FDI IN BANKING AND INSURANCE

7/29/2019 FDI IN BANKING AND INSURANCE

http://slidepdf.com/reader/full/fdi-in-banking-and-insurance 1/38

1

INTRODUCTION

Migration is the movement of people from one place to another. As long as Homo

Sapiens have existed, members of the species have migrated in search of food or to escape

from disasters or conflicts.

Mankind and migration have been linked to each other since the beginning of time; life

without migration could not be thought of. Migration has a history of its own, both at the

national and international levels. The mobility of capital and technology has indeed

changed the history of peoples. At the same time, migration has created a greater impact

on history.

According to the International Organization of Migration (2008), there are more than 200

million migrants around the world today and there is enough evidence to show that the

rate of international migration has actually increased at a time when the world is getting

more globalised. The total number of citizens that have emigrated from India is about 10

million, which works out to just about a per cent of her population.

In India, the cultural ethos of the country has actually dissuaded people from going

abroad. There are myths and superstitions surrounding migration in almost every Indian

tradition. The fear of kala-pani, literally translated as ‘black waters’, which meant

ostracism, was a strong deterrent. Such myths were prevalent also in other ancient

cultures like China and Japan, preventing people from going abroad. For a variety of



2

reasons, be it economic or cultural or personal, the concept of ‘we’ and ‘they’, and the

notions of individual, intellectual and spiritual ‘pollution’ and the fear of consequent

ostracism prevented people from leaving their home soil until the advent of the

Europeans—which in turn stimulated an interest for Indians to migrate overseas.

In the post-Independence era, the end of the Second World War marked a turning-point

in the trends of migration, which was spurred on principally by the shortage of

manpower. Europe and North America had a large requirement for manpower and many

countries on these two continents, which had hitherto followed a policy of restriction of

immigrants, took pains to modify the same so that they could open up their countries to

migrant workers. Indians formed a part of this history of migration into these countries.

Population movements have been frequent during every epoch. They have often been

gradual and related to the search for better livelihoods, lasting for a thousand years.

The last century has witnessed new, massive population movements due to internal and

nation-state conflicts. Some examples: in 1923, 2 million Turks and Greeks moved in

opposite directions, most of them forced to become refugees. Three years after Indian

independence in 1947, more than7million Muslims had entered Pakistan and more than 7

million Hindus and Sikhs had left Pakistan for India. In 1994, 2 million Rwandans left their

country (mainly ethnic Hutus), and 500,000 mainly ethnic Tutsis had been massacred during

the three preceding months. At present, there are approximately 8.4 million refugees and 7



3

million internally displaced people (IDP) in the world.

International migration, the movement of people across international boundaries, has

enormous economic, social, and cultural implications in both origin and destination

countries. It is estimated that some 180 million people (3 percent of the world’s population)

are living in countries in which they were not born (United Nations 2002). Among these are

millions of highly educated people who moved to developed countries from developing

countries that already suffer from low levels of human capital and skilled workers.

Furthermore, the flow of formal remittances from migrants to their relatives in their country

of birth has exhibited a rapid and accelerating rate of growth. The remittance flow has

doubled in the last decade, reaching $216 billion in 2004, with $150 billion going to

developing countries (Ratha 2005). It surpasses foreign aid and is the largest source of

foreign capital for dozens of countries.

As a result of these trends, migration issues have increasingly become the focus of

attention, both among governments of origin and destination countries, and within the

development community.



4

There has been extensive analysis of the impact of migration on the receiving

countries’ economies, especially on markets for unskilled labour . However, the links

between migration and development issues in the sending countries have been somewhat

neglected, particularly as far as empirical research is concerned (Borjas 1999). This oversight

is partly due to the relatively minor role played by migration in promoting the integration of

developing countries.

Globalization and migration are rapidly transforming traditional spheres of human activity.

The work of rural families is no longer confined to farming activities, and livelihoods are

increasingly being diversified through rural-to-urban and international migration. Age-old

boundaries are breaking down.

