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The crisis in West Asia, which has also engulfed Bahrain and the Sultanate of Oman now, has the potential to impact the Indian economy, feel bankers.
Post-Egypt crisis, oil prices have been going up, and with the turmoil in other West Asian countries, oil prices will continue to be a challenge, Mr Albert Tauro, Chairman and Managing Director, Vijaya Bank, told Business Line . The current account deficit and inflation in the country will worsen, which will adversely impact our economic growth.
According to data from the World Bank's Migration and Remittances Fact Book 2011, India has, in the first six months of the current fiscal, received remittances of $27 billion, retaining its top position in the sector. While the Union Minister for Overseas Indian Affairs, Mr Vayalar Ravi, said in the Lok Sabha recently that India received a total of $53.9 billion as remittances in the year 2009-10, the World Bank had earlier indicated that Indian expatriates are expected to remit about $55 billion into the country this fiscal. Of these, a significant portion comes from the West Asian countries, pointed out bankers. The UAE, Saudi Arabia and Oman are among the top destinations for Indian emigrants in the West Asian region.
Remittances
“Any escalation in the crisis in West Asia could impact remittances into India,” said Mr Tauro. As the West Asian countries are big trading partners for the country and there would be some pressure on trading volumes too, he added. “Though not big, there will be a definite impact on the Indian economy,” explained Mr Tauro.
However, there is an interesting twist too. “Remittances into India could get expedited now, since Indians in these countries would want to send as much of their savings back to the country as possible,” said Mr S. Raman, Chairman and Managing Director, Canara Bank.
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