India Seen Escaping Argentina’s Fate As Remittances Curb Deficit
India received $69 billion in overseas remittances last year, equivalent to almost 3 per cent of GDP, Capital Economics said, citing World Bank data.
India’s vast army of overseas workers should cap the country’s current-account deficit and keep it from joining emerging-market counterparts that have struggled with currency crashes this year, according to Capital Economics.
“Remittances from abroad are a vital — yet often under-appreciated — source of funding for India,” Shilan Shah, senior India economist in Singapore at Capital Economics wrote in a note Tuesday. Without that support, the nation’s deficit “would have placed it alongside the likes of Turkey and Argentina — two countries that have suffered a currency crisis.”