Development organizations that support rural poor families in overcoming poverty are

realizing that essential members of these families are making their living abroad, far away

from their dependants.

The ‘global village’ has become a reality. However, the poverty that forced rural inhabitants

to migrate still exists in their places of origin and continues to influence their lives and

prospects in their ‘adopted countries’, as well as those of the people they left behind.

Migration is significantly reshaping the traditional social and economic structures of rural

communities, in both positive and negative ways.



5

In addressing rural poverty, one challenge is to take these new social and economic realities

into consideration and integrate them into innovative strategies for promoting rural

development. The complexities of the migration phenomenon must be incorporated into

the development agendas of developed and developing countries, as well as those of

development organizations.

Reasons for migration

The reasons for migrating are complex and vary from area to area. Migration may be

prompted by major economic, demographic and social disparities, as well as by conflicts,

environmental degradation or natural disasters. Regardless of their origin and the causes of

the relocation of almost 200 million migrants worldwide, their productivity and earnings

constitute a powerful force for poverty reduction. Remittances are the financial counterpart

to migration and are the most tangible contribution of migrants to the development of their

areas of origin.

Mass migration movements are expected as a result of climate change, while agricultural

production in many countries and regions, including access to food, is projected to be

severely compromised. The areas suitable for agriculture, length of growing seasons and

yield potential of some mainly arid areas are expected to decrease. Episodes of heavy

rainfall and drought are likely to become more frequent and severe, thus triggering further

migration of those already living under difficult conditions. Moreover, the intense

movement of people across regions and countries may affect the growth of diseases and



6

pest management systems, thus putting further pressure on food production and the

performance of agricultural systems at large.

Many migrants have established a continuous social and economic interaction with their

communities of origin and play unique roles as agents of change in both their countries of

settlement and of origin. Governments, financial institutions and international development

agencies can no longer afford to ignore the ever-growing impact that financial flows from

migrants have on the economic and social development of remittance-receiving countries.

What Forces Determine Migration Patterns?

Like most other economic flows, migration operates as an equilibrating mechanism. In the

presence of wage inequalities, migration permits greater wage and income equality

between sending and receiving regions. International labor mobility is subject to restrictive

policies and high migration costs when compared with internal mobility. As a result, income

levels exhibit much lower variation domestically than internationally.

The principal cause of south-north migration is, in most cases, the difference

in (the present value of) expected real wages, adjusted for migration costs. These

costs increase with the distance between source and destination countries, and

decline with social networks in the destination country. Literature has identified

the importance of networks that provide support and information to migrants



7

who are dealing with difficulties ranging from financing the move to other struggles

associated with social and cultural differences, such as language and social norms. Migration

flows and remittances would be expected to rise with the difference in expected real wages

and decline with migration costs.



8

OBJECTIVES AND SIGNIFICANCE OF THE STUDY

There is significant interest in migration statistics both nationally and internationally and

there is a need to understand how moves impact on society and the economy. Migration

estimates are a fundamental component of ONS’ mid-year population estimates. These are

used by central and local government and the health sector for planning and monitoring

service delivery, resource allocation and managing the economy. For further information on

how ONS migration statistics are used along with information on their fitness for purpose

The impact of this migration, both from the earlier times and recent, is manifold,

beginning with their foreign exchange remittances, which in turn has a multiplier-effect

on the economy. Indian migrants are in 110 countries, and forex remittances to the

home nation is next only to that of the Chinese migrants. The figure averages $ 5 billion a

year from West Asia alone. There is the question of ‘brain-drain’ in the reverse, as qualified

and capable individuals seek fresher pastures, overseas.

-To know the reason for migration(job relocation and overpopulation)

-To know how much remittances are collected from migration in the form of foreign

Currencies.

-To understand the economic, social and cultural consequences of international migration.

