Title: Role of remittances in India's economic growth

Authors: T.K. Jayaraman; Chee-Keong Choong; Ronald Ravinesh Kumar

Addresses: Faculty of Business and Economics, School of Economics, University of the South Pacific, Laucala Campus, Laucala Bay Road, Suva, Fiji Islands. ' Faculty of Business and Finance, Universiti Tunku Abdul Rahman, Perak Campus, Jalan Universiti, Bandar Barat, 31900, Kampar, Perak, Malaysia. ' Faculty of Business and Economics, School of Economics, University of the South Pacific, Laucala Campus, Laucala Bay Road, Suva, Fiji Islands

Abstract: India has been among the top ten remittance recipient countries in the world since the 1970s. In the context of the ongoing worldwide recession and uncertain export prospects, mobilisation of foreign exchange earnings has assumed greater importance. Given the intensification of financial sector development together with relatively stable capital inflows (FDI and ODA) and the efforts towards formalising the channels of remittance inflows, we find that remittances and the interaction between remittances and financial sector development have had a positive and significant effect on growth over the last four decades (1970-2009). In the light of these findings, it is proposed that the proactive policy measures in India should continue for encouraging remittance inflows for long-term growth and development.

Keywords: remittances; financial sector development; bounds test; economic growth; India; foreign exchange earnings; remittance inflows.

DOI: 10.1504/GBER.2012.047802

Global Business and Economics Review, 2012 Vol.14 No.3, pp.159 - 177

Received: 20 Apr 2011
Accepted: 06 Sep 2011
Published online: 29 Jul 2014 *

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