Remittance slowdown unlikely despite West Asia conflict: RBI DG Gupta

RBI Deputy Governor says remittances to India likely to remain stable as demand for migrant workers may rise despite ongoing conflict in West Asia

Remittances to India from West Asia are unlikely to decline despite the conflict as demand for migrant workers from the region is expected to rise, which could further support inflows, said Reserve Bank of India (RBI) Deputy Governor Poonam Gupta at the post-monetary policy press conference.

 

Remittances originate from a diverse range of regions, with the share from Gulf countries declining over time, she said adding that this diversity also extends to the skill composition of migrants, encompassing low, medium, and high-skilled workers across countries, all of whom contribute to remittance flows.

 

“We are not anticipating a decline, especially, if the crisis is going to be resolved very soon. We anticipate the demand for migrant workers will in fact increase from this region, which will help remittances further,” said Gupta.

 

 

Meanwhile, RBI Governor Sanjay Malhotra, in his monetary policy statement, said that weaker global growth prospects might dampen external demand and reduce remittance flows.

 

Gaura Sen Gupta, chief economist, IDFC First Bank, said: “Two things can happen, people would send back their money as a precautionary move or they might migrate to home because of the crisis. We feel that the impact could be more in the longer term.”

 

“Post-Covid, we had seen more migration to the US, Europe, Singapore. As a result, the remittances from these areas have picked up. The US is now the largest supplier of remittances. As per RBI Remittance Survey, US accounts for 27.7 per cent share, GCC (Gulf Cooperation Council) share reduced to 33.8 per cent and share of UK increased to 10.8 per cent and Singapore to 6.6 per cent,” Gupta said.

 

Economists said that over a period, share of GCC may come down in total remittances but it will not affect the overall remittances.

 

The RBI said India’s external sector remains comfortable, aided by strong services exports and steady remittance inflows. These factors are likely to keep the current account deficit at sustainable levels in 2025–26 (FY26).

 

The data from the RBI showed that in FY26 so far, Indians living abroad have sent over $107 billion. In FY25, they remitted more than $132 billion, a record high.