India has consistently held the position of the top recipient of remittances worldwide, with an impressive total of $119.5 billion received in 2023. This remarkable achievement can be attributed to its vast diaspora comprising over 18.5 million international migrants. A notable trend is the increasing proportion of highly skilled workers migrating to high-income countries, allowing them to earn more and send larger sums back home, thereby enhancing the overall remittance figures.
In the fiscal year 2023-24, remittances contributed approximately 3.4% to India’s GDP. While this figure is substantial in absolute terms, it appears modest when compared to countries such as the Philippines, where remittances account for around 9% of GDP. Nevertheless, these financial flows play a critical role as an external income source, providing essential support for families and local economies throughout India.
Recent trends indicate a notable transition in the countries contributing remittances to India. The influence of Gulf countries has diminished, with a marked increase in remittances from high-income Western nations. In 2023-24, the United States alone contributed 27.7% of total remittances. Altogether, the US, UK, Singapore, Canada, and Australia represented over half (52%) of the total inflows, reflecting a shift towards skilled migration to nations that offer better wages and formal employment opportunities.
Despite hosting a significant 45% of Indian migrants, Gulf countries contribute only 38% of total remittances. This discrepancy is largely due to the nature of employment in the Gulf, which tends to be lower-paying and predominantly blue-collar, such as in construction. In contrast, migrants heading to Western nations typically secure positions in higher-paying skilled sectors.
The states of Maharashtra, Kerala, and Tamil Nadu emerged as the leading recipients of remittances in 2023-24, collectively accounting for nearly half of the total remittance inflow. This trend is attributed to their established migration patterns, educational focus, and a strong presence in the international workforce. However, it's worth noting that Maharashtra's share has significantly declined from 35.2% in 2020-21 to just 20.5% in 2023-24.
The recent decrease in Maharashtra’s remittance share may be linked to the economic slowdown following the COVID-19 pandemic and evolving migration trends. Additionally, states like Karnataka and Punjab have witnessed an increase in their remittance shares, potentially due to the rise in student migration and employment opportunities abroad from these regions.
A significant portion (approximately 70%) of remittances is derived from transactions below ₹50,000. Conversely, high-value transactions exceeding ₹5 lakh—though they represent only 1.4% of the total number—contribute nearly 40.6% of the overall remittance value. This statistic underscores the influence of a small group of high-income earners on total remittance inflows.
Migrants in high-income countries such as the US, UK, Canada, and Australia tend to earn better salaries and benefit from stable employment conditions, allowing them to remit larger amounts. Many of these individuals are employed in lucrative sectors such as IT, healthcare, finance, and education, further enhancing their ability to send money home.
Looking ahead, India’s share of the global working-age population (ages 20–65) is expected to grow from 18.6% in 2023 to 20.8% by 2040. This youthful demographic, combined with enhanced education and skill development, positions India favorably to either maintain or increase its global remittance inflows in the coming years.
Accurate data collection surrounding remittances poses various challenges. Much of the information is sourced from banks and money transfer agencies, often overlooking informal channels such as hawala. Additionally, high-value transactions may be divided into smaller amounts, complicating categorization. There is also a lack of comprehensive details regarding remitter profiles, including their professions or precise locations.
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