India has been consistently the top recipient of worker remittances for almost a decade now. According to the World Bank figures, India received remittances worth $51.6 billion in 2008.

But 2009 is expected to record a dip to $47 billion on account of a lagged response to a weak global economy. The sharp rise in remittances could be traced to a few structural factors. Initially in the 90s, migration to Australia, Canada, and the US increased significantly, particularly among information technology (IT) workers on temporary work permits, according to an RBI report.

Besides the growth in migrants’ ranks coincided with better incentives to send and invest money, liberalisation of regulations and controls and more flexible exchange rates. The convenient remittance services provided by Indian and international banks have also shifted such remittance flows from informal channels to banking channels. Also, non-resident Indians have also responded to several attractive deposit schemes and the policy initiatives on this front. Apart from these structural factors, some current developments that guided the remittances flows include: depreciation of the rupee, hike in interest rate ceilings on NRI deposits since September 2008 and uncertainties in oil prices, which might have induced workers to remit their money to India as a hedging mechanism due to its relatively better growth prospects, the RBI report said.