The patriotism of wealthy Indians living abroad has helped India avert economic crises in the past, so it comes as no surprise that embattled policymakers are turning to them to plug a record trade gap that is punishing the rupee.
This time, though, big investors among the 25 million-plus overseas Indian community—the world’s second-largest diaspora—are demurring as the economic outlook darkens and political instability looms ahead of national elections.
Shoring up inflows from overseas Indians is one of Finance Minister P. Chidambaram’s key instruments to prop up the rupee, which has lost 20 percent against the dollar this year and dropped to a record low Wednesday.
The currency’s crash has boosted remittances, mainly from blue-collar workers—particularly in the Gulf—who can get more rupees for hard currency. But it has not triggered a surge in high-value investments in real estate, private equity funds and stock markets, bankers and wealth managers said.
Underlining the hesitancy, flows from nonresident Indians (NRIs) into bank deposits in the second quarter dropped to $5.5 billion from $6.6 billion a year earlier, central bank data show.
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