India’s Remittances Landscape

Table of contents

India, the world’s top recipient of remittances, is witnessing a paradigm shift in its remittance landscape — from the traditional dominance of Gulf nations to Advanced Economies (AEs) like the US, UK, Canada, and Australia.
As per the RBI’s 2025 Remittance Survey, over 50% of India’s remittance inflows now originate from AEs, signalling a transformation in the nature, profile, and destination of Indian migration.

RBI Remittance Survey 2025: Key Findings

Surge in Total Remittance Inflows: India’s remittances more than doubled from $55.6 billion in 2010–11 to $118.7 billion in 2023–24, reaffirming its status as the world’s top remittance recipient.
Shift in Source Countries: Remittances from the U.S. and U.K. rose to 40% in FY24, up from 26% in FY17. In contrast, the UAE’s share fell from 26.9% (2016–17) to 19.2% (2023–24), Saudi Arabia’s from 11.6% to 6.7%, and Kuwait’s from 6.5% to 3.9%.
Concentration in Recipient States: Maharashtra, Kerala, and Tamil Nadu received nearly 50% of India’s remittance inflows, while Haryana, Gujarat, and Punjab had lower shares of under 5%.
High-Value vs Low-Value Remittances: 28.6% of remittances were high-value transfers over ₹5 lakh, while 40.6% were low-value remittances of ₹16,500 or less, highlighting disparities in migrant incomes.
Rise in Remittances per Migrant from AEs: The GCC has more Indian workers, but remittances per capita from the U.S., Canada, and Australia are higher due to better wages in skilled jobs.
Growing Role of Indian Students: More Indian students in AEs contribute to remittances through education loan repayments & later as skilled workers, although many experience “wilful deskilling” in Canada and the U.K.

Reasons for India’s Remittance Shift from GCC to Advanced Economies

Economic Slowdown in GCC: The pandemic-induced recession in Gulf nations led to job losses and reduced remittances from key sectors like construction and hospitality.
Gulf Nationalization Policies: Local employment drives like Saudization have curtailed job opportunities for Indian migrants, lowering remittance flows.
Migration to Advanced Economies: A growing number of skilled Indians are migrating to advanced economies, resulting in higher per capita remittances.
Better Wages in AEs: Higher incomes, job security, and strong currencies in advanced economies boost remittance volumes.
Shift in Migrant Profile: India’s migration pattern now favours high-skilled jobs in AEs over low-skilled labour in the Gulf.
Restrictive AE Immigration Policies: Tightening immigration laws in AEs may lead migrants to send more money home as a financial safeguard.

Key Risks in India’s Remittance Ecosystem

Vulnerability to Global Shocks: Remittance inflows are highly sensitive to external disruptions like oil price fluctuations, geopolitical tensions, and global health crises.
Overdependence on Specific Corridors: States like Kerala and Tamil Nadu rely heavily on remittances from the Gulf, making them economically vulnerable to changes in these regions.
Brain Drain and Skill Exodus: While high-skilled migration increases remittances, it also results in talent loss from crucial sectors such as healthcare, IT, and education.
Informal and Costly Transfer Channels: A portion of remittances still flows through informal routes with high transaction costs and limited traceability.
Lack of Integration with Development Planning: Remittances are often used for consumption rather than investment, limiting their long-term developmental impact.

Policy Measures and Way Forward

Diaspora Engagement: Strengthening institutional platforms like the Pravasi Bharatiya Divas, India Centre for Migration, and the MADAD portal to support Indian workers abroad.
Skill Upgradation and Certification: Expanding programs like Pravasi Kaushal Vikas Yojana to ensure migrants are competitive in global job markets.
Reducing Remittance Costs: Promoting digital infrastructure, simplifying KYC norms, and collaborating with fintech companies to reduce transaction fees.
Migration Governance: Adopting a rights-based and strategic migration policy that aligns with India’s demographic surplus and global labour demand.
Leveraging Remittances for Development: Creating financial instruments (E.g., diaspora bonds, investment-linked remittance schemes) to channel remittances into infrastructure and social development.

“The Indian diaspora is not just an identity—it is an asset to the nation.” – PM Narendra Modi. India’s remittance landscape is now a key economic pillar. The emphasis should shift from short-term consumption to long-term development to maximise this potential.

Reference: Indian Express | PMFIAS: Indian Diaspora

PMF IAS Pathfinder for Mains – Question 153

Q. Examine the factors influencing the changing patterns of remittance inflows to India and analyse their implications for the Indian economy. (150 Words) (10 Marks)

Approach

Introduction: Briefly discuss remittances and provide current data on remittance inflows in India.
Body: Critically examine the factors driving the changing patterns and analyse their implications for the Indian economy.
Conclusion: Write a futuristic conclusion by mentioning the strategic policy intervention.