Slowdown in inward remittances from non-residents is a significant area of concern for emerging market economies, including India, according to Reserve Bank of India Deputy Governor SS Mundra.
The depressed oil prices have created stress in the oil-exporting countries in the Middle East which has a significant population of migrant Indians.
“Already a feeble trend of decline in remittance is established and if the oil prices remain depressed for an extended period of time, immigrant population may lose their jobs, face retrenchment and the consequent repatriation may lead to social tensions back home,” said Mundra.
Mundra observed that while the economic fundamentals of the country are on a much sounder footing than three years ago, like the rest of the world we are also wary of the impending market volatility that could emerge from crystallisation of any of the risk events.
He was referring to risk events such as reversal of policy rate by Federal Reserve and recent runs on several large UK commercial property funds illustrating the risks associated with deteriorating real estate values in few entities with structural vulnerabilities.
Though, the World has survived BREXIT as a risk event, but how it will manifest in the trade relations, investments and business sentiments going forward would be keenly observed, said the Deputy Governor.