Gulf NRIs and Their Remittances to India: The Saga of Overlooked Great Expectations

Abstract

As the leading labour exporting country to the Gulf, and also as the largest recipient of annual remittance inflows, India occupies an enviable position in the world, particularly because of the strong and unmatched beneficial macroeconomic effects of remittances. This paper views remittances from the Gulf to India not only as a case of rich dividend to the country on zero investment, but also as a costless outcome characterized by rich harvest from a policy of benign neglect. This paper outlines the macroeconomic justifications for according specialized policy attention to remittances on par with other sector specific policies, ranging from exports to foreign direct investment, and argues that the Gulf NRIs as a group deserve such a focused policy framework in India as a reward for their indelible contributions to the Indian economy. Gulf NRIs represent an important interest group, with genuine justifications supporting their great expectations that someday Indias current policy of benign neglect will be replaced by a more focused policy framework, which not only could encourage remittance flows through an attractive policy environment, but also may lead to better harnessing of the immense growth and development potential of remittances.