India Insight

India has the second-largest overseas population after China, and it is thelargest recipient of remittances (in value terms) in the world. Inflows fromoverseas Indians (including private transfers and NRI deposits) stood atUS$79bn in FY16. These flows (a) help boost household income and, hence,support private consumption, (b) play a key role in bringing stability to India’sCAD, and (c) act as a source of foreign exchange reserves to help bridge thefunding gap in the event of global risk aversion and restoring external stability.

    Going forward, we believe policymakers should try to leverage these flows tofund infrastructure and other development projects to have a multiplier effect onoverall growth.

    An estimated ~27mn Indians resided overseas as of April 2016, with an annualGDP of ~US$750bn, on our estimates, implying an average per capita income of~US$29,000. This is ~18x the per capita income of India, with an annual GDP ofUS$2tn and a 1.3bn population. We believe overseas Indians’ wealth, includinggold, property and other assets, to be much higher, at above US$1.5tn.

    India has been the top recipient of migrant remittance inflows (private transfers)in 16 out of last 20 years and for the past 8 years consecutively. The migrantremittance (net) inflows to India increased nearly 2.8 times in the last decade toUS$67bn (3% of GDP) in CY15 from US$24bn in CY05. The private transfers(including remittances) have been largely stable, in the 3