NEW DELHI, AUG. 14, REUTER — Indians working abroad in menial Jobs such as amahs, bearers, cooks and drivers — known as ABCD Indians — are helping to keep their homeland out of the financial mire, bankers and economists say.
Thanks to the billions of dollars they send home, the Indian government has been able to pay its foreign debts.
The expatriates’ bank deposits at home total about 100 billion rupees (seven billion dollars) — almost twice the country’s foreign exchange reserves of about 54 billion rupees (four billion dollars), according to reserve Bank of India (RBI) figures.
P.S. Bhatnagar, secretary of India Investment Centre, said in an interview about 10 million people of Indian origin lived abroad and the money they sent home had grown by leaps and bounds.
Most consistent senders of money were a million Indians living in the gulf countries who saved small sums of money.
Many of them were the ABCD Indians, Bhatnagar said. “On an individual level their savings are small but the accumulated figure is very high,’ he added.
The Investment Centre, set up by the Indian government, advises the expatriates how and where invest their savings.
No one really knows how many investible funds are available among Indians living overseas, but ruling congress (1) legislator Murali Bhandare believes it could be as high as 300 billion rupees (21.5 billion dollars).
He is setting up a foundation to use such funds for technological development.
For investment purposes, the government regards descendants of all Indians who emigrated up to two generations ago as nonresident Indians regardless of their current nationality.
Bhatnhgar said many of the Indians who want to return home or set up businesses in India had no idea where to go and his Centre was flooded with enquiries.
“They have managerial capabilities they imbided living outside the country. They could help India with exports. They already have the contacts and they could use India as a manufacturing base,” he said.
Apart from ABCD Indians, there are wealthy Indian families who have tried to set up an industrial base in India. At least one London based Indian industrialist has attempted but failed to take over a giant Indian company.
Although foreigners are not allowed to buy into Indian companies, people of Indian origin are allowed to buy up to five per cent, a figure which is expected to be raised to 10 per cent.
An RBI official said money sent back by nonresident Indians was used to finance imports and help repay the country’s foreign debt.
One economist said the government virtually treated these deposits as part of foreign exchange reserves.
Economist Vasant Chitale of the associated Chambers of Commerce said the deposits had come in handi in financing the country’s trade deficit, although the government would not acknowledge this.
New schemes are being devised to attract more hard currency deposits from overseas Indians.
Bhatnagar said dollar and sterling deposits had increased dramatically because Indian banks were paying higher interest rates than those offered by banks overseas.
Term deposits of up to one year attracted an interest of 8.5 percent, one to two years 9.25 per cent and three year deposits 9.75 per cent. Under a new scheme to be introduced shortly, seven year deposits will earn one percentage point more than the three year deposit. But the principal will be refunded in rupees and will benefit those who plan to return.
One banker said’ the foreign currency deposits had also become attractive because of the steady fall of the rupee, which has dropped by more than a quarter against sterling in the past year, bringing capital gains for the depositors.
Article extracted from this publication >> August 19, 1988