Onam this year is turning out to be even more special than usual for Keralites, especially those with family members who work abroad. Reason? The tanking Indian rupee. The currency’s sustained slide against the US dollar has bumped up the value of remittances flowing into the country even as it simultaneously inflates the oil import bill. And not surprisingly, Kerala, with its 2.5- million- strong diaspora spread across the Gulf and the US, is one of the biggest beneficiaries.
Remittances to the state are projected to touch Rs 75,000 crore— comprising 35 per cent of Kerala’s net domestic product— during financial year 2013- 14, according to S. Irudayarajan, head of migration studies at the Centre for Development Studies, Thiruvananthapuram. Ahead of Onam on September 16, many expatriates have even taken loans to cash in on the falling rupee and send more money home. The total remittance to Kerala in 2012 was Rs 60,000 crore.
Banks have raised interest rates on NRI deposits of three years and above from 8.75 per cent to 9.5 per cent. Consequently, most banks in Kerala have crossed their annual targets for NRE deposits by August. “It’s boom time for NRI families in Kerala and banks. There has been 35- 40 per cent increase in NRE deposits from March to July over the same period last year,” says Abraham Tharyan, executive director, South Indian Bank. Federal Bank, another Kerala- based private
bank which routes 8 per cent of total remittances to India and has 800,000 NRIs among its 5.5 million customers, also saw its NRE deposits grow by 33 per cent during March- July to touch Rs 28,000 crore. “We expect it to cross Rs 32,000 crore by September- end,” says A. Surendran, general manager ( international division), Federal Bank.
The windfall in remittances is expected to result in a bumper Onam festival shopping season, especially in consumer durables, gold and diamond jewellery, luxury cars and premium flats and villas. Fifty malls are at various stages of construction in Kerala. The 25 lakh- square- feet Lulu Shopping Mall in Kochi has also been operational since March. According to the state government, the Onam season ( July- September) witnesses consumer durables sales of up to Rs 3,000 crore. “We expect a 100 per cent growth in Onam sales this year to Rs 150 crore,” says Manish Sharma, MD ( global consumer marketing), Panasonic India. “Sales of luxury cars in the state have grown fourfold from 150- 200 in 2008 to 2,000 now,” says industry watcher Byju N. Nair.