-To study the pattern of out-migration from India, proportion of emigrants out of total

population in a state , also state-wise estimated number of permanent and



9

temporary labour out-migrants.

-Distribution of emigrants according to various socio-economic and demographic

characteristics like caste, religion, Monthly Household Consumer Expenditure Quintiles,

age, sex.

-To study further the state-wise distribution and frequency of remittances during the last

365 days across the states.

-To examine the trend in long term remittances to the Indian economy during the period

1971-2008.

Not only the UK, the US, Australia, Canada and the Gulf but a large number of

countries in the European Union, countries in Africa and Asia are emerging major

destinations for Indian emigrants. Moreover, India is not only seen as a source of getting

manpower, it also continues to be considered a must destination for internationally

renowned educational institutions to woo the Indian students. This provides

foreign exchange to the education exporting institutions/ countries and enhances students'

educational and economic profile. A foreign degree also opens gateways to enter in the

labour market of that country unless the law of the immigrant country prohibits them.



10

DATA ANALYSIS AND INTERPRETATION

Migration from India has taken place from the very dawn of civilization and there is hardly

any part of the earth where Indians are not found today. But, never before in history had India

witnessed such massive movements of people from country to other parts of the world as in

the 19th and 20th centuries (Rajan, 2003). Since, independence, two distinct streams of

migration have left India: people with professional expertise of technical qualifications

emigrating to industrialised countries, and semi-skilled and skilled workers emigrating to the

Middle East. Most of out-migrants are from Kerala, Tamil Nadu, Andhra Pradesh, Gujarat,

Goa and Punjab. Remittances are main benefit of international out-migration, providing

scarce foreign exchange and scope for higher levels of savings and investments. The World

Bank estimates for 2008 put India in the lead at $52 billion, with China and Mexico close

behind at $49 billion and $26 billion, respectively (World Bank, 2009).

The data on International migration in India is collected through the two government sources:

-the Office of the Registrar General and Census Commissioner and National Sample Survey

Organization (NSSO). Indian census collects information of immigrants from other

countries however, information on out-migration/emigration from India lacks in this

particular data source.



11

International Migration Trends: Facts and Figures

Source: International Organization for Migration

Global estimates

1. In 2005, it is estimated there are between 185-192 million1 migrants worldwide.

2. In 2000, there were 175 million international migrants worldwide: one out of every 35

person is an international migrant.

3 .Migrants represent 2.9 per cent of the global population.

4. Of these, almost half (48.6%) are women.

5. The stock of international migrants rose from 82 million in 1970 to 175 million in 2000.

Global trends

1.Migration flows have shifted in recent years with changing poles of attraction for labour

migration.

2 .In some parts of the world, migrant stock has actually decreased.



12

3 .Although the number of Asian migrants has increased from 28.1 million in 1970 to 43.8

million in 2000, Asia’s share of global migrant stock decreased from 34.5 per cent to 25 per

cent over the same period.

4. Africa has also seen a decline in its share of international migrants: from 12 per cent in

1970 to 9 per cent in 2000.

5. This is also true for Latin America and the Caribbean (down from 7.1% to 3.4%); Europe

(down from 22.9% to 18.7%) and for Oceania (3.7% to 3.3%).

6 .Only Northern America and the former USSR have seen a sharp increase in their migrant

stock between 1970 and 2000 (from 15.9% to 23.3% for Northern America and 3.8% to

16.8% for the Former USSR). In the latter case however, this increase has more to do with

the redefinition of borders than with the actual movement of people.



13

DIAGRAMS





15

from $381 billion in 2011.

The true size of remittance flows, including unrecorded flows through formal and informal

channels, is believed to be significantly larger. Compared to private capital flows,

remittance flows have shown remarkable resilience since the global financial crisis,

registering only a modest fall in 2009, followed by a rapid recovery. The size of

remittance flows to developing countries is now more than three times that of official

development assistance.



