MUMBAI: External advisers of Reserve Bank of India governor Raghuram Rajan are worried about the monetary policy implications of slowing remittances by overseas Indians for the first time since 2009 even though India does not rely significantly on such funds to meet foreign exchange requirements.Remittances to India, the world’s largest remittance recipient, decreased 2.1% last year to $68.9 billion, a World Bank release had said earlier this week. “This marks the first decline in remittances since 2009,” it said.“Weak corporate sector and slowing remittances are concerns that monetary policy needs to take into account,” said the Reserve Bank’s technical advisory committee in its recent pre-policy meeting prior to the April policy statement.The World Bank had warned of a dip in remittances in its note a few months ago, saying that remittances by the diaspora would decline because of a global economic slowdown and a sharp drop in global crude oil prices But unlike many countries in East Europe, Africa including some Asian economies such as Nepal, Vietnam and Philippines, India does not depend a lot on remittances to meet its foreign exchange obligations – it is just about 3.4% of the GDP in 2014.However, unlike foreign portfolio flows that are volatile, remittances by the diaspora to their relatives are current account transfers that are permanent in nature.Economists say a slowdown in remittances implies lower structural liquidity. A billion dollar inward remittance translates into Rs 6,600 crore flows into the system at current dollar conversion, and a billion dollar dip in inflows implies a corresponding drain in rupee resources.“Domestic monetary policy has a limited role in calibrating this flow, but a slowdown has an impact on domestic liquidity. Lower remittances implies lower structural liquidity, which RBI might have to fill through OMO (open market operations) purchases,” said Saugata Bhattacharya, chief economist, Axis Bank The concern assumes significance as the domestic financial markets are facing liquidity shortage as government is parking unspent revenues with the RBI. “However, a coordinated policy response is likely to keep dollar inflows strong, offsetting volatility in remittances. India is moving away from a remittances-driven BoP to a more China-like ecosystem, which is more productive and competitive-oriented,” said Bhattacharya.