Remittances to India from advanced economies surpass Gulf inflows: RBI

Share of inward remittances from advanced economies, including the US and the UK, has risen, surpassing that of Gulf economies in 2023-24, reflecting a shift in migration pattern towards skilled Indian diaspora, said RBI March Bulletin released on Wednesday. 

India's remittances have more than doubled from $55.6 billion in 2010-11 to $118.7 billion in 2023-24. While financing around half of India's merchandise trade deficit, net remittance receipts have been an important absorber of external shocks during this period. 

An article 'Changing Dynamics of India's Remittances – Insights from the Sixth Round of India's Remittances Survey' published in the Bulletin captures various dimensions of inward remittances to India – country-wise source of remittances, statewise destination of remittances, transaction-wise size of remittances, prevalent modes of transmission. 

It noted that India's stock of international migrants has tripled from 6.6 million in 1990 to 18.5 million in 2024, with its share in global migrants rising from 4.3 per cent to over 6 per cent during the same period. 

Indian migrants in the Gulf Cooperation Council (GCC) countries account for around half of the total Indian migrants in the world. Besides GCC countries, advance economies (AEs) have also emerged as a major source of inward remittances to India over the years, reflecting the changing dynamics of India's diaspora. 

As India's working-age population is expected to rise till 2048, India would be the world's leading supplier of labour, it said.

"The results of the survey highlight the gradual shift in dominance of India's remittances from the GCC countries to the AEs 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. 

The sixth round of the survey on inward remittances for 2023-24 covered 30 AD banks (capturing around 99 per cent of the value of total inward remittances reported under the purpose of family maintenance and savings), two major Money Transfer Operators (MTOs), and two fintech companies operating in cross-border remittance business. 

The share of the US in India's total remittances remained largest, rising to 27.7 per cent in 2023-24 from 23.4 per cent in 2020-21. The share of inward remittances received from the UK has also increased to 10.8 per cent in 2023-24 from 6.8 per cent in 2020-21. 

United Arab Emirates (UAE) maintained its position as the second largest source of India's remittances, with its share increasing from 18 per cent in 2020-21 to 19.2 per cent in 2023-24. UAE is the largest hub for Indian migrant workers engaged primarily in blue-collar jobs which are dominated by the construction industry followed by healthcare, hospitality, and tourism industry. 

This is in stark contrast to the US where Indian migrants are mainly employed in white-collar jobs, the article said. Maharashtra received the largest share of 20.5 per cent in 2023-24, albeit lower than 2020-21 (35.2 per cent). 

Kerala followed closely with its share increasing to 19.7 per cent from about 10 per cent during the same period, followed by Tamil Nadu (10.4 per cent), Telangana (8.1 per cent), and Karnataka (7.7 per cent). 

Maharashtra, Telangana and Punjab accounted for the largest number of Indian students migrating abroad for education and staying back for employment opportunities, which is reflected in the increasing share of these states in India's inward remittances. 

In terms of value (size) of transactions, remittances amounting to more than Rs 5 lakh had the highest share of around 29 per cent in 2023-24, the article said. 

The authors of the article are from the Department of Economic and Policy Research of the Reserve Bank of India (RBI).

The RBI said the views expressed in the article are those of the authors and do not represent the views of the central bank.