16

RESULTS

Preliminary findings show that more than 80 percent of out-migrants have gone to other

countries due to employment related reasons. Sex-wise analysis reveals that marriage is the

most important reason for the females to migrate whereas around 95 percent of males have

out-migrated due to employment related reasons. It is also found that more than half of the

emigrants had left country less than five years ago.



17

Results indicate that there were 44,42,245 emigrants living outside the country during the

reference period of the survey, i.e, between July, 2007-June, 2008. With the 1.58 million

out migrants Kerala had contributed the one-third of emigrants from India followed by Tamil

Nadu (4,98,327), Andhra Pradesh (4,37,404), Punjab (3,86,423) and Uttar Pradesh

(3,83,625). The number of temporary labour out-migrants was around 1,10,150 persons in the

reference year. They have out-migrated for employment purpose and hence this figure may

provide some idea about the temporary labour mobility from India. Interestingly Delhi leads

in the temporary labour out-migration with 28,164 labour out-migrants along with Bihar

(19,690) and Kerala (18,003).

More than two-third of the emigrants belongs to age-group of 20 to 40. It suggests that

outmigration of working age-population is high. Further sex-wise results show that women’s

proportion is almost negligible in international migration. Findings related to socio-economic

background of out-migrants illustrate that majority of the out migrant are from Other

Backward Classes and Others caste group. Moreover it is also found that prevalence of outmigration

from households of Muslims is higher as compared to Hindus and other religion.

Households with higher economic status, for which Monthly per Capita Consumer

Expenditure (MPCE) quintiles is taken as proxy, have higher number of international outmigrants

migrants, and the households belonging to the highest quintiles of MPCE have more

than one-third of the total emigrants.



18

Results also reveal that percentage of sending remittances was higher among male outmigrants

from rural areas (82 percent) than their urban counterparts (69 percent).

On an average Rs. 52,000 was remitted in the reference year of survey by emigrants from rural

areas, while this figure is Rs. 73,000 for emigrants from urban areas. We have also found that

in last 365 days country had received remittances of Rs. 57,100 per out-migrant and among

states Delhi is the leading receiver with remittances of Rs. 2,40,400 in the reference year.

Moreover, we found that in rural areas percentage of households reporting receipt of

remittance did not vary much with increase in MPCE as found in case of urban areas.



19

Trends in Remittances: The Quantum Jump in the Globalization Era.

In the balance of payment statistics, remittances to India can be identified as credit on

account of net private transfer payments in the current account. Based on these estimate

of remittances, a time series data from the period 1971-2008 has been constructed which

is given in table 1.



20



21

From the Table 1 and Figure 1, it is clear that the magnitude of remittances to

India increased steadily during the 1970s; remained more or less flat in the

1980s and picked up sharply in the 1990s (the sharpest increase took place

during 1991-97). The remittances to India increased approximately 20-fold

during the period 1991-2008, making India the largest recipient of remittances.

In the absolute term, remittances are around USD 52 billion which is more than

any type of capital flow to India including FDIs, FIIs etc. In terms of

percentages of GDP at market price, remittances were around 0.02 percent in

1971, 0.78 percent in 1991 and 5.63 percent in 2008.

There are many factors which could be attributed for such a phenomenal rise in

remittances during the period 1971-2008:

The phenomenal rise in remittances resulting from international labor

migration until the mid-eighties may be attributable entirely to the economic

boom in the oil-exporting countries and the associated inflow of remittances

from Indian workers in the Middle-East. But from the 1980s, the share of the

Middle-East countries in the total remittances declined from 77 per cent to

around 61 percent in 1990-91 to and further to 22 per cent in 2003 (Sasikumar & Hussain,

2007).



22

The reason for such a decline in the share of Middle- East could be attributable to the

geographical spread of the migrants throughout the world.

• From the early nineties, the increase in remittances has been astonishing (see

figure 1) which is due to the liberalization of the exchange rate system fuelled by

the large number of Indian professional migration to the USA due to information

technology revolution. The market determined exchange rate regime and current

account convertibility instituted since the early 1990s have had a considerable

influences on remittances inflows.

