New Delhi: India’s global position as the largest recipient of remittances has been further strengthened with significant changes in the sources of these inflows, according to the Reserve Bank of India’s latest report. The Sixth Round of India’s Remittances Survey 2023-24 reveals a major shift, where advanced economies like the United States and the United Kingdom have overtaken traditional Gulf countries as the leading remittance contributors to India.
This transformation reflects India’s changing migration landscape, rising skill levels of its overseas population, and the country’s increasing integration with global economic hubs.
Record-Breaking Remittance Inflows Strengthen India’s Economic Stability
India’s remittance inflows reached an all-time high of US$ 129 billion in 2024, accounting for 14.3% of global remittance flows. The RBI report highlights that remittances have more than doubled from US$ 55.6 billion in 2010-11, underscoring their growing significance in the country’s economy.
These inflows have become a vital source of foreign exchange, consistently outperforming foreign direct investment (FDI) inflows and acting as a buffer against global financial volatility. Importantly, remittances now finance around 42% of India’s merchandise trade deficit, offering critical support to the country’s balance of payments.
Major Shift in Source Countries: U.S. and U.K. Dominate Remittance Flows
For decades, Gulf nations like the United Arab Emirates (UAE) and Saudi Arabia were the primary contributors to India’s remittance inflows. However, the latest RBI data reveals a significant decline in their shares. The UAE’s contribution dropped from 27% in FY17 to 19.2% in FY24, while Saudi Arabia’s share halved from 11.6% to 6.7% during the same period.
In contrast, the United States has emerged as the largest single source, contributing 28% of total remittances in FY24. This marks a remarkable rise from 22.9% in FY17. Simultaneously, the United Kingdom’s share surged from 3% to 10.8%, reflecting increasing migration for education, skilled jobs, and professional opportunities.
Combined, the U.S. and U.K. now account for 40% of India’s total remittance inflows, nearly doubling their share from 26% in FY17.
Emerging Global Players: Australia, Canada, and Singapore on the Rise
The RBI survey also pointed out new players gaining significance in the remittance ecosystem:
- Singapore’s share grew to 6.6%, marking its highest level since 2017.
- Australia entered the top contributors’ list, accounting for 2.3% of remittances.
- Canada’s growing Indian population, particularly students and professionals, contributed significantly to the rise in remittance volumes.
This reflects the changing preferences of Indian migrants who now increasingly seek education and employment opportunities in developed countries, boosting remittance inflows from these regions.
State-Wise Distribution: Maharashtra Surpasses Kerala as Top Remittance Recipient
A notable change in the domestic distribution of remittances was also observed. Maharashtra emerged as the leading state, securing 20.5% of total remittance inflows in 2023-24. This marks a major shift as Kerala, traditionally the highest recipient due to its large Gulf diaspora, now ranks second with a 19.7% share.
Other observations include:
- Tamil Nadu strengthened its position, benefiting from increased inflows from advanced economies.
- Karnataka’s share witnessed a sharp decline, falling from 15% in FY17 to just 4.4% in FY24.
- Northern states like Haryana, Gujarat, and Punjab recorded modest growth but remained below the 5% share mark individually.
This shift indicates that states with stronger diaspora links to developed economies are increasingly becoming key beneficiaries.
Digitalization: Transforming the Remittance Ecosystem
The RBI report underscores the growing impact of digital platforms on remittance transfers. The survey revealed that 73.5% of remittances in 2023-24 were processed through digital channels, reflecting a growing preference for speed, cost efficiency, and transparency.
Digitalization not only facilitates faster transfers but also contributes to reducing transaction costs. However, the survey notes that sending small amounts (less than US$ 200) remains expensive, with costs averaging 4.6%. In contrast, larger transactions between US$ 200 to US$ 600 saw costs drop to 2.4%.
These findings highlight the need for further innovations to achieve the United Nations Sustainable Development Goal (SDG) of reducing average transaction costs to 3% or below by 2030.
Remittance Size Patterns: A Mix of Small and Large Transfers
According to the survey:
- 40.6% of total remittance volume involved small transactions of ₹16,500 or less.
- Large remittances exceeding ₹5 lakh made up 28.6% of the total.
