Examining the RBI’s remittances survey

RThe balance of the outskirts of India has long been a quiet but important role, but in terms of policy attention, they have often been overshadled by indicators such as foreign direct investment (FDI) and trade flow. Nevertheless, the latest data of the sixth round of the sixth round of India’s remittance survey of the Reserve Bank of India (RBI) has been released in March, making it clear that such flows are integral parts of the stability and structure of external accounts of India. Inward remittance was a record of $ 118.7 billion in 2023-24, not only more than FDI flows but also more than half of India’s trade trade deficit. India’s frequent high remittance flows form a significant stable force in terms of global economic uncertainty and tightening financial conditions.

Structural shift

However, data also indicates deep structural changes that attract attention closely. The most striking remittance is the changing spatial composition of sources. The traditional dominance of countries of the Gulf Cooperation Council (GCC) is now giving way to advanced economies (AES). The survey of the fifth round (2020–21) has an American account for 27.7% of India’s inward transmissions, above 23.4%. The United States, Britain, Canada, Australia and Singapore together eat 51.2% flow together, carrying forward the cumulative part of six GCC countries (37.9%) by a large margin. This reverse of a historical pattern not only reflects the macroeconomic shift, but also changes the profiles of Indian migrants-it is mainly from low-skilled workers in West Asia to high-skilled professionals and students in AES.

Its remittance is long -term implications for both the volume and stability of the flow. AES has high and more stable earnings in migrants, and their remittances are often less sensitive to cyclical instability in commodity markets. At the same time, unlike temporary workers in the Gulf, high-skilled migrants in AES may be less transmitted abroad as their economic and family integration.

A concern is the increasing concentration of large value transactions. In 2023-24, that had about 29% of the total remittance value in the transfer above 5 lakhs, even though they represented a small fraction (1.4%) of the overall transaction. This oblique suggests that dispatchs are rapidly operated by mobile Indians, high-Kamai instead of broad-based migrant remitters. Although it can reflect the migrant’s upper dynamics, it also creates potential weaknesses. The recession in high-efficient migration can unevenly affect these major flows due to the immigration policy shift of adverse host-country.

There is also a quick change towards the digital mode of dispatch. In 2023–24, digital channels, on average, were responsible for 73.5% of all remittances transactions. The cost of transactions has declined similarly. The average cost of sending $ 200 to India is now 4.9%below the global average of 6.65%, although the continuous development target of 3%is still above the benchmark. This progress is impressive and responsible for the rise of Finntech platforms and app-based money transfer services.

Despite this overall progress, transition remittances in digital channels have not remained the same in the corridors. While in countries such as UAE (76.1%) and Saudi Arabia (92.7%), migrants have recorded a very high part of the transfer transfer through digital channels, others such as Canada (40%), Germany (55.1%), and Italy (35%) depend more on traditional methods. These inequalities suggest that infrastructure and regulatory environment remain a binding obstacle. For India, the Policy Challenge Cross-Border lies in deepening the digital payment linkage. Doing so will not only reduce the cost and increase efficiency, but will also ensure that the dispatch flows remain within formal, trackable financial channels.

At the sub-national level, the remittance map shows constant asymmetry. Bihar, Uttar Pradesh and Rajasthan received a total share of 6% of the remittances, while Maharashtra, Kerala and Tamil Nadu received around 51%. This is not only a reflection of the historic out-migration pattern, but of uneven access to migration-enabled infrastructure: foreign language training, credentials, and employer linkage are thin. The National Skilling Mission should become far more state-answer; Otherwise, India abandoned financial literacy to migrate the remittances with social capital and to take advantage of returns, while overtaking the rest.

missing data

In particular, this round does not provide data on how reminded at the domestic level. This limits a complete understanding of the developmental role of dispatch beyond their comprehensive economic contribution to the balance of payments. Since the profiles of migrants move to high-efficient businesses and as the size of the transactions become more concentrated at the upper end, it is important to assess whether these flows are being directed for long-term financial goals such as savings, investment, or asset manufacturing or mainly consuming consumption in nature. Including this dimension will also help to indicate the design of supplemented equipment-input-linked transmission products, targeted financial literacy programs, or investment incentives for home-obtaining houses-which can increase the long-lasting growth multiplier of these flows.

Amarndu Nandi, Assistant Professor (Economics Area) at the Indian Management Institute of Management Ranchi. Views are personal