Measuring International Remittances in India: Concepts and Empirics
Author: Puja Guha
India is the top remittance receiving nation in the world. The international remittance receipts in India have grown at an impressive rate of 300 per cent during the past decade. Understanding the true impact of these foreign exchange flows is possible only with better knowledge and accurate measurement of the volume of these flows. This paper presents an empirical illustration of the different measures of international remittances for India, as measured by different institutions and surveys, and highlights the discrepancies between these measures. The broad objective of the paper is to understand the conceptual and empirical issues involved in measuring these flows. It uses data from the Reserve Bank of India (RBI), International Monetary Fund (IMF) and the National Sample Survey (NSS) of India on international remittances to show that there are large discrepancies in international remittance estimates. While the IMF estimate is twice that of the RBI, the RBI value is twice that of the household-level NSS survey data. This discrepancy can be partly explained by the varied nature of definitions used by these different agencies. Data is gathered at different levels by different sources and these sources do not coordinate among themselves. Also, there is a lack of transparency in the methods of collation and aggregation of the data at each level. One way to overcome this problem is to create a link between the local and the central data gathering institutions and have a centralised data generating mechanism, where data is gathered at the local level and then compiled at the central level. The necessary condition for such a centralised data generating process would be to have a strong and efficient mechanism in place at the local level, supervised centrally across the country.
Keywords: Workers’ Remittances, RBI, IMF, NSS, Private Transfers, NRI Deposits