Credit rating agency crisil in its latest report has said that continuous weakness in oil process may impact remittances from Gulf countries into India. It said that the oil prices are only expected to recover from present. But if the oil prices remain weak for an extended period, they can result in fiscal stress in the Gulf Cooperation Council (GCC) countries and impact inward remittances into India.
It further highlighted that the dip in remittances is lower at 2.2 percent as compared to the 47 percent drop in oil prices. It stressed that remittances from GCC countries have been sticky in the $36-billion range, which has ensured that there is a surplus of $22 billion even after accounting for the trade deficit. However, the agency said that low prices have reduced the India’s trade deficit with GCC countries.
Besides, it said that while falling oil prices have curbed India's exports to GCC, imports from the GCC have also fallen steeply. In the financial year 2016, imports from these countries fell at a faster clip of 34.5 percent. Compared to this, the exports have declined 18.7 percent, while the remittances from the region were also down 2.2 percent to $35.9 billion as compared to the previous year.