Inward remmitances, i.e. foreign currency coming into the country sent by non-resident Indians working overseas, is likely to see a surge this year due to better festive season and rupee depreciation.
In 2012, inward remmitance inflow is estimated at $75 billion, says Sudhesh Giriyan, Head, Xpress Money Business.
Festive season, usually when supported by a depreciating rupee, sees a rise in both volumes and value of inward remmitances.
In 2011, the inward remittance into India was to the tune of $66.13 billion, about 20% higher than $55 billion inward remittance seen in 2010.
According to Giriyan, it is during this period that those with low paying jobs, such as the labourer class, send money home to their families for personal consumption.
But NRIs who hold high paying jobs accumulate money also wait for favourable exchange rates (i.e. when the rupee weakens) to send bulk amounts.
The festive season typically starts in August and goes on till December. It includes Islamic festivals like Ramadan and Bakri Id, Hindu festivals like Dushera and Diwali and ends with Christmas. Since Ramadan is considered the month of giving, people who work abroad send money home during this time and volume are seen rising 40-50% during this period.
While during Diwali and Dushera the rise in the volumes is on a lower scale at about 15-20%, adds Giriyan.
"In 2011, the third and fourth quarter saw the rupee depreciating, especially during the fourth quarter. That is when we saw a huge amount of inflows. This phenomenon has continued even in the first half of 2012,'' he says.