• In the 1990s, migration to USA, Canada, and Australia increased significantly,

particularly of information technology professionals. The professional migration

to USA seems to have massively preferred the remittances route to the NRI

deposits which could be contrasted with the 1980s when NRI deposits (due to interest rate

differential and exchange rate guarantee) were the preferred mode of

the professional migrants. With gradual withdrawals of the incentives structures

for NRI deposits, there was a strong shift to remittances. The speculative nature of

these deposits was reflected in the massive fluctuations in the net NRI deposits in

the 1990s (see table 1). Due to the massive fluctuations and speculative nature of

the NRI deposits, remittances have become a preferred mode of transfer for short

term investment (Sasikumar and Hussain, 2007).





24







27

Impact on the labour market

Much of the popular debate in developed countries on immigration policies revolves

around their effects on the labour market. It is a common concern among the native

population of countries hosting migrants that immigration could lead to higher

unemployment and lower wages for natives. This concern is especially evident in many

European countries, where unemployment levels are high and the proportion of the long-term

unemployed among the unemployed is large.

Impacts on host countries

From the point of view of the host country, immigration raises three main issues. The first

issue concerns the impact of immigration on the labour market in the host countries,

where the fear of losing jobs or purchasing power because of immigrants is often widespread

among the native population, particularly among those at the lower end of the

labour market. The second issue concerns the impact of immigration on economic growth

and the third concerns the fiscal consequences of migration, which are becoming more

important in the light of the ageing of the population in the developed countries, particularly

the countries of Europe, and Japan.



28

REFERENCES

Adams, Richard H., Jr. 1993. Economic and demographic determinants of international

migration in rural Egypt. Journal of Development Studies30, no. 1.

— 1996. Remittances, income distribution, and rural asset accumulation. FCND Discussion

Papers 17. Washington, D.C.: International Food Policy Research Institute (IFPRI).

- 2005. Remittances, household expenditure and investment in Guatemala. World Bank

Policy Research Working Paper No.3532. Washington D.C.: World Bank.

- 2006. Remittances and poverty in Ghana. World Bank Policy Research Working Paper No.

3838. Washington D.C.: World Bank.

- 2007. International remittances and the household: analysis and review of global

evidence. World Bank Policy Research Working Paper No. 4116. Washington D.C.: World

Bank.

-Adams, Richard H., Jr., and John Page. 2005. International migration, remittances and

poverty in developing countries. World Bank Policy Research Working Paper No. 3179.

Washington D.C.: World Bank.



29

-Adepoju, Aderanti. 2005. Migration in West Africa. Paper prepared for the Policy Analysis

and Research Programme of theGlobal Commission on International Migration. Geneva,

GCIM. Adhikari, Jagannath.

-Alonso, José Antonio. 2004. Emigración y desarrollo: implicaciones económicas. La Insignia,

España(22 October), www.lainsignia.org/2004/octubre/soc_026.htm.

-Asante, Molefi. 2004. Africa and its diaspora – forging ideas of African renaissance. Paper

presented at the First Conference of Intellectuals of Africa and its Diaspora, Dakar, 6-9

October.

-Azzarri, Carlo, Gero Carletto, Benjamin Davis and Alberto Zezza. 2006. Choosing to migrate

or migrating to choose: migration and labour choice in Albania. ESA Working Paper 06-06.

Rome: Agricultural and Development Economics Division (ESA), FAO.

-BAfD 2007. Les transferts de fonds de migrants, un enjeu de developpment: Les Comores,

Mali, Maroc, Sénégal. Rapport provisoire, October. Abidjan, Côte d’Ivoire: African

Development Bank. Bagasao, Ildefonso F., Ma. Elena B. Piccio, Ma. Lourdes T. Lopez and

Peter Djinis. 2004. Enhancing the efficiency of overseas workers’ remittances. Final report of

technical assistance.



