NEW DELHI: The share of India’s inward remittances from Gulf countries has likely declined from more than 50% in 2016-17 to about 30% in 2020-21, a survey by the Reserve Bank of India (RBI) showed.
According to the survey, remittances from the US have surpassed that of UAE, with the former accounting for 23% of total remittances in 2020-21. Remittances from UAE now account for 17-18% of India’s total inward remittances.
The RBI conducted the fifth round of the survey on remittances for the year 2020-21 based on a census of all authorised banks and major money transfer entities engaged in cross-border transfer of funds.
An RBI report further says that amid the steady migration of skilled workers, advanced economies particularly the US, the UK and Singapore have emerged as important source countries of remittances, accounting for 36% of total remittances in 2020-21.
The report believes that the fall in remittances from the Gulf region can also be attributed to the fact that the Indian diaspora working in informal sectors in the region seems to have been impacted the most due to lockdown restrictions, subdued crude oil prices and slower pace of migration in recent years.
The signs of financial distress among remitters, says the report, were evident in the increase in smaller denominated transactions (less than $200) in 2020-21. “While the increase in small size transactions may be due to the reduced sending capacity of the overseas remitters, it might also be indicative of more frequent financial support required by their low-income beneficiaries during the pandemic period,” says the report.
State-wise share
The share of the traditional remittance recipient states of Kerala, Tamil Nadu and Karnataka, which had strong dominance in the Gulf countries, has almost halved in 2020-21, accounting for only 25% of total remittances compared to over 42% in 2016-17, while Maharashtra has emerged as the top recipient state surpassing Kerala. The report shows Maharashtra now accounts for almost 35% of the total remittances in 2020-21.
The majority of the remittances continue to be routed through private sector banks, followed by public sector banks although foreign banks have witnessed a marginal increase in remittances transactions.
Majorly via private banks
The majority of the remittances continue to be routed through private sector banks, followed by public sector banks although foreign banks have witnessed a marginal increase.