Context:
India received a record $118.7 billion in inward remittances in 2023–24, surpassing foreign direct investment (FDI) inflows and financing over half of the merchandise trade deficit. The RBI’s Sixth Round of India’s Remittances Survey (released March 2025) reveals critical trends in the composition, value, and mode of remittances, underlining their rising importance in India’s external sector balance.
Key Highlights
- Total Inward Remittances (FY24): $118.7 billion (new record)
- Comparison with FDI: Higher than total FDI inflows in FY24
- Macroeconomic Role: Financed >50% of merchandise trade deficit
- Stability Factor: Key stabilising force amid global economic uncertainty
Structural Shifts in Remittance Sources
- Rise of Advanced Economies (AEs):
- U.S. share: 27.7% (up from 23.4% in 2020–21)
- Combined share of U.S., U.K., Canada, Australia, Singapore: 51.2%
- GCC nations’ share declined to 37.9%
- Implication: Reflects a shift in migrant profile — from low-skilled workers in GCC to high-skilled professionals and students in AEs
Impact of Migrant Profile Evolution
- High-skilled migrants in AEs:
- Tend to have stable incomes and remit consistently
- Likely to integrate abroad, reducing long-term remittance intensity
- Concentration Risk:
- Transactions above ₹5 lakh accounted for 29% of total value, though only 1.4% of volume
- Suggests a growing reliance on fewer, high-value remitters
Digital Transformation of Remittance Channels
- Digital share of transactions (FY24): 73.5%
- Average transaction cost for $200: 4.9% (below global average of 6.65%)
- SDG benchmark target: 3%
- Drivers: Rise of fintech and app-based platforms
Corridor Disparities in Digital Adoption:
| Country | Digital Share (%) |
|---|---|
| UAE | 76.1 |
| Saudi Arabia | 92.7 |
| Canada | 40.0 |
| Germany | 55.1 |
| Italy | 35.0 |
- Policy Challenge: Improve cross-border digital payment infrastructure and harmonize regulatory environments
Regional Disparities in Remittance Receipts:
- High-receiving States: Maharashtra, Kerala, Tamil Nadu (51% of total)
- Low-receiving States: Bihar, Uttar Pradesh, Rajasthan (<6% combined)
- Underlying Cause: Unequal access to migration-enabling systems (language training, foreign credentialing, job linkages)
- Policy Need: Make skilling missions more state-responsive to reduce regional inequality in remittance potential
Missing Dimensions: Household-Level Data:
- No current data on end-use of remittances at household level
- Limits insight into developmental potential (consumption vs. savings/investment)
- Policy opportunity:
- Develop savings-linked remittance products
- Promote financial literacy for migrant families
- Encourage productive asset formation
BS
