With 12 per cent of all global remittances being sent to India, the country receives one of the highest percentages worldwide. Figures suggest that $15 billion alone came from the UAE last year, aiding India’s socio-economic recovery.
“As per a research paper published by the Reserve Bank of India, in the financial year 2020-21, remittances from the UAE to India were $15.40 billion, which is 18 per cent of India’s total inward remittances,” says Adeeb Ahamed, MD, LuLu Financial Holdings. “The World Bank has projected global remittances to India to grow by nearly 3 per cent in 2022. Therefore, remittances from the UAE to India are expected to reach $15.86 billion in 2022, and present trends indicate that these figures are attainable.”
This growth is already evident in the UAE, as money exchanges note a steady increase in remittances.
Ahamed says, “We, at Lulu International Exchange, have been witnessing a positive growth of 3-4 per cent in remittance flows this year, both in the number and volume of transactions. A large section of the expat population is awaiting a further weakening of the INR, and we may see remittance volumes increase further as the months progress this year.”
Ahamed says that in 2022 alone, the Indian Rupee depreciated 7.21 per cent against the US Dollar from 74.30 in January 2022 to 79.25 till July 2022. This weakening rupee is one of the driving factors in remittance flow growth from the UAE to India.
“India remains the UAE’s top recipient of remittances accounting for 28 per cent of all transfers from the country in 2021,” says Rashed Al Ansari, CEO of Al Ansari Exchange.
“The recent currency fluctuations, across several currencies, have had a positive impact on the volume of money transfers, including to India, during the past two months.”
The question remains whether there might be further favourable exchange rates.
Al Ansari says, “The currency is still highly volatile amid the rising global tensions, so it’s very difficult to predict if the rates will drop or rise at this stage. “
Regardless of future currency fluctuations, the current increase in remittances is good news for everyone.
Al Ansari says, “In India, Non-Resident Indians (NRIs) play an integral part in shaping the country’s financial, social, and economic conditions, as they are the main source of foreign currency inflows, with each transfer adding to the country’s stock of foreign currency.
“Remittances can significantly raise people’s purchasing power, boosting demand and supply in the market for consumer goods. Additionally, it enables families with limited resources to start businesses, accumulate emergency funds, or provide social security for family members. In simple terms, we firmly believe that remittances made by NRIs to their families back home help in maintaining the core stability of the country’s economy.”
To support NRIs, there have been initiatives and offers to ensure they send money home securely through formal channels.
“Our promotions are our way of giving back to our community and customers,” says Al Ansari.
The future looks promising as promotions and the ability to send money securely through digital channels could bolster growth further.
“How the remittances sector evolves will be largely driven by customer choice, reliability and speed. Looking at the UAE-India corridor, Western Union data tells us that UAE customers regularly use both retail and digital channels and choose to pay out in cash or into bank accounts in India,” says Hatem Sleiman, Head of Middle East, Pakistan and Afghanistan, Western Union. “Technological advancements will support this while tailoring solutions so that the ability to send and receive money is made available to everyone — driving financial inclusivity.”