Did Modi's note ban hit Bangladesh hard?

Figures show only a marginal dip in remittances to the country post note ban

Remittances by migrant workers play a big role in Bangladesh’s economy. The Economist reported that remittances by migrant workers’ accounts for as much as 10 per cent of Bangladesh’s GDP. Data released by the Central Bank of Bangladesh shows that in 2015-16, the country received almost $15 billion in remittances from overseas workers. Between July and January 2016-17, the country received almost half the amount.

What Bangladeshis sent home from abroad
Month	Remittance
July	1,005.51
August	1,183.61
September	1,056.64
October	1,010.99
November	951.37
December	958.73
January	1,009.44
Figures pertain to 2016-17 and are in $ mn; Source: Central Bank of Bangladesh

But monthly figures show that there was a small dip in remittances from overseas workers immediately after the Modi government’s demonetisation move.  Between July and October, overseas Bangladeshi workers remitted close to $1 billion on an average every month. (See Table: What Bangladeshis sent home from abroad)

After the Modi government’s demonetisation move, remittances dipped marginally by around $60 million in November. In December, the fall in remittances was marginally lower at $51 million as compared to October.

In January 2017, remittances rebounded to their original $1 billion a month mark. Surprisingly, the Central Bank of Bangladesh doesn’t even list India in the top 30 nations from which remittances are received. Carnegie India, a think tank, estimates that there are 15 million Bangladeshi immigrants in India. Many of them stay and work illegally in the country.

Top ten countries from where Bangaldeshis send money back home
Saudi Arabia	2,955.55
UAE	2,711.74
USA	2,424.32
Malaysia	1,337.14
Kuwait	1,039.95
Oman	909.65
UK	863.28
Bahrain	489.99
Qatar	435.61
Singapore	387.24
Others	1,376.68
Total	14,931.15
Figures in $ mn; India does not feature even in the top-30 list; Source: Central Bank of Bangladesh

Almost 38 per cent of Bangladeshis’ $15 billion yearly remittances in 2015-16 came from just two countries – Saudi Arabia and UAE. In fact, Bangladeshi workers in Middle East countries contribute almost 59 per cent of all inward remittances.

In November, remittances to Bangladesh dipped from virtually all countries barring a few like UK, Bahrain and France as compared to October. By January this year, the money flows were back to their pre-demonetisation levels. Concerns were raised about illegal financial flows from abroad in the wake of the deadly terror attack in Dhaka in July last year.

The Modi administration was hoping that demonetisation would selectively damage parts of the Bangladeshi economy that was financially supporting anti-India terror outfits on its soil. Bangladesh is also a major source of counterfeit currency pumped into India to damage the country’s economic stability. While the effect of demonetisation on the fake-rupee industry in Bangladesh remains unclear, it certainly seems that little damage was done to Dhaka’s economy with the move.