Dilip Ratha has opined doubtlessly, “The over-regulation of banking sector can be avoided because they affect the entry into the market of poor migrant workers. The remittances give a lifeline to people in poor countries. The fears over money laundering and terrorist financing are an over-reaction to an otherwise smaller problem affecting the lives of very poor people. These regulations governing remittances can be avoided.”

Global remittances play at least two crucial roles: act as a stable source of sustenance for the millions of families and add to the foreign exchange to dozens of countries. This eventually builds up to foreign reserves, which can prevent a crisis in a country’s balance of payments. Worldwide this year, remittances grew at only 0.4% compared to the previous year mainly because of low oil prices, hitting Saudi Arabia, Russia and Gulf Cooperation Council states particularly hard.

This is perhaps the only macroeconomic indicator in which India has beaten China twenty-seven times and lost only thrice in the last thirty years. Currently, India with $72 billion, is the world’s largest recipient of remittances and followed by China ($64bn), the Philippines ($30bn), Mexico ($25bn), France ($24.6), Nigeria ($21bn) and Egypt ($20.4bn). According to The Economic Times of India (2016), UAE, USA, Saudi Arabia and Pakistan in a year, transferred remittances to India to the tune of $13.2bn, 11.5bn, $11bn and $4.9bn respectively. If the World Bank’s analytical estimate is believable Pakistan has sent $14.36bn to India in last three years. This calculation surprises both Pakistan and India. Less surprise is shown when we realise that $4.6bn remitted from India to Bangladesh in 2015. According to World Bank’s Migration and Remittances Fact Book 2016, capital that flew abroad from India was recorded at $6.2bn. In 2014-15 some $2.06bn was remitted from India to Pakistan. Indian remittances constitute nearly 25% of Pakistan’s GNP, GNP does not include the undocumented one. India and China jointly received 31% of the total remittances; their trained workers proved more productive as they are only 11% of the total international migrants. The remaining 69% went to all other developing economies including Pakistan. The remittances poured in India exceed what was received by the whole Latin American and Caribbean region ($69.3bn). Till the completion of the last financial year, Pakistan received nearly $20bn, ahead of a target of $19bn and is ranked the 8th largest recipient after Egypt. In the fiscal year 2015-16, remittances have grown at 6.38% than the last year. In June 2015-16 it crossed $2bn for the first time in history, and surely in response to Eid celebrations at home.

The World Bank (2016) estimates that nearly 250 million global migrants may send collectively $601bn to their respective homes in 2016 and saved $600bn at work places. Globally, 3.4% world population is residing in countries other than its place of birth. Indian origin workers settled abroad are 13.9 million compared with 9.7 million Chinese. Currently remittances moved in the less developed world are estimated to $441bn, thrice than that of the global aid budgets meant for them. Remittances were primarily generated from USA, Saudi Arabia, and Russia. In the South Asian context Pakistan has outshined Bangladesh as a second largest recipient of foreign forex after India. Bangladesh’s inflow of remittances has nosedived by 8%. According to Dilip Ratha, chief of the World Bank’s migration project known as Knowledge Partnership on Migration and Development, Indians are mainly influenced by economic, social and cultural considerations while pouring their hard earned money back to the country of birth. Even “remittance decay”, (money supply decreases with a longer period of non-residents staying abroad) principle of Economics does not apply on India. They afford strong cultural links and mostly prefer to marry a spouse from India.

Among outward flows, US emerged as the largest remittance source country with almost $56 billion, followed by Saudi Arabia ($37bn) and Russia ($30bn). From the US, $24bn crossed border into Mexico. In Pakistan, the total volume of remittances has grown more than double if compared with 2009-10 when it was $8.9bn. Remittances in Pakistan are steadily growing if compared with the export proceeds of the country. According to the State Bank of Pakistan, remittances in 2015-16 have grown at 6.38% compared to the previous year. The highest exports in 2010-11 were recorded at $25.36bn, a level never achieved again. Exports have declined by 12.11 percent to $20.802 billion during the fiscal year 2015-16 from $23.667 billion during the same period of the previous year. The upbeat Ministry of Commerce is all set to achieve export target of $35bn by 2018. Despite the weak performance of exports; Pakistan’s external account has been in surplus in the past three years. This mainly happened owing to a dramatic fall in oil prices, large debt inflows and remittances growing at an accelerated rate compared to the export proceeds’ rate.

Compared with India and China’s, Pakistan’s reliance on remittances in current account receipts with 36% is far higher of 12.2% and 1.6% respectively. Doubtless, Indians settled in foreign countries are well-organised, as a community mutually supportive, promoting the soft image if India abroad, lobbying effectively and generally bring back technology and knowledge to their homeland. Whereas non-resident Pakistanis mostly identify themselves from their ethnic, linguistic, sectarian and political affiliations they carried from their homes and nourished abroad. Dr Ishrat estimates that Pakistan’s seven million workforce settled abroad contributes almost 7% of the country’s GDP. The Pakistan Economic Survey 2015-16 suggests they are 8.7 million. They are more than the half of Indian non-residents; which means their contribution should be approximately $40bn. Pakistan occupies the 27th rank in terms GDP’s purchasing power parity in the world. Being the 6th most populous country, only 60% of its population is economically active, putting pressure on the scarce and dwindling resources. Despite issues abroad, Pakistani non-residents have consistently stabilised foreign exchange reserves of the country.

Analysts urge that the unprecedented growth of remittances is mainly attributed to the Income Tax law concession given under section 111 of the Income Tax Ordinance 2001 which guarantees inflows of foreign money if received through banking channel and enchased in local currency, cannot be probed further. Money whitening if happening in the cloak of remittances needs to be questioned by the FBR and FIA if it falls under the ambit of money laundering. In order to provide for an ownership structure in Pakistan for remittance facilitation, the State Bank of Pakistan, Ministry of Overseas Pakistanis and Ministry of Finance launched a joint initiative called Pakistan Remittance Initiative (PRI) in 2009. This initiative aims at taking necessary steps and actions to enhance the flow of remittances by ensuring quality banking service products.

In Pakistan’s case, the main sources of remittances are Saudi Arabia ($5.96bn), UAE ($ 4.36bn), UK ($2.57bn) and USA ($2.52bn). Till 2015, USA was the second largest source of remittances for Pakistan.

More tangible homework is needed in Pakistan now than previously done. NAVTEC (now NAVTTC) had launched its first comprehensive National TVET Policy in 2008-09. The organisation worked diligently on skill development across the country though the war on terror was in full swing. The then head of NAVTTC Mr. Athar Tahir and his team made some impressive contributions including launching national TVET policy and by actively collaborating with provincial TVTAs and other stakeholders, mostly belonging to the industry and private sectors. Empirical data suggest that the number of workers registered with Bureau of Immigration and Overseas Employment rose from 300,000 to 946,571 in the region of 2009 to 2015. The roles of Bureau of Immigration and Overseas Employment, NAVTTC, Ministry of Finance and provincial governments require vigorous strategic planning with result generating strategies. Safety of migrants’ families and their properties are hardly attended by the respective governments.

Pakistani non-residents if truly involved by the government, can annually remit up to $40bn potentially. Exports target of $35bn may not actualise in the near future, but that of remittances can be achieved by 2018.

n             The writer is an alumnus of Potsdam Centre for Public Management Germany and of Geneva Centre for Security Policy Switzerland.