30

- Manila: AsDB. Bain, Sheila C. 2003. Improving access to the US banking

system among recent Latin American emigrants. Amherst: Center for Public Policy and

Administration, University of Massachusetts.

-Barham, Bradford, and Stephen Boucher. 1998. Migration, remittances, and inequality:

estimating the net effects of migration on income distribution. Journal of Development

Economics 55, no. 2 (April).

-Desai et al (2009), ‘The fiscal impact of high-skilled emigration: Flows of Indians to the

US’, Journal of Development Economics (88), 32-44.

-Nayyar, Deepak (1994), ‘Migration, Remittances and Capital Flow: The Indian

Experience’, Oxford University Press, New Delhi.

-Kannan, K.P. and K.S. Hari (2002), ‘Kerala’s Gulf Connection: Remittances and their

Macroeconomic Impact 1972-2002’, Centre for Development Studies, Thiruvananthapuram,

Kerala.



31

-Kapur, Devesh (2003), ‘Remittances: The new development mantra’ Paper prepared for

G-24 technical group meeting, Centre for Global Development, Washington DC.

Ratha, Dilip (2003), ‘Worker’s Remittances: An Important and Stable Source of External

Development Finance’, Global Development Finance, The World Bank,

Washington DC.

-Gupta, Poonam (2005), ‘Macroeconomic Determinant of Remittances: Evidence from

India’, International Monetary Fund, Washington DC. Reddy, Y. V. (1997), ‘Capital Flight:

Myths and Reality’ Reserve Bank of India Bulletin, Mumbai.



32

CONCLUSION

From the above discussion, it is clear that India has already achieved a large and sustained

increase in remittances over the year due to phenomenal increase in the volume of

international migration. The impact of remittances has been tremendous for both the

household as well as the economy like India which is characterized by persistence of

abject poverty and lack of opportunity for the abled one in every aspect of their life.

Remittances, as a result of International migration, have emerged as one of the most

fruitful panacea to get rid of such economic problems.

It was also seen that in a capital scarce country like India, remittances are not simply

foreign exchange reserves which can be used to finance the balance of trade deficit or the

current account deficit but also a counterpart in terms of source of external development

finance (mechanism already discussed). It means remittances within the control of the

government should be utilized to finance higher level of investment rather than

consumption, if the objective is to maximize development benefits. But for this to be

applicable in reality there is a need of the appropriate government policies on mobilizing

and attracting migrant’s remittances and redirecting them to formal channels. The

government policies might be regarding providing fiscal incentives such as removing

restrictions on repatriation of profits and eliminating needless licensing requirements.

Apart from that there is also another important policy option for maximizing the

development benefits of remittances is to channel remittances to small and micro

enterprises through financial intermediaries as deposits rather than expecting migrant’s to



33

directly invest. In this case, the policy focus might be to induce micro finance institutions

to capture remittances to be in turn used to fuel productive activities.

Today, looking at the size of the Indian Diaspora, comprising Persons of Indian Origin

(PIOs) and Non-Resident Indians (NRIs), the total stands at 22 million. Of them, 50 per

cent are NRIs: North America (US and Canada: 3.2 million), South America (Trinidad&

Tobago, Guyana, Surinam, and Jamaica: 1.6 m), Europe (UK, the Netherlands, Germany,

Austria, Switzerland, etc.: 2.5 m), and Africa (South Africa, Mauritius, East African

countries, etc: 2.5 m). The figure stands at 3.5 millions in West Asia, including the UAE,

Saudi Arabia and Kuwait. In South-East Asia comprising Malaysia, Singapore and

Myanmar, etc, it’s 3.5 million. In the Pacific island groups of Fiji, Australia and New

Zealand, there are 0.7 million Indians. They also add up to 4.5 million in Sri Lanka and

Nepal.

