India's initiative to attract funds from its diaspora has yielded stronger-than-anticipated inflows, aiding the Reserve Bank of India's efforts to stabilize the rupee. The central bank announced that $40.8 billion has been received since a campaign launched in June to draw foreign exchange from overseas citizens.

These inflows are crucial as India, a significant oil importer, faces rising energy costs due to the conflict in Iran. The rupee has depreciated 6% against the dollar this year, making it one of Asia's weakest currencies, and the nation is on track for a third consecutive fiscal year with a balance of payments deficit. Economists noted the robust inflows, partly attributed to finance minister Nirmala Sitharaman's push for state-owned banks to engage with the diaspora, offering preferential rates and leverage on deposits.

According to Madan Sabnavis, chief economist at Bank of Baroda, the total could approach $60 billion by September. This influx provides greater flexibility for RBI governor Sanjay Malhotra ahead of a monetary policy announcement, with most expecting interest rates to remain unchanged despite rising inflation. The success of the scheme is also linked to the diaspora's growth to 37 million people.