US Overtakes UAE as India’s Largest Source of Remittances in 2024

The Reserve Bank of India (RBI) published the sixth round of India’s Remittances Survey (2023-24) which showed a change in the origin of remittance flows. The United States now leads the United Arab Emirates (UAE) in providing India with remittance inflows which supports skilled migration to developed nations. The worldwide data shows India keeps its position as the top remittance destination and digitalization has improved money transfer speed.

Context: 

• The RBI Remittances Survey (2023-24) provides essential findings about remittances to India which show that the United States has surpassed the United Arab Emirates as the main source country for remittances.

Leading Source Countries for Remittances

• Total Indian remittance inflows in 2023-24 received 27.7% of their value from the United States as the major sending nation.

• Total remittances received by the United Arab Emirates have declined to 19.2% since it previously held the top position.

• Remittances received by India mainly come from four countries among the UK, Singapore, Canada and Australia that together represent more than 50 percent of the entire inflow.

• Gulf Cooperation Council (GCC) nations have sent less money to India during 2023-24 which reduced their share to 37.9% from 46.7% in 2016-17.

Shift in Migration Patterns: Blue-Collar vs. White-Collar Jobs

• The United Arab Emirates serves as a principal employment center for workers from India who perform tasks in building construction along with medical care provision and hotel services and travel services.

• A vast majority (78%) of skilled Indian professionals in management and business sectors along with science and arts follow work in the United States.

• Although they have lower numbers of Indian immigrants, the United States provides larger remittances because its Indians earn more money.

India as the Largest Recipient of Remittances in 2024

• In 2024 India received the largest volume of remittances worldwide projected to amount to $129 billion.

• Beyond India there are four other nations obtaining big remittance amounts namely Mexico, China, Philippines and Pakistan.

• Low- and middle-income countries (LMICs) will receive remittance money of $685 billion during 2024.

• Remittance growth for 2024 will rise at 5.8% after remaining at only 1.2% in 2023.

Growth and Importance of Remittances

• The three countries Bangladesh, India and Pakistan together with South Asia will likely experience the fastest remittance growth (11.8%) in 2024.

• The flow of remittances surpasses Foreign Direct Investment (FDI) by a large margin because FDI decreased 41% since the last decade but remittances grew 57% during that period.

• High-income OECD countries led by the United States have regained their employment markets resulting in this growth. Since the pandemic split, international workers obtained 11% more employment positions compared to their pre-pandemic statistics.

• The recent trend has achieved a substantial rise of remittances which flow into Latin America and the Caribbean.

State-Wise Remittance Distribution

• The state of Maharashtra now leads Kerala in receiving remittances based on the 20.5% share of total remittances.

• Kerala maintained its position as runner-up for foreign remittances after Maharashtra took over as the leader in 2016-17 with 19% of total remittances.

• In Tamil Nadu the remittance sector expanded which elevated its portion from 8% during 2016-17 to 10.4% for the period of 2023-24.

India’s Global Share in Remittances

• Between 2001 and 2024 India’s contribution to global remittances has risen from 11 percent to 14 percent according to World Bank statistics.

• Jeremy in the World Bank projects that remittance flows will reach up to $160 billion during the 2029 period.

• The distribution of global remittances includes Mexico and China as main recipients in addition to the Philippines together with France and Pakistan and Bangladesh.

Role of Digitalization in Remittance Transfers

• Digital payment system advances have reduced the expenses involved in sending money to India.

• More than seven out of ten total remittances entering India during 2023-24 were received digitally through various payment methods including fintech platforms alongside money transfer operators.

Going forward, India should:

• The country needs to use remittance flows as a tool for developmental purposes by targeting poverty reduction through funding healthcare and education.

• Financial institutions should promote access to financial services which allows beneficiaries to make development-oriented investments into strategic economic sectors.

• The government should create policies that simplify digital transactions to provide faster money transfers at lower costs.

• India maintains its position as the world's largest remittance recipient because its diaspora demonstrates critical economic importance to the nation which reshapes financial conditions.

Conclusion

Residence and study patterns of Indian migrants towards advanced economies have triggered substantial changes in India's international remittance activities according to RBI survey results. The rising amount of money sent to India stems from Indian professionals working at high earnings levels abroad particularly in US workplaces and other developed nation jobs. The reduced role of GCC nations in India’s migrant workforce financial streams demonstrates a transition in the sector. Digitalization serves as a fundamental force which optimizes the process of remittances while minimizing expenses and improving operational efficiency. The economic influence of India’s diaspora on the nation’s financial structure is confirmed by India’s position as the world leader in receiving remittance flows.