Date: 08/12/2022

Relevance: GS-2: Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora;

Key Phrases: Structural shift in Indian migration pattern, Gulf Cooperation Countries, increased remittances from Western and Asia-Pacific countries, Different ecosystem in GCC and Western Countries

Why in News?

• According to World Bank estimates, India will receive $100 billion in remittance inflows in 2022, which is a 12 percent jump from last year’s $89 billion.
• This is a good achievement in a world just emerging from Covid-19 and also hit by the Russia-Ukraine war.

Key Highlights:

• The remittance growth in India way exceeds the global 4.9 percent rise of remittances.
• The figures are remarkable in the way that for nearly 40 years, money inflow into India was from the millions of Indians working in the Gulf, however, currently the largest contributors are from affluent English-speaking countries like the US, the UK, and Canada which account for over 36 percent of inflows, up from 26 percent five years earlier.
• Meanwhile, the Gulf countries’ share has plummeted to 28 percent from 54 percent in the same time-frame.
• With a share of 23 percent of total remittances, the United States surpassed the United Arab Emirates as the top source country in 2020-21.
• About 20 percent of India’s emigrants are in the United States and the United Kingdom.

Reasons for increase in remittances:

1. Structural shift in qualifications and destinations:
   • This structural shift has accelerated growth in remittances tied to high-salaried jobs, especially in services.
   • During the pandemic, Indian migrants in high-income countries worked from home and benefitted from large fiscal stimulus packages.
   • Post-pandemic wage hikes and record-high employment conditions supported remittance growth in the face of high inflation.
2. Structural shift in Indian migration pattern:
   • The economic conditions in the GCC (30 percent share of India’s remittances) also played out in India’s favor.
   • The majority of the GCC’s Indian migrants are blue-collar workers who returned home during the pandemic.
   • Vaccinations and the resumption of travel helped more migrants to resume work in 2022 than in 2021.
   • GCC’s price support policies kept inflation low in 2022, and higher oil prices increased demand for labor, enabling Indian migrants to increase remittances and counter the impact of India’s record-high inflation on the real incomes of their families.
3. Depreciation of the Indian rupee against the US dollar:
   • Indian migrants may have taken advantage of the depreciation of the Indian rupee against the US dollar (10 percent between January and September 2022) and increased remittance flows.

Differences between the diaspora of Western countries and the Gulf Cooperation Countries:

• The five-million Indian diaspora in the US is highly skilled as well as high-earner.
• Workers in the GCC (Gulf Cooperation Countries) mostly leave their families behind in India and send back as much money for meeting the basic expenses which is a rare possibility with diaspora in US, UK and Canada.
• The working conditions in the Gulf region have changed where the workers are poorly paid and the Gulf states are now recruiting from other places aside from India with cheaper workers flooding in from countries like Kenya, Uganda and Nigeria.
• As per the Reserve Bank of India, GCC has been hiring fewer Indians since 2015.

Reasons for increased remittances from Western and Asia-Pacific countries:

• The explanation for the larger sums coming from countries like the US, the UK, Canada, Singapore and East Asia is that more money has started to come via legal routes although large amounts came by unofficial channels in the past.
• The ease of online banking could have changed the picture, especially since Covid-19 made sending money via unofficial avenues harder.
• The formalisation of the economy might have taken place but it’s not the remittances that have increased the inflow rather it was send through some other source not captured by RBI data.

Different ecosystem in GCC and Western Countries:

• The investment opportunities in western countries are immense. Moreover, in Canada, Indians can buy land and have mortgages and have freedom to work to their fullest potential.
• By contrast, only a very few can buy homes in the GCC and investment opportunities are limited and almost all migrants expect to retire to India and make provision accordingly.

Undminishing role of Gulf in housing Indian migrant population:

• Indians still comprise the largest share of the migrant Gulf population.
• In Qatar, for instance, Indians comprise 24 per cent of the inhabitants, followed by Nepalese at 16 per cent and Filipinos at 11 per cent or 250,000.
• More people have been migrating to the GCC countries from Uttar Pradesh than from Kerala since the last decade.
• India’s, and particularly Kerala’s, links with the Gulf are so deeply entrenched it’s unlikely they’ll diminish massively even in coming decades.

Prospects for Indian migrants in Gulf region:

• Gulf governments have ambitious construction projects in the coming years.
• Saudi Arabia plans a new Riyadh mega-airport and has designs for a city that will rise in the desert called The Line (it will be built in a straight line).
• Moreover, Dubai is also planning a new city, Dubai South.
• These projects if materialised will provide an opportunity and prospects for the Indian immigrants to reap their fortune in West Asia for many years to come.

Source: Hindu BL

Mains Question:

Q. More people have been migrating to the GCC countries from Uttar Pradesh than from Kerala since the last decade. Comment with examples. (UPSC 2020).