The Tribune - Spectrum

, August 18, 2002

Dealing with non-resident Indians’ money
B.S. Thaur

NRI Investment Guide
by A. N. Shanbhag. Vision Books, New Delhi.
Pages 200. Rs 235.

NRI Investment GuideFOREIGN money is a buzzword in industrial, financial, banking and government circles. The role of foreign money in the country’s economy has become increasingly important. At times it seems as if the developmental activities will come to a standstill in case there is no foreign money flowing into the country. Not long ago, articles of rare supply like scooters and cars were delivered on priority basis against a remittance from abroad through a special quota known as "foreign exchange allotment," which was fixed by dealers to attract money from abroad. The foreign reserves’ draught of 1990-1991 is still fresh in the financial circles when the country was virtually sustaining on a day-to-day basis regarding imports of essential items like petroleum products. It was only the Narshimha Rao-Manmohan Singh duo in 1992 that brought relief to the strained and sinking foreign exchange reserves by initiating liberalisation and reforms in country’s economic policy.

Apart from our exports, the other main sources of foreign money are Indians residing in foreign countries, or non-resident Indians (NRIs), who send their earnings back home, and foreign direct investments. According to an estimate, in 2001 India attracted foreign direct investment inflows of over $4 billion. The foreign exchange reserves of the country now stand at $55 billion. There are about 15 to 20 million Indians living abroad and their annual remittances are estimated at about $10 billion (Rs 48,000 crore). Indian banks hold NRI deposits to the tune of $23 billion. A. N. Shanbhag, who hardly needs any introduction in financial circles, has brought out the book NRI Investment Guide for the benefit of NRIs. About them, the author in the preface of the book says, "the combined wealth of NRIs is estimated to be close to the current GDP of India’s $300 billion. If such Indians sow some seeds of foreign remittances as investment, they are bound to reap a rich harvest which can be enjoyed by them and their family members at their chosen El Dorado."


The 200-page paperback is divided into 23 small chapters. Even a cursory go-through of the book would indicate that almost all aspects of NRI money have been dealt with in an explicit manner. Though economy of words is apparent, it is not at the expense of the required explanation. The book provides proper answers to the problems commonly faced by an NRI who has already invested or is desirous of investing his earnings back home. The topics touched upon are deposit in banks, investment in shares, NRI bank accounts, income tax, wealth tax, gift tax, foreign exchange repatriation, etc. Even the minute details of the relationship status of an NRI is explained, apart from the far more intricate issues regarding foreign money like repatriable and non-repatriable funds, prohibited remittances/transactions, etc.

A look at the title of the book may give an impression to the reader that it would contain the material culled out from the plethora of enactment and amendments of the law applicable to foreign money and presented in a concise and forthright manner, as is generally the case of help books in school/colleges, which does not require much intellectual exercise. This book is different from such ‘guides’ available in the market. An example where the author’s knowledge and insight about globalisation is perceptible to the reader: in chapter 16, "Rob Peter to Pay Paul," the author takes the government to task regarding rupee convertibility. "The Indian Government is obsessed with the idea of going global by making the rupee fully convertible. The panoply of decisions already implemented and also those planned for phased implementation over the next three years, appear to be arbitrary and without application of mind. The main issue that the authorities should address themselves is whether India can afford the cost of convertibility."

On foreign investments, the author avers that foreign entrepreneurs installing new industries in virgin areas like infrastructure are welcome but they should not play the ‘Peter-Paul’ game by using their financial muscle and divert the ‘cream’ to themselves.

The author runs a weekly ‘question-answer’ column on matters of investments in English dailies. True to his journalistic forays, he has written the second section of the book in a question-answer format. The questions are posed on behalf of NRIs. The topics covered are residential status, banks, business, housing property, income tax, gift tax, etc. The book undoubtedly can prove an asset to NRIs. It is also a "must-read" for bankers, whom it will serve as a ready reckoner on NRIs’ matters. It should also find space in the library of other financial institutions dealing with NRIs.