Understanding the Importance of Remitting Money to India
An increase in migrants has boosted the flow of remittances worldwide in the last few decades. Funds sent by foreign workers to their homes in India become an important source of income for their families while contributing significantly to the receiving country’s economy.
Money remittance essentially refers to the money sent by an individual residing overseas to their home country. Any money sent abroad to family members, friends, acquaintances or any other third party is remittance. Today, it is the largest income source for poorer nations.India has been among the world’s top 10 Remittance recipient countries since the 1970s.
Their sheer size is bound to impact the economy at the micro and macro levels significantly. Here are the positive impacts it creates:
Boosts family income
When you use remittance services, a significant contribution goes towards the recipient country’s economy. At the micro-level, money transfers boost a family’s income, which leads to higher spending on education, increased purchasing power, more disposable incomes, improved nutritional outcomes, and a better standard of living.
Foreign remittance also enables recipients to boost their financial literacy, investments, and savings, as a stable stream of overseas income can ease the credit constraints of unbanked households. You can learn more about the fund transfer laws in other countries and build an investment corpus that you can use in emergencies.
While initiating the US to India money transfer, it is important to note that the funds contribute to the disposable income of families, thus pushing GDP growth. The country’s overall economic and social stability improves when the GDP increases. This way, it makes the nation less reliable on borrowings.
Holding up currency values
Remittances also aid in maintaining stability in foreign reserves of India, thereby helping the Indian Rupee hold up against the US Dollar, Euro, British Pound, and many other major currencies. The purchasing power of the nationals increases, thereby reducing poverty, boosting economic growth, and making essential facilities available to the lower sections of society.
Acting as Insurance
A money transfer from Dubai to India acts as Insurance when the country faces macroeconomic shocks, natural disasters, financial crises, and political upheaval. NRIs have relied on remittance to support their motherland while dealing with financial crises.
How to remit funds?
One of the best ways to remit funds to India is through a bank or money transfer agent. Both charge a nominal fee and take the sender’s and recipient’s personal, and Bank Account details to transfer the money safely. Some apps allow you to track your transactions from anywhere, maintaining transparency.
The Indian government encounters the challenge of framing policies to promote remittance flows and encourage their proper use. However, the effects of Remittances in developing countries differ widely depending on the structure and size of the economies, local policies, and how the recipient households spend the money.