U.S., U.K. Replace Gulf Nations as Top Source of Remittances into India: RBI Bulletin

The Reserve Bank of India (RBI) has highlighted a significant shift in the source of inward remittances to India, with developed nations like the United States and the United Kingdom surpassing Gulf countries as the top contributors. According to the RBI’s paper, “Changing Dynamics of India’s Remittances – Insights from the Sixth Round of India’s Remittances Survey,” published in its March bulletin, remittances from the U.S. and U.K. nearly doubled, accounting for 40% of total inflows in FY24, compared to 26% in FY17. This increase is attributed to the growing presence of Indian professionals and students in these countries, while contributions from traditional sources like the UAE and Saudi Arabia have declined.

Key Highlights

Rise in Remittances from Developed Economies

• The U.S. and U.K. together accounted for 40% of India’s total remittances in FY24, compared to 26% in FY17.
• The U.K.’s share increased from 3% in FY17 to 10.8% in FY24.
• The U.S. emerged as the top source in FY21, contributing 23.4%, which further rose to 28% in FY24.
• Other advanced economies like Canada, Australia, and Singapore have also seen an increase in remittances to India.

Decline in Contributions from Gulf Nations

• The UAE’s share dropped from 27% in FY17 to 19.2% in FY24.
• Saudi Arabia’s contribution nearly halved, declining from 11.6% in FY17 to 6.7% in FY24.

Reasons Behind the Shift

• Increasing Indian workforce migration to the U.S. and U.K. due to better job opportunities.
• Growth in Indian students studying in Canada, the U.K., and Australia, leading to higher family transfers.
• Stagnation in wages and job opportunities in Gulf nations.

State-wise Distribution of Remittances

• Maharashtra, Kerala, and Tamil Nadu received nearly half of total remittances.
• Haryana, Gujarat, and Punjab saw an increase in remittances but still accounted for less than 5% each.

Transaction Size Trends

• 28.6% of remittances were above ₹5 lakh.
• 40.6% of transactions were of ₹16,500 or less.