High crude oil prices to fuel remittances

The surging international crude oil prices are projected to fuel inward remittances to India this year, topping the $69 billion of net remittances clocked during 2017 calendar.

Last year, India had topped the international list of remittance receivers at $69 billion, followed by China ($64 billion), the Philippines ($33 billion), Mexico ($31 billion) and Nigeria ($22 billion).

“There is a direct link between crude oil prices and remittances to India. The current spate of high crude oil prices would certainly boost inward remittances given the large number of Indian migrants working in the oil-rich Gulf nations,” global money transfer company MoneyGram head (India & Subcontinent) Sheshagiri Malliah told Business Standard here on Tuesday.

Remittances to India stood at $72 billion in 2014, when the crude oil prices were ruling high above $100 dollars a barrel, however, the remittances fell to $64 billion and $62 billion in 2015 and 2016 respectively, when oil prices subsided following demand squeeze and robust production.

“The World Bank has already projected the remittances to India to rise by 45 per cent this year, which would peg the remittances to $72-73 billion,” he added.

Currently, the oil prices have been ruling firm following output cuts by oil cartel Organization of Petroleum Exporting Countries (OPEC) and other geopolitical factors, including looming US sanctions against Iran coupled with strong market demand.

Oil prices are hovering around $80 a barrel with analysts forecasting it to reach $100. Similarly, the gradual fall inthe rupee value has positively impacted remittances to India. Indians count for a large working diaspora in foreign countries at about 16 million, of which 67 per cent hail from rural background. Meanwhile, MoneyGram has announced a strategic partnership with cash payout company Weizmann Forex Limited, which would allow the former to expand its footprint in key remittance geographies across India.