Migration Remittances: The Emerging Scenario

Remittances are increasingly identified as golden eggs that contribute crucially to the foreign exchange earnings of many developing countries across the world. Governments and international agencies have recognised that remittances to the developing world are substantially greater than aid. Though the global flow of such remittances is in the vicinity of $150-200 billion, remittances to South Asia alone total perhaps $40-50 billion. Much of these remittances are done through unofficial mechanisms and procedures, via informal value transfer systems and are, therefore, unregulated and uncontrolled. Proliferating migrant social networks and the emergence of a vibrant immigration industry, have given a momentum to international migration. Remittances generate both micro and macro-economic effects. In microeconomic terms, remittances make an important welfare contribution to the receiving household, besides providing a cushion during an economic downturn or following natural disasters. They also generate ripple effects impacting extended family and community beyond the receiving household due to increased consumption. In macroeconomic terms, remittances provide a stable flow of funds that is often counter-cyclical and an important source of foreign exchange for many countries. The argument in this article concentrates on the economic and financial linkages that the Indian diasporic community has maintained with the mother country and their relevance to the developmental programmes in India.