INVESTMENT BEHAVIOUR of Nris in KERALA with SPECIAL FOCUS on MALABAR REGION
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AN ANALYTICAL STUDY ON INVESTMENT BEHAVIOUR OF NRIs IN KERALA WITH SPECIAL FOCUS ON MALABAR REGION MINOR RESEARCH PROJECT REPORT Submitted to the University Grants Commission, New Delhi In partial fulfilment of the requirements for the Minor Research Project By PRAVEEN MV Assistant Professor of Commerce POST GRADUATE AND RESEARCH DEPARTMENT OF COMMERCE GOVT. COLLEGE MADAPPALLY VADAKARA-2 KOZHIKODE CERTIFICATE This is to certify that Minor Research Project titled “An Analytical Study on Investment Behaviour of NRIs in Kerala with Special Focus on Malabar Region" is an original work done by Sri. Praveen M.V, Assistant Professor, Post Graduate and Research Department of Commerce, Govt. College Madappally. He is permitted to submit the report to University Grants Commission. Place: Madappally Date: Principal DECLARATION I hereby declare that the project report entitled “An Analytical Study on Investment Behaviour of NRIs in Kerala with Special Focus on Malabar Region" is a bonafied project work done by me and I further declare that this report has not been submitted anywhere for the award of any degree or other recognition. Madappally Date: PRAVEEN M V. Acknowledgement I am very happy with completion of this project work and as far me is concerned it is great achievement. I am indebted to many people for their immense help and support for the completion of this work. With these few word officially I can convey my thanks but I cannot convey the depth of my gratitude to all those who helped me a lot. I express my sincere thanks to the Principal, Govt. College Madappally and my gratitude to all the colleagues in the Post Graduate and Research Department of Commerce for their cooperation and valuable suggestions. I am indebted to the University Grants Commission very deeply for sanctioning this project and allotting fund for the research work. I express my thanks to all my post graduate students who were always with me for all the assistance while conducting study. Moral and mental support from my family including my parents, wife and children were inevitable for the completion of this task otherwise I could not be able to complete this work in time Moreover I am very thankful to the god almighty for giving health and strength to complete this work successfully. Praveen M V CONTENTS List of Table List of Charts and Graphs List of Abbreviations Chapters Descriptions Page No. 1.1 Introduction 1 1.2 Relevance of the Study 2 1.3 Statement of the Problem 3 1.4 Objectives of the Study 4 Chapter I 1.5 Hypotheses of the Study 5 1.6 Scope of the Study 5 1.7 Research Methodology 5 1.8 Chapterisation of the Study 6 1.9 Limitations of the Study 7 Chapter II Review of Literature 8 – 19 Chapter III A Theoretical Portrait 20 – 38 Chapter IV Analysis of Respondent's Profile 39 – 50 Chapter V Analysis of Investment Behaviour of NRIs 51 – 75 Findings, Suggestions and Conclusion 76 – 85 6.1 Findings 76 Chapter VI 6.2 Suggestion 83 6.3 Conclusion 85 Bibliography 86 – 93 Appendix LIST OF TABLES Sl. Table Page Index No. No. No. 1 3.1 District- Wise Number of NRIs in Kerala 22 2 3.2 NRI‟s Remittance by District 24 3 3.3 Remittance by Religion in Kerala 25 4 3.4 Country of Employment of NRIs of Kerala 26 5 3.5 Returned NRIs by District 27 6 4.1 Age-Wise Distribution of Respondents 41 7 4.2 Gender Wise Distribution of Respondents 42 8 4.3 Marital Status of Respondents 43 9 4.4 Education-wise Distribution of NRIs in Malabar 44 10 4.5 Religious-wise Distribution of Respondents 45 11 4.6 Place of Employment of NRIs 46 12 4.7 Duration of NRI‟s Stay Abroad 48 13 4.8 Employment Status-wise Distribution of NRIs 49 14 5.1 Income-wise Classification of NRIs in Malabar 52 15 5.2 Saving-wise Classification of NRIs in Malabar 53 16 5.3 Average Annual Investment-of NRIs in Malabar 55 17 5.4 Motivating source of Investment of NRIs 56 Investment Criteria wise distribution of NRIs in 18 5.5 Malabar 57 19 5.6 Level of Satisfaction of NRI Investors in Malabar. 59 20 5.7 Assumed Risk level of NRIs in Malabar 60 21 5.8 Investment Timing of NRIs in Malabar 61 22 5.9 Timing of Withdrawal of Investment 62 23 5.10 Investment Portfolios of NRIs in Malabar 65 24 5.11 Ranking of Investment Preferences of Religions 68 LIST OF CHARTS & GRAPHS Sl. Table Page INDEX No. No. No. 1 3.1 Trends of NRIs In Kerala 23 2 4.1 Age-Wise Distribution of Respondents 41 3 4.2 Gender Wise Distribution of Respondents 42 4 4.3 Marital Status of Respondents 43 5 4.4 Education-wise Distribution of NRIs in Malabar 44 6 4.5 Religious-wise Distribution of Respondents 45 7 4.6 Place of Employment of NRIs 47 8 4.7 Duration of NRI‟s Stay Abroad 48 9 4.8 Employment Status-wise Distribution of NRIs 50 10 5.1 Income-wise Classification of NRIs in Malabar 52 11 5.2 Saving-wise Classification of NRIs in Malabar 54 12 5.3 Average Annual Investment-of NRIs in Malabar 55 13 5.4 Motivating source of Investment of NRIs 56 Investment Criteria wise distribution of NRIs in 14 5.5 Malabar 58 Level of Satisfaction of NRI Investors in 15 5.6 Malabar. 