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Tuesday, May 04, 2004

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Govt urged to use NRI remittances for development projects

Vimala Vasan

Abu Dhabi , May 3

AN NRI welfare organisation based in the UAE has urged the Indian Government to introduce a scheme to tap the vast resources obtained by way of NRI remittances to carry out infrastructure development programmes in the country, rather than approach the World Bank for loans. Referring to India's loan deal of $4-billion with the World Bank for the major road linking programme called India Connect, Mr K.V. Shamsudheen, Chairman of the Pravasi Bandhu Welfare Trust, told Business Line that the funds for such programmes could instead be raised by borrowing from Indian citizens working abroad.

He indicated that last year overseas Indians sent home $20 billion by way of remittances, while the figure was around $4 billion in the three months of the current year. A scheme like a long-term bond could be introduced that will assist the Government in carrying out major infrastructure development projects and also encourage savings by NRIs.

He pointed out that whenever India borrows from the World Bank, it was always with strings, demands and compulsions and unreasonable interest rates that were many times higher than the current LIBOR. Instead, NRIs could contribute a portion of their remittances to a special scheme automatically from the NRE account, which will not only help projects, but also provide them with recourse to funds when they return home permanently.

NRIs have always responded positively to Government bonds and schemes and a scheme with no strings and development oriented would definitely receive a good response.

Mr Shamsudheen said that studies had revealed that India today was the highest recipient of worker remittances in the world, with Mexico a distant second, in which 60 per cent was accounted for by remittances of Indian workers from the UAE alone.

The study also reveals that a bulk of the remittances from the UAE is from low-income earners who regularly send money back home. The trust's survey of 10,100 middle-income NRIs living in Gulf countries indicated that only two per cent of the families are saving from the remittances. Even though 98 per cent agreed that the lifestyle of their families had improved, only five per cent felt they could lead a comfortable life when they go back for good to India.

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