Migration matters

Mobility must remain a priority for economic diplomacy

Many Indians migrate to other countries, particularly the Gulf nations and the developed world. Both migration within the country and migration to other countries are usually in search of better livelihood, but can sometimes be distress-led. In 2020, about 18 million people from India were residing outside their country of birth. Countries like the United Arab Emirates (UAE), the United States (US), and Saudi Arabia host the largest Indian diaspora. The latest World Migration Report, released by the International Organization for Migration, reaffirms that India to the UAE, the US, and Saudi Arabia feature in the top 10 country-to-country migration corridors. Interestingly, migration from Bangladesh to India also features on the list. The number of people emigrating from India not only remains the highest in the world but is also gender-skewed. The proportion of male emigrants from India is nearly 65 per cent of total external migration from the country, suggesting that men migrate for work and women stay behind.
 

From a macroeconomic standpoint, migration acts as a big source of remittances for any country. The report highlights that India was the top remittance-recipient country in 2022, receiving more than $111 billion. India’s remittance dominance is growing steadily and has held top position for many years. Remittances play an important role in narrowing India’s current account deficit, which stood at 1.2 per cent of gross domestic product (GDP) in the third quarter of 2023-24. Being a large energy importer, India runs a large merchandise-trade deficit. As a source of additional disposable income, the remittance flow boosts household consumption expenditure and bolsters domestic demand. However, there are also concerns regarding over-reliance on international remittances. It is sometimes argued that it can cultivate a culture of dependency in the receiving country, potentially lowering productivity and slowing economic growth. It can also make an economy vulnerable to sudden changes in remittance receipts because of a variety of factors. Fortunately, the data cited in the report suggests India’s dependence is fairly limited compared to other countries. Tajikistan, which tops the list, had a remittance-GDP ratio of 51 per cent in 2022. In contrast, the corresponding figure for India was about 3.3 per cent.
 

Being a labour-surplus country, India benefits from a vast pool of migrant population. A large section of these migrants works in low-paying sectors such as construction, security, domestic work, and retail, while others are engaged in high-paying, skilled professions. In a large and developing country like India it is natural to expect some people to migrate to the developed world in search of better opportunities. However, the migration of low-skill workers clearly suggests that India needs to create productive employment opportunities at scale. However, since creating employment opportunities at the scale required has been a persistent policy challenge, the trend in migration is likely to continue in the foreseeable future. In this context, while there has been progress in recent years, India must strengthen its capabilities to address problems faced by Indians living abroad. These include handling cases of discrimination, exploitation, repatriation, and getting a grip on the whereabouts of Indians overseas. As things stand, global labour mobility must remain a priority for India’s economic diplomacy. It must protect India’s interests in a world increasingly becoming protectionist.