RBI data reveals J&K received more than Rs 1450 Cr from Diaspora
Srinagar- J&K’s economy may have finally received a welcome respite from volatility, thanks to an increase in foreign remittances which grew by as much as 0.3% in 2020-21, from 0.2% in 2016 -17.
According to a report by the Reserve Bank of India (RBI) in July, while the share of traditional remittance recipient states of Kerala, Tamil Nadu and Karnataka – which have had a strong dominance in the Gulf countries – had almost halved in 2020- On January 21, J&K’s share of India’s total remittances increased by 0.3% over the same period, with the majority of remittances continuing to flow. be channeled through private sector banks and public sector banks.
Relevantly, the latest edition is the fifth in a series of RBIs based on foreign remittances. It was conducted for the year 2020-21 based on a census of all authorized banks and major money transfer entities engaged in the transfer of foreign funds.
According to the World Bank, India’s total foreign currency inflow for the year 2021 was $87 billion. And a quick breakdown of the data points out that J&K’s total foreign funds (inbound remittances) are $261 million over the same period. In 2016-2017, India received a total payout of $69 billion, which means that J&K received around $138 million, that too, when the rupee plunged to a vicious level.
However, defying adverse predictions of an unprecedented global recession triggered by COVID-19, remittances in the latest report proved resilient in both India and J&K’s union territory, even during the pandemic.
According to substantial data provided by the Indian Institute of Management, Bangalore, J&K’s international household remittances in 2007-08 were recorded at 0.4% based on passport data. Interestingly, an analysis of international remittances from 2007-08 – when India received $43.5 billion in “private transfers” – Kashmir Observer data reveals that J&K’s total share of 0, 4% was just $174 million, as the rupee juggled sharply between 40 and 50 against the dollar, nearly $87 billion less than J&K’s total share of the latest pie.
According to the same data, J&K ranks ninth in terms of “share of international remittances” in India. The rural J&K contributed 0.11% while the urban J&K shared 0.34%. Notably, in 1993, the share of rural J&K in international remittances was 0.63%, while urban J&K contributed nothing.
According to the World Bank’s report on migration and remittances, remittance flows to low- and middle-income countries fell slightly to $540 billion in 2020, just 1.6% less than $548 billion in 2019.
India, the first beneficiary country, should be one of the most affected (expected decrease of 23%) because its basket of host countries was vulnerable to the double effect of the economic slowdown and the fall in oil prices. Defying early projections, however, India remained the top recipient country, accounting for 12% of total global remittances, registering a marginal decline of 0.2% in 2020 and growth of 8% in 2021.
Share of inbound remittances from Gulf countries fell sharply in 2020-21 due to economic stress created by COVID-19 pandemic, according to RBI research paper prepared by Deputy Governor Michael Debabrata Patra with officials by RBI Joice John and Deepak Kumar.
Talk with Kashmir ObserverEminent economist, Ejaz Ayoub said that the bottom percentile of J&K’s share of remittances is a pillar of J&K’s economy.
“Unlike the commercial economy which winds around huge risk, remittances do not fluctuate and also increase gradually. Exports and remittances are the two most stable pillars of our economy. When combined, these two factors deliver a boost of around Rs 3,000 crores to our economy every year. The 2021 data reveals that J&K received more than Rs 1,450 crore from the Diaspora. And in 2017, the same funds amounted to around Rs 960 crores. So the change is pretty obvious,” Ejaz Ayoub told Kashmir Observer.
The economics researcher further observed that one of the major factors that led to an increase in total remittances from J&K is how the Indian currency has weakened over a period of time.
“Global inflation due to Covid has also impacted remittances. As mentioned in the report, countries like Pakistan, Bangladesh or other economically weak countries received more remittances during the Covid years. Similarly, India also received a substantial remittance or we can simply say that the predicted drop did not happen. The component linked to inflation is the salary. Whenever inflation is high, people, including the diaspora, receive a particular component of the salary that matches the inflation. So the salaries of people working outside India also increased, subsequently increasing remittances,” said Ayoub, adding that remittances are a boost for J&K’s economy because the state is already going through a difficult period.
Echoing similar views, Assistant Professor in the Department of Economics at the University of Kashmir, Dr. Javaid Iqbal Khan, said remittances have an immense contribution to any economy.
“Foreign remittances are an essential pillar for stabilizing any economy. As we know how unstable the J&K economy is, the available remittance figures will help stabilize the economy. The share would have been higher, but due to the massive inflation caused by covid, there is a reduction in the overall percentage,” Dr Javaid said. Kashmir Observer.
Relevantly, economists also noted that the overall percentage may show J&K among the lower ranks, but the absolute value of the former state is quite high.
“After the insurgency of the 1990s, Kashmir saw a massive increase in migration, which subsequently increased our share in remittances. And similarly, after 2019, another jump was observed. However, the share of the population that migrated after 2019 has yet to impact remittances. Over the next 4-5 years, J&K’s share of India’s total remittances will increase significantly,” says Ejaz Ayoub.
Follow this link to join our WhatsApp group: Join now
Be part of quality journalism
Quality journalism takes a lot of time, money and hard work to produce and despite all the difficulties, we still do it. Our journalists and editors work overtime in Kashmir and beyond to cover what matters to you, tell great stories and expose injustices that can change lives. Today, more people are reading Kashmir Observer than ever before, but only a handful are paying as advertising revenue plummets.
CLICK FOR DETAILS