The Hindu Business Line : Foreign inward remittances

India has achieved the status of the highest remittance economy in the world. Its forex remittances is in sync with the highest rate of return paid on it.

The world economy is in doldrums with falling interest rates and returns in many of the developed countries. Japan has just recovered from the blues of the zero interest rate regime.

The continued flow of inward remittances can heat up the economy leading to spiralling of interest rates, inflation and the attendant worries of excess liquidity.

The Indian economy is also showing some signs of a bubble and its discriminating interest rate regime with forex remittances drawing more interest rates while its own citizens are comforted with a meagre 9 per cent returns.

The Finance Ministry and the RBI should put a check on this rising trend of inward remittances before the economy loses its momentum in the near term.

Suhas S. Bohra

Mumbai

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