This mix indicates that while many migrants continue sending regular amounts for family support, a considerable portion is driven by large payments for investments, education, or property-related expenses.
Key Drivers Behind the Shift Towards Advanced Economies
Several factors explain the increasing remittance inflows from countries like the U.S., U.K., Australia, and Canada:
- Growing numbers of skilled Indian professionals in high-paying sectors such as IT, healthcare, and finance.
- Rising student migration for higher education, which often leads to permanent residency and employment opportunities.
- Higher savings capacity and income levels of the Indian diaspora in developed nations.
- Policy changes and migration reforms in these countries enabling easier work and settlement opportunities.
These drivers have collectively reduced India’s reliance on Gulf countries, where remittances were largely dependent on low-skilled, temporary workers.
India’s Remittance Strength Outpaces FDI
The report also highlights a noteworthy comparison with foreign direct investment (FDI). While FDI inflows have shown volatility, particularly in the post-pandemic period, remittance flows have remained robust and stable.
This trend reinforces remittances as a more dependable source of foreign exchange, helping India maintain economic stability, especially during times of global uncertainty.
Policy Recommendations for Maximizing Remittance Benefits
Given these changing dynamics, several policy initiatives can enhance the benefits of remittances for India:
- Improving digital infrastructure to lower transaction costs further, especially for smaller remittances.
- Bilateral agreements with key countries like the U.S., U.K., Australia, and Canada to safeguard the interests of Indian migrants.
- Promoting financial literacy among migrants to encourage the use of formal remittance channels.
- Leveraging remittance inflows for investments in infrastructure, education, and healthcare to ensure long-term national development.
Conclusion: Remittances Continue to Power India’s Growth Story
The RBI’s latest remittance survey reaffirms India’s global leadership in remittance receipts. With a record inflow of US$ 129 billion in 2024, India’s overseas population remains a formidable economic asset.
The shift from Gulf nations to developed countries signals an evolution in India’s migration story—from low-skilled labor to high-skilled professionals and students. Coupled with technological advancements and digitalization, remittances are now more efficient, formalized, and impactful.
As India navigates the complexities of global economic changes, remittances will remain a critical pillar of financial strength, social support, and national growth.
FAQs
Q1. How much remittance did India receive in 2024, and why is it significant for the country’s economy?
India received a record US$ 129 billion in remittances in 2024, reinforcing its position as the top global recipient. These inflows fund 42% of India’s trade deficit, surpass FDI inflows, and support millions of families. Remittances stabilize India’s economy, finance education, healthcare, and daily expenses, making them a crucial external financing source amid global uncertainties.
Q2. Which countries are the largest sources of remittances to India, and how has this changed in recent years?
The United States (28%) and United Kingdom (10.8%) are now India’s largest remittance sources, together contributing 40% of inflows. Gulf countries, once dominant, have declined significantly. This change reflects increasing skilled migration and student presence in developed countries, leading to higher per capita remittances from these regions, particularly the U.S., U.K., Canada, and Australia.
Q3. How has the rise in digital remittance platforms impacted the cost and convenience of sending money to India?
Digital remittance platforms now handle 73.5% of transfers, offering speed, transparency, and reduced costs. Digitalization lowers fees, making remittances faster and safer. However, sending amounts below US$ 200 remains costly at 4.6%. Larger transactions are cheaper at 2.4%, helping India inch toward the UN SDG target of reducing remittance costs below 3% by 2030.
Q4. Which Indian states receive the highest share of remittance inflows, and what are the reasons behind this regional variation?
Maharashtra tops with 20.5% of total remittances, followed by Kerala (19.7%) and Tamil Nadu. The rise in skilled migration to the U.S., U.K., and other developed nations benefits these states. Meanwhile, northern states like Punjab, Gujarat, and Haryana recorded modest growth. This shift reflects changing migration trends favoring high-skilled jobs and education-driven remittances.
Q5. Why have Gulf countries’ contributions to India’s remittance inflows declined, and what does it signify?
Gulf countries like the UAE and Saudi Arabia saw declining shares due to reduced low-skilled migration. Their combined contribution fell sharply as skilled Indian workers migrated to developed economies. This shift signifies India’s move from traditional labor markets to advanced economies, driven by better job prospects, higher incomes, and increasing educational migration worldwide.
