The Hindu cites data by India's Prime Minister's Economic Advisory Council which suggest that remittance flows to India will grow strongly in the 2009/10 fiscal year (which runs from April through March). Inward private transfers reached $27.5 billion in the first half of the current fiscal year, a 4.3 percent increase on a year on year basis (see story). The PMEAC predicts that India will receive $30 billion in the second half of the fiscal year, which will take the annual figure to over $57 billion, a nearly 30 percent increase over the previous fiscal year.
The difference between our estimates and the PMEAC's is that we measure remittances by calendar year, instead of fiscal year. The first quarter of 2009 was a turbulent period for remittance flows to India -- inward private transfers collapsed by almost a third on a year on year basis because of the financial crisis. If remittances are measured in calendar years, this large decline in January-March offsets most of the gains in the rest of the year (hence our expectation of a decline for the full calendar year). If measured in fiscal years, this collapse in Jan-March 2009 goes into the previous fiscal year (2008/9) -- this lower "base" also implies a larger increase in the current fiscal year.
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