NRI remittances to their families indirectly and invisibly have helped the Indian economy grow at an impressive rate
BY PARSA VENKATESHWAR RAO JR
The money that NRIs had sent back to India through monthly remittances to their families, rupee and dollar deposits in Indian banks, and investment by buying or constructing a house indirectly and invisibly helped the Indian economy grow at an impressive rate after the 1991 economic reforms. Major changes have occurred in the patterns of remittances over the years, especially from 2016-17 onward.
It is not Kerala that receives the highest remittances anymore, it is Maharashtra. And it is not the Gulf countries but the advanced economies like the United States, the United Kingdom, Canada, and South Africa that are the source of increased remittances. While emigrants to the Gulf countries were the low-skilled labour, the better skilled workforce is now moving to the AEs. And the change did not come about during the Covid-19 breakdown, but a few years before that. The share of remittances from the GCC countries went down from 50 percent in 2016-17 to 30 percent in 2020- 21, and the share of the AEs stood at 36 percent in 2020-21. And the US accounted for 20 percent of the remittances to India.
Soumashree Tewari and Ranjeeta Mishra, who work with the Department of Economic Policy and Research with the Reserve Bank of India (RBI), have done an interesting analysis of the patterns of remittances—a crucial part of foreign fund inflows into the country—and the countries which contribute to it. The authors have noticed the impact of Covid-19 on the NRI remittances.
Much of the skilled labour is now moving to the better-paid AEs for employment, but the emigration of low-skilled labour from Uttar Pradesh and Bihar continues to go towards the Gulf countries. Kerala was the leading state in terms of remittances from the NRIs in the GCC, but now it is Maharashtra that receives larger remittances from emigrants to the AEs. Maharashtra received 35.2 percent of the remittances in 2021, followed by Kerala (10.2 percent), Tamil Nadu (9.7 percent), and Delhi (9.3 percent).
It is now reckoned that 46 percent of Indian emigrant labour is in three countries, the UAE, the US, and Saudi Arabia. In 2000, the distribution of Indian emigrants was: 11.6 percent (UAE), 13.2 percent (US), 12.3 percent (Saudi Arabia). In 2020, the distribution is: 19.4 percent (UAE), 15.2 percent (US), and 14 percent (Saudi Arabia).
In 2021, the low- and middle-income countries like India received $87 billion through remittances, and it was more than the remittances received by China and Mexico, which got $53 billion, the Philippines ($36 billion) and Egypt ($33 billion) in the same income group.
It was common wisdom in the 1990s that China’s market reforms were fuelled by remittances sent home by overseas Chinese. The story of Indian expats doing their bit for powering the Indian market economy needs to be told and acknowledged.
The writer is a New Delhi-based journalist who has worked with The Indian Express, India Today, Gulf Today (Sharjah), The Straits Times (Singapore), tehelka.com and DNA