According to an article by the Reserve Bank of India (RBI) on the impact of Covid on remittances, in 2020-21, the US surpassed the United Arab Emirates (UAE) as the top source country, accounting for 23% of total remittances in 2020-21. This corroborates with the World Bank’s report in 2021, citing economic recovery in the US as one of the important drivers of India’s remittances growth.
Remittances from overseas workers – one of the biggest suppliers of foreign exchange to India – have helped the country to live with a current account deficit. Money sent by non-residents has helped the economy during past crises, including the aftermath of the Lehman Brothers collapse, with remittances peaking at 4% of GDP in 2009. In FY21, remittances amounted to $87 billion, nearly 2.75% of GDP.
The RBI article said that the share of remittances from the Gulf Cooperation Council (GCC) region in India’s inward remittances is estimated to have declined from more than 50% in 2016-17 (last surveyed period) to about 30% in 2020-21. Amid the steady migration of skilled workers, the US, the UK and Singapore emerged as important source countries of remittances, accounting for 36% of total remittances in 2020-21.
The UAE, the US and Saudi Arabia have been the three major destinations of Indian migrants for the past two decades. Out of the total migrants from India, 48.6% were in the UAE, the US and Saudi Arabia as of end-2020.
Historically, the GCC region accounted for half of India’s remittances, making up for a major chunk of the oil trade deficit with the region. Post-Covid, the migration pattern to the GCC countries has changed significantly with a sharp contraction in the number of emigration clearances (ECs) issued since 2015, generally issued to unskilled or semi-skilled workers and women seeking overseas employment.
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