Par panel asks govt to take steps to cut remittance costs

A Parliamentary panel today asked the government to take steps to cut cost of remittances by overseas Indians who sent a whopping USD 69 billion to the country in 2012.
In a report to Lok Sabha, the Standing Committee on External Affairs recommended that the Ministry of Overseas Indian Affairs should consult with the RBI to reduce cost of remittances and devise methods for encouraging the diaspora community to send money through regular banking channels.
Expressing surprise at the Ministry's reply that it did not have any idea about remittances made through non-banking financial institutions, the panel said money sent through such channels were indirectly encouraging Hawala transactions.

"The remittance fees of such outside institutions are considerably low as compared to regular banking institutions. Such strange situation clearly reflects the invisibles in the balance of payments with the RBI. These kind of transactions are indirectly encouraging Hawala transactions," the panel said in the report.
As per a World Bank report last week, India with USD 69 billion topped the list of countries receiving remittances in 2012, followed by China (USD60 billion), the Philippines (USD24 billion), Mexico (USD23 billion) and Nigeria and Egypt (USD21 billion each).
Noting that cost of remittances through regular banking channels are not uniform across various countries, the Committee strongly recommended the Ministry to take up the issue with the RBI to explore ways to bring down the cost.

At the same time, the panel said the Ministry should make "earnest efforts" to collect data of overall remittances made by overseas Indians, including through non-banking institutions.

The panel expressed dismay that the Ministry did not have mandate to bring more NRI investment into the country and that it has limited role of information dissemination on investment climate and opportunities in India.
It has recommended that though there are various other institutions like the Foreign Investment Promotion Board (FIPB) to promote and keep track of NRI investment in India, the Ministry must also set up such an institution in consultation with the Finance Ministry.

The Committee also criticised the Ministry for failing to utilise the funds granted at the Budget estimate stage during 2012-13. It asked the Ministry to improve spending by instituting strict monitoring on each and every scheme so that the budget allocated for 2013-14 is evenly spent.