The financial crisis in Dubai may not affect remittances sent by Indian expatriates in Gulf countries, policymakers and economists said on Friday. About one-fourth of the total money remitted to India every year comes from Indians in the United Arab Emirates (UAE).
“Remittances from expats did not suffer when the larger crisis was on. So that this one should have an impact in terms of employment, salaries and, therefore, remittances is somewhat unlikely,” Finance Secretary Ashok Chawla told reporters.
Former RBI governor Y V Reddy said: “On the basis of past evidence, the recent development in West Asia should not have any serious impact on Indian remittances. These hiccups, a crisis of oil or financial, have not caused any significant short-term impact on the workers’ remittances so far.” Both Chawla and Reddy, however, said it would take some time to assess the impact of the crisis in debt-ridden Dubai on the Indian economy.
India got total remittances of $46 billion in 2008-09. About 4.5 million Indians live and work in the Gulf region and remit more than $10 billion annually. North America accounts for nearly 44 per cent of the total remittances to India, followed by West Asia (24 per cent) and Europe (13 per cent).
Meanwhile, the Prime Minister’s Economic Advisory Council said the Dubai crisis would not affect the country’s growth rate, but admitted remittances from the Gulf city-state might slow down. Council Chairman C Rangarajan said other West Asian countries would probably come to the rescue of Dubai, which might not plunge the world into another financial meltdown.
