Last year in the month of November PM Narendra Modi announced the demonetization of the currency notes of the denominations 1000 and 500. The order put a ban on the use of these notes and introduced new notes of the denomination 500 and 2000. It was said that this step was taken to curb the black money and the practice of corruption in India. Demonetization in India has had a huge impact on almost every section of the economy and society. Money remittance is no exception to it. Do you know the impact of the demonetization on the Indian living abroad? What impact does it have on the Indian students studying in the foreign universities? What about the people who have to Money remittance and other rich countries? Let us tell you they too have been affected by the demonetization to a great extent. Even the international money transfer has seen the effects of the demonetization.
Numbers reveal that just about 7 million Indians residing in the Gulf countries remit almost 70 billion dollars every year to India. This number is enough to gauge the amount of remittances from other parts of the world such as the European and other western nations.
Why is remittance necessary?
Remittance is a crucial component in the economy of India. A large part of the India’s GDP is composed of the remittances from abroad. There are many channels through which remittances come to India. Some of them are the banks and the money transfer companies like the MoneyGram, Western Union, Instarem, etc. People who need to Money remittance and other countries use these services to transfer the money with ease and efficiency.
Effects of Demonetization on the Money remittance
- The government put limits on the amount of money that can be transferred from any country to India and vice versa. This has had a huge impact on the remittances coming to India. For example, if you wish to Money remittance there are upper limits placed on the same. This has restricted the amount that the Indians living abroad can send to their friends and family living in India.
- The government has become more cautious about the money leaving and entering the economy. Strict checks and regulations have led to a decrease in the remittances coming to India. People cannot Money remittance without disclosing their identities. With the fear of being caught for the black money and other financial crimes the remittances have decreased considerably.
- The decrease in the amount of remittances to India has further led to a slowdown in the Indian economy. As a major proportion of India’s GDP comes from the remittances, demonetization has hit hard on the economic growth of the country.
- The money transfer services did not accept the old currency notes on the orders of the RBI. It has hit hard even on the remittance business. So if you want to Money remittance the money transfer companies are not delivering the cash in India due to a crunch in cash.
- The use of digital wallets has increased over time after the demonetization. But people living abroad are still scared of sending money via these digital wallets as they are not sure if they can transfer large amount of money. Also, the transactions made through these wallets are recorded. This prevents people from sending any unaccounted money via digital transfer.
Demonetization has had many negative impacts on the remittance business industry but with the use of digital payment methods we can bring the remittances on the right track.