A recent report by the World Bank (WB) had India recording a 22.5% increase in home remittances to US$ 80 billion in 2018, retaining its position as the world\u2019s top recipient of remittances for five years in a row. The last three years surge carried remittances from US$ 62.7 billion in 2016 to U$ $65.3 billion in 2017. The 10 top recipient nations include China ($67 billion), Mexico and the Philippines ($34 billion each) and Egypt ($26 billion), Pakistan is 7th in line. Remittances to South Asia are projected to increase by 13.5 % to US$ 132 billion in 2018, a stronger pace than the 5.7 % growth seen in 2017. Even than Bangladesh has experienced a strong uptick of 17.9 %. The upsurge is not only due to robust economic conditions in advanced economies, but the increase in oil prices increasing outflows from some GCC countries.
\nDue to downsizing employment opportunities in Saudi Arabia and the GCC countries Pakistan\u2019s remittances growth remains moderate at 6.2% due to significant commensurate reductions in inflows. Saudi Arabia\u2019s policy enabling its native population for jobs meant deporting more than 39,000 Pakistanis. Receiving $20.9 billion in 2018, overseas employment for Pakistani workers dropped 41% (0.83 million in 2016 to 0.5 million in 2017).
\nOver the past decade, cheaper and better trained Indians and Bangladeshis have replaced Pakistani manpower. The 8 million Pakistanis living abroad, means a scope to boost the monthly inward remittances. After exports, inward remittances approximately of US$ 2 billion are the second most important contributor to Pakistan\u2019s cash-starved foreign exchange reserves. Pakistan\u2019s increased dependence on remittances is due is its widening current account deficit.
\nThe \u2018Hundi\u201d or \u201cHawala\u201d, remittance system exists and operates as an alternative outside of or to parallel to traditional banking or financial channels. Unlike formal transfer system, hundi providing total anonymity enhances money laundering and facilitates terrorism. Not disclosing of identities allows terrorists and criminals to use it. This system facilitates the illegal flow of funds that works by transferring money without actually moving it, it requires no bank accounts and is consummated without leaving a paper trail. The corrupt who can easily send their ill-gotten gains abroad for purchase of assets and property outside Pakistan, \u201chundi mafia\u201d has thus great influence with the establishment. Estimated at around $14-15 billion in 2014, the \u201chundi system\u201d facilitators earned about $1.3 billion annually.
\nThe \u201chundi system\u201d was declared illegal by India to (1) stop circulation of black money (2) stop funds for terrorism (3) stop drug trafficking and (4) stop other illegal activities. Imposing emergency rule in 1975, former Indian PM Indira Gandhi jailed all hundi traders, confiscated their properties and bank accounts and even funds en route. Indian expatriate on an average send $4,000 per head annually, all through the banking system. Given 8-9 million non-resident Indians (NRIs) abroad it has grown from $30-35 billion annually in 2004 to more than US$ 80 billion today.
\nIn Pakistan the \u2018hundi\u2019 system continues despite measures taken by the State Bank of Pakistan (SBP). The \u201cHundi System\u201d has inadvertently provided a perfect electronic platform by the SBP\u2019s permission to the TELCOS to open commercial banks. The \u201chundi\u201d trade is hurting Pakistan financially and economically as this deprives the country of legitimate taxes as well as precious foreign exchange.
\nResearch carried out in Pakistan, Sri Lanka, Bangladesh and the Philippines in 2004 showed 3.2 million Filipinos were registered as employed abroad in 2003, 82%were women. Investing money in a particular software Philippine Central Bank gave it free to banks open 24\/7, meant to disburse money instantly to the many branches of many banks on one platform. Because of this plan $8.6 billion was remitted through banking channels in 2003, approximately $2,700 per expatriate Filipino per year. The banking system was used more than \u201chundi\u201d, a negligible amount of money transacted outside banking channels. In 2003 2.3 million Bangladeshis had sent $800 million annually, about $350 per head. While Bangladesh has a very active \u201chundi\u201d trade, Pakistan was and remains the worst easily. Non-resident Indians (NRIs) sent as much as $4,000 per head home in 2003. Comparing Pakistan\u2019s sending US$ 300.
\n\u201cFinancial Inclusion\u201d requires the govt to initiate sweeping reforms in the banking system, accompanied with some really stringent measures. Those operating the \u2018hundi\u2019 system are now armed with the latest technology. The foreign-owned TELCOS are providing an electronic platform instead of an old manual one to conveniently transfer funds anywhere, TELCOS must be stopped from establishing a parallel banking system. Stringent monitoring must be done by PTA by extensive use of modern technology. To stop \u201cHundi\u201d operations increasing of \u201cHome Remittances\u201d electronically will enhance collection by almost 20-25% as in the India and Philippines.<\/p>\n
The writer is a defence and security analyst<\/p>\n","protected":false},"excerpt":{"rendered":"
A recent report by the World Bank (WB) had India recording a 22.5% increase in home remittances to US$ 80 billion in 2018, retaining its position as the world\u2019s top recipient of remittances for five years in a row. The last three years surge carried remittances from US$ 62.7 billion in 2016 to U$ $65.3 […]<\/p>\n","protected":false},"author":2,"featured_media":41341,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[],"class_list":["post-41330","post","type-post","status-publish","format-standard","has-post-thumbnail","category-article"],"yoast_head":"\n