 "India's most remittances came from the US over the last few years. Representational Image/Reuters")
India has seen a shift in the source of remittances coming to the country. Once led by Gulf economies, the share of remittances is now dominated by developed countries, including the United States and the United Kingdom.
Reserve Bank of India’s (RBI) latest survey of remittances has revealed that advanced economies emerged as the top source of inflow of remittances to India in the last four years. But what explains it?
Let’s take a closer look.
From Gulf nations to advanced economies
Remittances are cash or goods sent by people working abroad to support their families in their native country. India has consistently received the highest remittance over the years, with the monies doubling from $55.6 billion in 2010-11 to $118.7 billion in 2023-24.
As per the RBI’s monthly bulletin this month, the US was India’s top source of inward remittances. Its share increased from 23.4 per cent in 2020-21 to 27.7 per cent in 2023-24.
The UK accounted for 6.8 per cent in remittances to India in 2020-21, a jump from a mere three per cent in FY17. The transfers from the UK to India further rose to 10.8 per cent in 2023-24, as per the article Changing Dynamics of India’s Remittances – Insights from the Sixth Round of India’s Remittances Survey published in the RBI bulletin.
The US and the UK together contributed to nearly 40 per cent of total remittances coming to India through banks in FY24, reported The Hindu. This figure was 26 per cent in 2017-18.
While the share of advanced economies’ remittances to India has surged, the money from countries that were previously major contributors has either remained the same or decreased.
The United Arab Emirates (UAE), which was India’s top source of inflow of remittances in 2016-17 with a 26.9 per cent share, was reduced to the second spot by 2020-21. Its contribution slightly rose from 18 per cent in 2020-21 to 19.2 per cent in 2023-24.
The share of money from Indians living in Saudi Arabia almost halved to 6.7 per cent in FY24 from 11.6 per cent in FY17.
India also received more money from Canada, Australia and Singapore. Australia’s share was 2.3 per cent of the total remittances in the last fiscal, while Singapore’s climbed from 5.5 per cent in FY17 to 6.6 per cent in FY24.
What’s behind the shift?
The shift in the source of remittances to India from Gulf nations to developed countries reflects the change in the migration pattern of the skilled Indian diaspora.
“The results of the sixth round of the survey on India’s remittances for 2023-24 highlight the changing dynamics of India’s diaspora from the GCC [Gulf Cooperation Council] countries as the pre-dominant source economies to the advanced economies,” RBI researchers wrote in the article published in the central bank’s monthly bulletin on March 19.
Indian migrant workers in the UAE are primarily involved in blue-collar jobs in fields such as construction, healthcare, hospitality, and tourism. In the US, Indians mostly do well-paying white-collar jobs, including in sectors like finance, medicine and technology.
The RBI officials pointed out that Indians preferring Canada, the UK and Australia for higher education destinations could be a factor for enhanced remittances from these countries.
“The results of the survey highlight the gradual shift in dominance of India’s remittances from the GCC countries to the AEs [advance economies] particularly the US, the UK, Singapore, Canada and Australia which together accounted for more than half of the remittances in 2023-24,” the article said.
Which states get the most remittances?
Roughly half of the remittances went to Maharashtra, Kerala and Tamil Nadu.
Maharashtra received the highest at 20.5 per cent in 2023-24, a drop from 35.2 per cent in 2020-21.
Kerala’s share of remittances increased to 19.7 per cent from about 10 per cent during the same period. Tamil Nadu got the third highest share at 10.4 per cent, followed by Telangana (8.1 per cent), and Karnataka (7.7 per cent).
As per the article, the most number of Indians migrating abroad for education were from Maharashtra, Telangana and Punjab, which showed the rise in the share of inward remittances of these states.
The central bank estimates that remittances to India will remain high and are likely to reach around $160 billion in 2029.
With inputs from agencies