Click to play videoMumbai: Although India’s economic boom has got many thrilled with the rupee’s rising strength, for many Indians with expatriate children, it spells bad news.
Mrs Eula Pinto was dependent on the money sent by her daughter, who resides in the US. But with the dollar’s continuing fall, she has been forced to restructure her household budget.
“It's (the dollar has) gone down terribly and it's quite difficult to meet with my day to day expenses,” said Pinto. “I mean, earlier I could even save for my future like – you know – medical expenses, or like, some major purchases. That way, I could save.”
She is not alone, for families of about 25 million Indians residing abroad and who send money home, have been hit adversely.
Between January and June 2007, about $16 billion – that is Rs 62,896 crores – came into India as remittances, a $ 2 billion increase over last year.
If a family received a remittance of one thousand dollars on December 4, 2006, it fetched Rs 44, 490. But the same amount on December 4, 2007 was worth only Rs 39,330, 5,160 rupees less.
Experts believe that an appreciating rupee against the dollar is a hard reality many Indian households will have to come to terms with.
Entering into a forward contract with banks could be a short-term solution.
Financial Planner Gaurav Mashruwala feels that is a good option.
“Reserve Bank of India has allowed that resident individuals can get into forward contracts which means you can go to your bank and lock in your rate at which you will get your future remittances converted into rupees,” he said.
However, he added a caveat: “Of course, there is a cost to it.”
”If the remittances are coming from abroad and people who are sending money are having sufficient funds, surplus funds, then money could come into India at one go and it could be invested here. So it's coming at this rate and there are some returns that are coming in,” he explained.
However, not many would have the understanding or the option for such instruments and are now being forced to brace for a tough life ahead.
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