Paper: GS – III, Subject: Economy, Topic: Trade and External sector, Issue: Remittances Survey trends as per RBI’s.
Context:
RBI’s sixth round of India’s Remittances Survey points out vital trends in the scenario of remittances.
Key Highlights:
Significance of Remittances Survey:
Structural Shifts in Remittances Survey Trends:
- Shift in Source Countries: Earlier dominance of Gulf Cooperation Council (GCC) countries is declining. Advanced economies (AEs) like the U.S., U.K., Canada, Australia, and Singapore now account for 51.2% of remittances.GCC countries’ share dropped to 37.9% from 54.0% in 2020-21.
- Change in Migrant Profile: Migration pattern shifted from low-skilled workers in West Asia to high-skilled professionals and students in AEs.High-skilled migrants have higher incomes and send larger, less frequent remittances.
- Concentration of Remittances: Large-value transactions dominate with transfers above ₹5 lakh form 29% of total remittances but only 1.4% of transactions. It Suggests that remittances are increasingly driven by High-earning, professionally mobile Indians.
- Digitalization of Remittance Transfers: There is an increasing shift to digital channels which account for 73.5% of all transactions in 2023-24.Transaction costs also declined to 4.9%, nearing the UN Sustainable Development Goal target of 3%.Rise in fintech platforms and app-based services has aided this trend.
Regional Asymmetries within India:
- States like Bihar, UP, and Rajasthan receive less than 6% of total remittances.
- In contrast, Maharashtra, Kerala, and Tamil Nadu get about 51%.
It Indicates distorted historical migration patterns besides Unequal access to foreign employment, education, and infrastructure.
Few missing links:
- Household-level data on remittance usage is lacking.
- Limited assessment on whether remittances support long-term goals (e.g., investment, education) or merely serve as consumption-smoothing tools.
Measures needed further:
- Enhance digital infrastructure and reduce transaction costs further.
- Improve financial literacy to promote productive use of remittances (e.g., savings, investments).
- Address regional disparities by: Encouraging migration from underrepresented states
Facilitating skills training and language education.
- Incorporate household remittance behaviour in surveys.
- Design targeted financial instruments and savings-linked products.
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