Why in News?

According to the recently released RBI’s Remittances Survey 2023-24, Advanced Economies (AEs) - led by the US, UK, Canada, Singapore, and Australia - have overtaken Gulf Cooperation Council (GCC) countries as the top source of remittances to India.

It reflects a structural shift in India’s migration and remittance patterns, raising policy and developmental implications.

What’s in Today’s Article?

• Declining Gulf Dominance in Remittances
• Rise of Advanced Economies in Remittances
• Migration Policy Shifts & Future Trends
• Role of Indian Students Abroad
• Policy Recommendations - Enhancing Remittance Potential
• Conclusion

Declining Gulf Dominance in Remittances:

• Traditional role of GCC nations: Historically dominant due to large numbers of low-skilled Indian migrant workers.
• Major contributors: UAE, Saudi Arabia, Kuwait, Qatar, Oman, Bahrain.
• Reasons for decline:
  • COVID-19 impact: Job losses, salary cuts, and return migration.
  • GCC nationalisation policies: Saudi Arabia’s “Nitaqat” (Saudisation) - preference for local over foreign labor.
• Statistical trends:
  • UAE: Remittances fell from 26.9% (2016-17) to 19.2% (2023-24).
  • Saudi Arabia: ↓ from 11.6% to 6.7%.
  • Kuwait: ↓ from 6.5% to 3.9%.

Rise of Advanced Economies in Remittances:

• Major contributors:
  • United States: Largest share - accounting for 27.7% of total remittances in 2023-24, up from 22.9% in 2016-17.
  • Others:
    • UK: ↑ from 3% to 10.8%.
    • Singapore: ↑ from 5.5% to 6.6%.
    • Canada: ↑ from 3% to 3.8%.
• Key reasons:
  • Higher wages and living standards: Better income potential due to higher minimum wages and stronger currencies.
  • Professional migration: Increase in high-skilled Indian migrants in STEM, finance, and healthcare. Per capita remittances are higher than from Gulf countries.

Migration Policy Shifts & Future Trends:

• US immigration policy impact: Restrictive immigration reforms (e.g. green card backlog, end of birthright citizenship).
• Potential return migration: Uncertainty may push Indian migrants to return or remit more instead of investing locally.
• Global right-wing politics:
  • Rise in anti-immigration sentiments in Western countries.
  • Migrants may diversify risk by increasing remittances to India.

Role of Indian Students Abroad:

• Contribution to remittances:
  • Pay education loans, remit income after graduation.
  • Significant numbers in Canada, UK, Australia.
• Challenge - Wilful deskilling:
  • Overqualified graduates working in low-skill jobs (retail, delivery service, hospitality) to qualify for permanent residency.
  • Reduces earning potential and limits remittance capacity.

Policy Recommendations - Enhancing Remittance Potential:

• Skill harmonisation:
  • Align domestic training with global job requirements.
  • Prevent underemployment and ensure dignity of labor.
• Bilateral and multilateral mobility agreements:
  • Need for strategic migration partnerships.
  • Ensure rights protection, fair wages, and long-term career growth.
• Maximising developmental impact:
  • Encourage productive use of remittances (e.g. education, health, investments).
  • Leverage diaspora networks for economic and knowledge transfers.

Conclusion:

India’s remittance landscape is undergoing a major transformation, shifting from low-skilled Gulf migration to high-skilled migration to AEs.

Proactive migration diplomacy, education policy reforms, and labor market alignment are critical for sustaining and optimising this vital source of foreign exchange and socio-economic development.