External Sector

Indian Economic System

Title

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Indian Economy - Understanding the basics of Indian economic system

Remittances to India is money transfers from non-resident Remittance to India donot grow as expected, this may lead to which of the following ?

1. Remittances increase consumption in the economy as the disposable income of families increases.

2. Remittances helps in pushing up the GDP growth.

3. Remittances keep the foreign reserves of India stable

4. Remittances help the Indian rupee hold up against the US dollar and other major currencies

Which of the above stated impacts is/are correct?

1 , 2 and 3 only

1, 3 and 4 only

All of the above

None of the above

From a macro perspective, remittances increase consumption in the economy as the disposable income of families increases. This helps in pushing up the GDP growth. Remittances also keep the foreign reserves of India stable, thereby helping the Indian rupee hold up against the US dollar and other major currencies
Remittances can also reduce labor supply and create a culture of dependency that inhibits economic growth. Remittances can increase the consumption of nontradable goods, raise their prices, appreciate the real exchange rate, and decrease exports, thus damaging the receiving country's competitiveness in world markets.