Modi and NRI’s

The euphoria has settled and Narendra Modi is now our Prime Minister. What does that mean for NRI’s in the Gulf and more specifically in Kuwait.

The Indian diaspora in Kuwait (and the wider Gulf) is undergoing significant transformation from economic and social perspective. During the past few years they have had to encounter several challenges in the areas of education, investments, jobs and more importantly currency fluctuations. All these factors tend to affect NRI mindset. Now that a new leadership is in place in India, it will be interesting to see how this leadership transformation in India will affect NRI’s. I see the following implications:

1. Jobs

It is important to note that we have witnessed some sluggishness in the GCC in terms of job opportunities and more so in Kuwait where the exodus of people rendered jobless increased during recent years forcing them to return to their motherland. Project uptake has been slow in Kuwait and hence fewer needs for even low skilled labors leave alone high skilled technocrats. Kuwait companies have been restructuring and downsizing and hence finding opportunities for displaced people is becoming that much more difficult. How will this situation change given the new leadership in India? It may not change the situation here in Kuwait, but it may change the situation back home in terms of job opportunities. The main deficit India has been facing is that of confidence. Narendra Modi will try and infuse that among business leaders who will then not hesitate to invest in new projects leading to more opportunities back home. Also, the clear mandate given to him by the people of India means that he can take painful decisions without fear or favor. This is required to restart the Indian economy and put it on track at the quickest pace.

2. Rupee

The currency performance during the past few years has been of great interest to NRI’s. Steady depreciation of rupee vis-à-vis other currencies (especially USD) has given some cheer to the diaspora as they can now remit more for the same Dinar. However, a strong Indian economy in the medium to long-term will also mean a strong rupee which may not make NRI’s all that happy. Expect Rupee to steadily appreciate over the next few years.

3. Stock Market

Many NRI’s have invested in Indian stock market either through mutual funds or directly themselves. Apart from real estate and fixed deposits, stock market investing is a key element of investment for NRI’s. However, over the last few years Indian stock market did not perform as well as say the American stock market. The average annual return is about 11% during the last three years. Corporates listed in the stock market are finding it hard to report healthy growth in earnings, debt level in the balance sheet has increased over time, and slowing economy has not resulted in increased demand leading to lower margins and profitability. All this is bound to reverse once economy is put back on growth track, and liquidity being made available to sectors like Real estate and infrastructure for uplifting projects. Foreign investors have already factored in a grand performance of stock market in the coming years. Investments even at the current level may make immense sense for NRI’s especially in blue chip companies for the medium and long-term though stock markets always encounters volatility in the short term.

4. Real Estate

NRI’s have significant real estate commitments back home. Property market has not been doing all that great especially in metros and other important cities. Though prices have not come down drastically, the number of transactions have dwindled taking away liquidity. Major projects are either on hold or getting unreasonably delayed while people borrowed to invest in them. Real estate is a very important element of investing for NRI’s and hence the new leadership is very important for this. The key limitation of the real estate market is the lack of bank funding as banks have either reached their limits or are wary about the non-performing loans to this segment. Also, the dull performance of the IT sector means a significant slowdown in demand. Modi government is expected to provide some directions to institutions and enable reenergizing demand in this vital segment.

5. Education

The higher education market in India is especially of interest to NRI’s who invariably decide to send their wards either to India for Bachelor’s degree or to the West if they can afford. However, options back home are quite limited due to skewed demand supply factor where demand far exceeds that of supply for leading institutions leading many NRI’s to fork out extra money (under NRI quota) to get their wards admitted. A simple solution to this problem is to establish more institutions of higher learning. Modi has already made right noises in this direction by espousing “IIT’s and IIM’s in every state in India”. If this dream comes true, then NRI’s can revel in delight and need not worry about the expensive western education for their wards.

6. Pride

After all, we are first Indian citizens and then NRI’s. We will all feel immensely proud to belong to a nation that is vibrant, growing and becoming influential in the global market place. We don’t want a weak and non-performing India. Having a leader who can transform a weak India into a super power is what we want to see as Indians and NRI’s. Narendra Modi government should work itself towards this avowed objective and make us proud.


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