Increasing internal demand and motivating expatriates to send home more remittances may solve the Indian economy’s problems due to a depreciating rupee, an industry lobby said Sunday.
“At present, NRI deposits are between $52 and $55 billion, which needs to be pushed up to an ambitious level of $75-80 billion,” said Assocham (Associated Chambers of Commerce and Industry of India) President Rajkumar Dhoot.
“We will strongly recommend that high-level teams comprising of senior RBI officials, executive directors of banks and chairpersons and senior officials of the finance ministry do roadshows in areas such as the Middle East, South-East Asia and Europe where there is a concentration of Indian expatriates,” he said.
According to a survey conducted by economists and bankers, he said, remittances from NRIs had to be mobilised like never before.
While a handful of banks have increased interest rates on NRI deposits, these seem to be piecemeal efforts, which need to be intensified, the survey said.
The rupee has touched an all-time low of moving closer to Rs.54 per dollar and the pressure on the Indian currency increases each time there is a percentage point drop in the BSE Sensex.
Dhoot said the NRIs must be given assurances that given the global uncertainties investing back home makes better business sense.
“NRIs should invest in India not only because of the motherland connection but also because India has a market of 1.20 billion people which will continue to grow,” he said.
NRI deposits in the country can be raised by at least $10-15 billion in the short term by taking confidence-building measures and offering attractive interest rates, the survey said.
“The outflows by the foreign institutional investors (FIIs) are not the result of only the so-called policy paralysis, but mostly because of risk aversion by the global investors into the equity markets,” it added.
Dhoot also said once the internal demand was generated, the FIIs would return to the Indian markets which would soon have attractive valuations again.
On reviving internal demand, the survey said moderating interest rates would send a strong signal and boost consumer confidence. Also, the investment climate should be improved soon