The share of Kerala in inward remittances to the country almost doubled to 19.7% in FY24 from 10.2% FY21 after the Covid pandemic affected the inflows from the Gulf Cooperation Council (GCC) countries to the state. Maharashtra still topped the list with 20.5% share in inward remittances in FY24, down from 35.2% in FY21, data from the RBI March Bulletin show.
Tamil Nadu’s share grew to 10.4% from 9.7% and that of Karnataka rose to 7.7% from 5.2%. The share of Punjab, too, went up to 4.2% in FY24 from 3% in FY21.
States such as Maharashtra, Telangana and Punjab account for the largest number of Indian students migrating abroad from higher studies and staying back for employment opportunities, reflecting in increasing share of inward remittances, says an article ‘Changing Dynamics of India’s Remittances – Insights from the Sixth Round of India’s Remittances Survey’ published in the Bulletin.
The Kerala Migration Survey too has underlined a considerable rise in the number of students among the total emigrants from Kerala in 2023, reflecting a rise in migration of students to non-GCC countries for education and subsequently finding employment abroad.
Madan Sabnavis, chief economist, Bank of Baroda, says during the Covid pandemic remittances from gulf countries ebbed as activity came to a stop. “ As the situation has normalised, the share of Kerala went back to normal as in FY17 after falling in FY21. Typically, those who go to the gulf are in lower income jobs.”
Meanwhile, US topped the chart of countries contributing to India’s remittances from abroad at 27.7% in FY24, up from 23.4% in FY21, as West Asia ceded ground.
The US, the UK, Canada, Singapore and Australia accounts for more than half of the remittances in FY24, reflecting a gradual shift from Gulf Cooperation Council (GCC) countries. To be sure, the share from the United Arab Emirates —the second in the list —has fallen from 26.9% in FY17, to 18% in FY21 and a marginal uptick of 19.2% in FY24.
Gaura Sengupta, chief economist, IDFC FIRST Bank, says the trend reflects rising share of skilled labour force migration. “The rising share of remittance from US, Europe and other DMs, has reduced the correlation between remittances and crude oil prices. As a result we have seen strong remittance inflows coexist with low crude oil prices,” she says.
India’s remittances have more than doubled to $118.7 billion in FY24 from $55.6 billion in FY11, establishing their importance as a stable source of external financing. The country’s net remittance receipts have financed around 42% of merchandise trade deficit on an annual average basis during FY11 to FY24 (barring the pandemic year of FT21), the article notes.
India’s stock of international migrants has tripled to 18.5 million in 2024 from 6.6 million in 1990. The country’s share in global migration rose to 6% from 4.3% during the same period. Though Indian migrants in the GCC countries account for around half of the total Indian migrants in the world, the number of Indian migrants to the US and other advanced countries is rising because of demand for Indian IT services. About 78% of Indian migrants in the US are employed in high earning sectors such as management, business and science.