despite strong crude oil prices, said Ritesh Jain, chief investment officer, BNP Paribas Asset Management.
“The preference for hiring is shifting towards locals over foreigners and their governments are expanding public spending,” added Jain. Read More