59 16 5.7 Assumed Risk level of NRIs in Malabar 60 17 5.8 Investment Timing of NRIs in Malabar 61 18 5.9 Timing of Withdrawal of Investment 62 Composition of Investment Portfolios of NRIs in 19 5.10 Malabar 66 20 5.10.1 Investments in Traditional Venues 66 21 5.10.2 Investment in Modern Venus 66 22 5.10.3 Amount wise portfolio of NRIs in Malabar 67 Ranking of Investment preferences of NRIs in 23 5.11 Malabar 69 LIST OF ABBREVIATIONS CDS Centre for Development Studies DES Department of Economics and Statistics FCNRA Foreign Currency Non-Repatriable Account FDI Foreign Direct Investment FEMA Foreign Exchange Management Act GCC Gulf Co-operation Council KMS Kerala Migration Survey NBFC Non-Banking Financial Corporation NRE Non-Resident External NRI Non-Resident Indian NRK Non-Resident Keralites NRM Non-Resident Malabaris NRO Non-Resident Ordinary OCB Overseas Corporate Body PIO Person of Indian Origin PMC Pravasi Malayali Census RBI Reserve Bank of India RCI Religious Commitment Inventory UAE United Arab Emirates UK United Kingdom USA United States of America Chapter I INTRODUCTION 1.1 INTRODUCTION The study entitled "An Analytical Study on Investment Behaviour of NRIs in Kerala with Special Focus on Malabar Region" aims at investigating the investment behaviour and decision factors of NRIs in Kerala with special reference to Malabar region. The Kerala model development or Kerala phenomenon has gained wider acceptability and much acclaim across the country. The human development index (HDI) in terms of health, education and standard of living is always above the national average and even higher than that of most developed countries. Kerala has attained a near total literacy along with negligible dropout rate in primary and secondary education. The infant mortality rate is the lowest in Kerala together with a higher life span. Many a great factors worked behind this exemplary social and economic growth. One of the deciding factors that contributed substantially to the socio-economic progress of Kerala is the remittance of NRIs. A major chunk of NRI population of India is Keralites who contributes around 25% of the economic output of the state thereby participating the growth process of Kerala economy. The Gulf countries altogether had a Keralites population of more than 2.5 million. In 2015 remittance from NRIs crossed an all time high of INR 1,00,000 crores. Radical changes have been recorded in Kerala‟s socio-economic situation for the last 5 decades of which large scale migration to Middle East taken place. In the state of 32 million, one out of six employed Keralites, or 1 around 30 lakh people from the state, work abroad mainly in Persian Gulf. The result of a migration that started with the Kerala gulf boom, when Malayalees began migrating to the GCC countries for lively hood in 1970s. The areas where the impact of remittance are the main subject of investigation of this project. The main areas of investigation covers-investing behaviour of NRIs, factors affecting their investment, socio-economic impact of NRI‟s investment in Kerala State. Everyone knows that NRIs are really the strongest foundation of Kerala‟s economy. A substantial financial investment in infrastructural sector in Kerala is the contribution of NRIs. Financial investment from NRIs is to be utilised in such a way as to helps the development of not only individuals but the state and nation also. Construction and modification of palatial houses have a demonstration effect in our society. After 90‟s there were lot of attractive investment platforms in India to channelize the remittance of NRIs to the productive sectors which provides double sided benefits ie., for both NRI‟s and the country. However, the recent trends in NRIs investment behaviour shows that the investment is more confined to the traditional sectors such as real estate, business, gold etc,. This makes the study more relevant in the socio economic condition of Kerala, particularly that of Malabar. 1.2 RELEVANCE OF THE STUDY The number of Non Resident Indians and their quantum of remittances in the Kerala state have been increasing at a remarkable rate.