How India's overseas workers may save it from Argentina-like crisis

India’s vast army of overseas workers should cap the country’s current-account deficit and keep it from joining emerging-market counterparts that have struggled with currency crashes this year, according to Capital Economics.

“Remittances from abroad are a vital -- yet often under-appreciated -- source of funding for India,” Shilan Shah, senior India economist in Singapore at Capital Economics wrote in a note Tuesday. Without that support, the nation’s deficit “would have placed it alongside the likes of Turkey and Argentina -- two countries that have suffered a currency crisis.”

India received $69 billion in overseas remittances last year, equivalent to almost 3 percent of GDP, Capital Economics said, citing World Bank data.

Without that inflow from an estimated 20 million nationals abroad, India’s current-account deficit would have been around 5 percent of GDP at mid-year, rather than 2 percent, it said.