Wednesday, 09 Oct, 2024
By: Anshul Vipat
The gulf is no longer the top source of inward remittances for India. Image source: IANS
United States, home to 4 million people of Indian origin has now emerged as the top country when it comes to money being sent to India
For years, the gulf countries particularly UAE has been a major source of inward remittances for India. The Middle East is home to over 7 million NRIs who sent money back home regularly. These transfers have transformed India’s external profile into one of the biggest strengths of the economy. Then came Covid-19 and the world turned topsy turvy. Countries closed their borders and companies have to change their occupational patterns. Result: The gulf is no longer the top source country.
United States, home to 4 million people of Indian origin has now emerged as the top country when it comes to money being sent to India. According to Reserve Bank of India (RBI)'s monthly bulletin, US accounted for 23 percent of overall remittances in the financial year 2020-21. This corroborates with the World Bank report citing economic recovery in the US as one of the important drivers of India’s remittances growth.
Remittances from the UAE now account for 17-18 per cent of India’s total inward remittances. Infact, the share of remittances from the GCC region in India’s inward remittances is estimated to have declined from more than 50 per cent in 2016-17 (last surveyed period) to about 30 per cent in 2020- 21. UK emerged as the third largest source of remittances followed by Singapore, Saudi Arabia and Kuwait.
The change in remittances pattern has also impacted the states revenue. According to central bank's estimates share of the traditional remittance recipient states of Kerala, Tamil Nadu and Karnataka, which had strong dominance in the GCC region, has almost halved in 2020-21, accounting for only 25 percent of total remittances since 2016-17. Maharashtra with 35 percent share in total remittance has emerged as the top recipient state surpassing Kerala. Apart from Maharashtra, Uttar Pradesh and Delhi has shown tremendous growth in remittance receipts.
The decline in remittances from the Gulf countries during 2020-21 reflects a slower pace of migration and a larger presence of Indian diaspora in informal sectors which was hit the most during the pandemic period.
Despite projections of a severe contraction, India emerged as remained the top recipient country, accounting for 12 percent of total global remittances, recording a marginal decline of 0.2 percent in 2020 and a growth of 8 percent in 2021. In FY21, remittances amounted to $87 billion, nearly 2.75 percent of GDP.