The size of the Indian Diaspora is a force to reckon with. Though ‘brain-drain’ is the

main problem flowing from migration, the migrant talent has been very successful in

promoting the nation’s image in the host countries. The Indian contribution to the life in

the adopted country, to the life of the Diaspora is significant.





35

RECOMMENDATIONS

1. Developing migration information systems:

One of the areas requiring immediate policy intervention is the creation of an appropriate

information system on international emigration. This would enable closersurveillance and

better management of emigration.

The status of out-migrant data can be improved by making the registration of entry by

migrant workers mandatory in the Indian missions operating in labour

receiving countries.

There is also a need to use border control records for more accurate measurement of

international labour migration. International experience suggests that it is possible to extract

labour outflow and return flow data on key variables from embarkation/ disembarkation

cards.

2. Managing and directing migration flows:

There is an urgent need to manage and direct migration flows from India. It is important in

this context that labour markets of the major labour importing countries are closely



36

monitored. This may be done through the establishment of a labour market

monitoring authority. The authority has to carry out negotiations on various labour contracts

and also study the nature of emerging skill requirements. The activities of the labour market

monitoring mechanism should be linked with a comprehensive system of labour market

information for all types of employment seekers.

3. Welfare funds:

Although the issue of welfare of families of workers left behind in the home country has

come to be recognised as potentially important, there are hardly any policies in this area. It

may be worthwhile to consider the constitution of a ‘Welfare Fund’ for Indian workers

abroad. Such a fund can be utilised for a wide range of welfare measures concerned with both

the migrant workers and their families. The Welfare Fund could also be of vital importance to

women employees in the Gulf who are largely in the category of ara-medical staff and

domestic servants.

4. Pre-departure orientation programmes:

One of the most neglected aspects of overseas employment policy in India is the absence of

any form of pre departure orientation to the intending emigrants. It is important to recognise



37

adaptability of the workers to changed working conditions and to new socio-cultural

environment. It can also influence their productivity levels. The orientation programme can

include topics such as religion, the socio-cultural and political conditions of the country

of employment, the do’s and don’ts, the contract of employment, description of the jobsite,

the duties and responsibilities of the workers, travel tips, procedure on how the workers may

handle their problems at the worksite, and advice on remittance procedures.

5. Responding to transformations in labour markets:

Any policy intended to streamline the overseas labour recruitment system in India has to

recognise, as a pre-condition, the important transformation that has occurred with respect to

expatriate labour market in most of the labour importing countries, i.e. a transformation of

expatriate labour market from being a seller’s to a buyer’s market.

6.Financing outmigration:

It would also be worth establishing a government system of offering low interest loans to less

well-off emigrants to finance outmigration. Such a system of financing outmigration may

also ensure that those emigrants availing the lowinterest loans would resort to formal banking

channels to transfer their remittances back home. This would further augment the foreign



exchange resources, which are vital for a developing country like India.

7. Utilising resource flows and human capital of emigrants to strengthen development:

There is an absence of any policy framework regarding the effective utilisation of financial

inflows from emigrants to strengthen the development process at national or state levels.

Similarly, the existing policy regime in India hardly addresses any concerns related to the

migration of persons with technical or professional expertise, many of whom are willing to

make a contribution to the development process, either in their non-resident status

or as returnees. These issues need close consideration at national and regional levels and

effective policies need to be formulated which can integrate development concerns with the

migration process.

Apart from above, there is also a need to improve the infrastructure (physical as well as

human) of the country so that remittances to reach at higher level trajectory. The higher

level trajectory is needed for the capital and technological scarce economy like India.

With the presence of adequate remittances as foreign exchange reserve, India can finance

its need of capital for its economic development.

The most important macro-economic impact of remittances is on the BOP (particularly

current account) and through that on the economy as a whole. Hence, it is necessary to

consider the magnitude of remittances in the context of BOP.

Date post:	04-Apr-2018
Category:	Documents
Upload:	monikashrivastava12
View:	213 times
Download:	0 times

FDI IN BANKING AND INSURANCE

Documents