Besides boosting India’s remittances from the rest of the world, the post-pandemic period has also brought a shift in the source of funds away from Gulf economies, according to the Reserve Bank of India’s latest survey of remittances.
“The results of the sixth round of the survey on India’s remittances for 2023-24 highlight the changing dynamics of India’s diaspora from the GCC countries as the pre-dominant source economies to the advanced economies,” RBI researchers said in an article published in the central bank’s monthly bulletin on March 19.
Analysis of data from the RBI bulletin shows that the US, which was the second largest contributor to remittances in 2016-17, with a 22.9 percent share pipped UAE to become the largest contributor with a 27.7 percent share in India’s total remittances. The UAE’s share during this period declined from 26.9 percent to 19.2 percent.
Similarly, the United Kingdom, which just had a 3 percent share in 2016-17, has replaced Saudi Arabia with a 10.9 percent share in 2023-24.
Remittances are an important source of external funds for India, especially at a time when FDI has slowed.
India’s total remittances jumped to $129 billion in 2024, with a 14.3 percent share of global flows. India received more money than the next two countries combined.
There has been a shift in the states receiving the funds as well.
Maharashtra now tops the list with a 20.5 percent share, replacing Kerala, which had a 19.7 percent share in 2023-24. Tamil Nadu has also gained, while Karnataka, which had a 15 percent share in 2016-17, has declined to 4.4 percent.
The study also found that reliance on digital modes has increased, which brings down the cost of transferring funds further.
“Importantly, on an average, 73.5 percent of total remittances received by the MTOs were through digital mode during 2023-24. This, alongside the lower cost of digital remittances vis-à-vis cash remittances, reflects the significance,” the study noted.
Moreover, transferring lower amounts (less than $200) was the costliest, with 4.6 percent of rhe total amount, after which the costs halved to 2.4 percent for $200-600.
“Since the highest number of remittances are sent in lower values, the SDG goal of bringing down the average cost of sending US$ 200 to 3 percent or less by 2030 is critical,” the study noted.
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