Foreign Remittance Inflow In J&K Increased In 2020-21
RBI Data Reveals J&K Received Over Rs 1450 Cr From Diaspora
J&K’s economy may have finally received a welcome respite from volatility, thanks to a rise in foreign remittance inflow that has increased up to 0.3 percent in 2020-21 compared to 0.2 percent in 2016-17.
As per a report released by Reserve Bank of India (RBI) in
July, while the share of the traditional remittance recipient states of Kerala, Tamil Nadu and Karnataka—which have had a strong dominance in the Gulf countries—had almost halved in 2020-21, J&K’s share in total remittances of India rose up 0.3 percent in the same period with majority of the remittances continuing to be routed through private sector banks and public sector banks.
Pertinently, the latest edition is RBI’s fifth in a series 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 transfer of foreign funds.
As per World Bank, India’s total foreign money inflow for the year 2021 was $87 Billion. And a quick breakdown of data underlines that J&K’s total Foreign Money (inward remittance) is $261 million in the same period. In 2016-17, India had received a total remittance of $69 Billion dollars, which means, J&K had received about $138 Million, that too, when rupee was plunging to a vicious low.
However, defying adverse predictions of an unprecedented global recession triggered by COVID-19, remittances in the latest report have proved to be resilient, both in India and the Union Territory of J&K, even during the pandemic.
As per a substantial data provided by the Indian Institute of Management Bangalore, J&K’s International Household Remittances in 2007-08 was recorded to be 0.4 percent based on the passport data. Interestingly, an analysis of the 2007-08 International remittance— when India received $43.5 billion as 'private transfers’—data by Kashmir Observer reveals that J&K’s total share of 0.4 percent had only accounted for $174 million, when rupee was juggling strongly between 40 & 50 against a
dollar, almost $87 Billion less than J&K’s total share in the latest pie.
As per the same data, J&K ranked ninth lowest in ‘share of International remittance’ in India. The rural J&K contributed 0.11 percent while the urban J&K shared 0.34 percent. Notably, in 1993, rural J&K’s share in International remittance was recorded to be 0.63 percent while urban J&K didn’t contribute anything.
According to the World Bank Report on Migration and Remittances, remittance flows to low and middle-income countries declined marginally to US$540 billion in 2020, only 1.6 per cent below the US$548 billion in 2019.
India, being the top recipient country, was expected to be one of the worst affected (projected decline of 23 per cent) as its host country basket was vulnerable to the twin effects of economic slowdown and slump in oil prices. Defying the early projections, however, India remained the top recipient country, accounting for 12 per cent of total global remittances, recording a marginal decline of 0.2 per cent in 2020 and a growth of 8 per cent in 2021.
The share of inward remittances from Gulf nations dipped sharply during 2020-21 on account of the economic stress created by the COVID-19 pandemic, says the RBI research paper prepared by deputy governor Michael Debabrata Patra along with RBI officials Joice John and Deepak Kumar.
Speaking with Kashmir Observer, prominent economist, Ejaz Ayoub said that the latest percentile share of J&K in remittances is a pushing pillar for J&K’s economy.
“Unlike the trade economy which snakes around a huge risk, remittances don’t fluctuate and are also gradually growing. Export and remittances are two most stable pillars of our economy. When combined together, these two factors offer a boost of around Rs 3000 crores to our economy annually. The 2021 data reveals that J&K has received over Rs 1450 crores from diaspora. And in 2017, the same funds accounted for around Rs 960 crores. So, the change is quite evident,” Ejaz Ayoub told Kashmir Observer.
The economic researcher further observed that one of the main factors that has led to an increase in J&K’s total remittance inflow is the way Indian currency has weakened over a period of time.
“The global inflation on account of Covid has also impacted the remittances. As mentioned in the report, countries like Pakistan, Bangladesh or other economically weak countries have received more remittances during the Covid years. Similarly, India has also received a substantial remittance or we can simply say that the predicted dip didn’t happen. Inflation’s linked component is salary. Whenever Inflation is high, people including diaspora get a particular component in salary which is in line with inflation. So, the salaries of people working outside India have also increased, subsequently increasing remittances,” said Ayoub, adding that remittances are a boost for J&K’s economy as the state is already going through a rough patch.
Echoing similar views, Assistant Professor of Department of Economics University of Kashmir Dr. Javaid Iqbal Khan said that remittances have an immense contribution for any economy.
“Foreign remittances are an essential pillar in stabilizing any economy. As we know how unstable J&K’s economy is, the available figures of remittances will help in stabilizing the economy. The share would’ve been higher but due to the massive inflation caused by covid, there’s a cut in the overall percentage,” Dr Javaid told Kashmir Observer.
Pertinently, the economists also noted that the overall percentage may show J&K among the lower ranks but the absolute value of the erstwhile state is pretty high.
“After the 1990s insurgency, Kashmir witnessed a massive jump in migration, which subsequently increased our share in remittances. And similarly, post 2019, another jump was seen. However, the share of the population which migrated after 2019 is yet to impact the remittances. In next 4-5 years, J&K’s share in India’s total remittance will substantially increase” says Ejaz Ayoub.