KOCHI: Contrary to reports suggesting a decline, banks operating in Kerala maintain that remittances from abroad are on an upward trajectory, albeit at a slower pace. While inflows from Gulf Cooperation Council (GCC) countries show signs of tapering, experts note that other nations have stepped in to offset the decline.
The migration of skilled workers has been a significant contributor to the overall increase in remittance volumes. Federal Bank, holding the largest share of remittance among lenders in India, asserts robust growth in the segment, with the bank’s share witnessing visible expansion.
“Kerala, being a GCC-dominant, non-resident market, has not experienced any slowdown in the flow of remittance in the recent past. The state witnessed exponential growth during the Covid period, while the trajectory has shown a flattening trend in the last two fiscal years. In the current fiscal, the year-on-year growth in remittance volume to Kerala remains positive, albeit with very minimal expansion,” said Joy P V, senior vice president & country head - of deposits, wealth & bancassurance at Federal Bank.
"Furthermore, we are observing additional remittances from specific non-GCC locations, from where traditionally we were not accustomed to receiving flows,” he told TNIE. Anand Subramaniam, joint general manager and head - of NRI business at South Indian Bank, reported an increase in inward remittances from NRIs in the ongoing fiscal year compared to the previous year, unaffected by global events such as the Ukraine war or economic slowdowns.
Remittance has remained resilient and is on rise: Expert
“With the return to near normalcy, remittances are surging. Our remittance value has increased by over 10% this year compared to the same period last year,” he added. S Irudaya Rajan, chair of the International Institute for Migration and Development and former professor at the Centre for Development Studies (CDS), highlighted the resilience of inward remittance and migration from Kerala.
“Despite a decline in migration due to demographic factors, remittance has remained resilient and is on the rise. This is primarily attributed to the quality of migration, with a shift from unskilled to skilled workers. If earlier, 10 people were sending $500, now one person is sending that much,” he said. Rajan estimates the value of remittance into Kerala to be Rs 1,10,000 crore in 2022.
As per an RBI survey, India’s inward remittances have shown resilience despite the macro-level crisis, but there have been significant changes in its geographical and socio-economic composition. The survey indicates a decline in the countrywide share of remittances from the GCC, from over 50% in 2016- 17 to about 30% in 2020-21.
Maharashtra emerged as the top recipient state, surpassing Kerala in the remittance landscape. While inflows are currently growing, the future outlook appears uncertain, noted sources with State Bank of India. “Remittance from GCC countries is slowing, and the proportion of student migration is on the rise. Traditional remittance leaders such as Kozhikode and Malappuram are reporting stagnant or declining figures,” they said. Narendra Dixit, CSB Bank retail head, backed up this observation, noting that a few years ago, 19% of India’s total NRI remittances were directed to Kerala, a figure that has recently decreased to about 10%.
“From a corridor perspective, the remittance contribution of the UAE has dropped from 26.9% in 2016 to around 18% recently. Given that a majority of Kerala emigrants are in the UAE and GCC countries, both trends can be easily correlated,” he added.
The World Bank’s recent report anticipates a moderation in remittance growth to India in 2023, following a remarkable 24.4% increase in 2022. Factors include exceptionally high levels in the previous year and changing demand for highly skilled IT workers, along with lower oil prices affecting remittance flows from the GCC.