When you hear an Indian say they like to travel, you have to take it seriously. We don’t say that, but the data is. Indians form the largest migrant population in the world and the remittances they send home are also the highest. This immigrant population offers a good source of funds that can be tapped in times of external account crisis.
Analysis of the United Nations Migrant Database shows that the population of Indians living abroad has grown steadily since 1990 to reach 1.80 crore by 2020. The average annual population increase immigration over the three decades between 1990 and 2020 is 3.4%, but there have been periods when the exodus was faster.
For example, the number of Indians living abroad has increased sharply since the beginning of this century. The fastest growth was seen between 2005 and 2010, which was also a period of economic prosperity for India. Improved wealth seems to have encouraged more Indians to seek residency abroad.
According to the United Nations World Migration Report (WMR) 2022, Mexico has the second largest emigrant population in the world, but it is about 70 lakh less than Indian emigrants. Emigrants from China and the Syrian Arab Republic are next on the list.
The Great Indian Journey
So where have these Indians gone? The UAE appears to have been the most welcoming and had the maximum number of Indians in 2020 (34 lakh). The oil-rich nation offered a good opportunity for skilled and semi-skilled workers to earn a living.
The United Arab Emirates became the third largest host of Indian emigrants in 2005, after the United States and Pakistan. But between 1990 and 2020, its share of India’s population increased by 657%. It hosts the largest proportion of Indian emigrants since 2010.
Currently, India and the United Arab Emirates are the third largest international country-to-country migration corridor, after Mexico and the United States and the Syria-Turkey corridor. It is also worth noting that India does not share a border with the UAE, unlike the other two corridors.
The United States was the second most attractive country for Indians traveling abroad. The rapid growth of digital technology and services in the United States since the turn of the century required an educated, English-speaking workforce and Indians were more than ready to step in. About 27 lakh Indians lived in the United States in 2020. Saudi Arabia was next on the list as an emigration destination in 2020, accounting for 25 lakh Indian emigrants.
But the favorite destination for Indians between 1990 and 2005 was Pakistan. About 28 lakh Indians lived in the neighboring country in 1990. But the number has steadily decreased over the years to reach 16 lakh by 2020. On the other hand, Indians living in the UAE, USA and Saudi Arabia have shown a steady increase over the past three decades.
Apart from these four countries, places where more than one lakh Indians resided in 2020 include Oman, Kuwait, Qatar, UK, Canada, Australia and Nepal.
An increase in migration is beneficial to India due to the remittances sent by overseas Indians and the money they deposit in Indian banks as NRI deposits. These two factors contribute to the country’s external balance.
According to the UN report, “In 2020, India, China, Mexico, the Philippines and Egypt were (in descending order) the top five receiving countries for remittances, although India and China are well above the rest, with total inward remittances exceeding $59 billion for each country.
Remittances are financial or in-kind transfers made by migrants directly to families or communities in their country of origin. In 2020 alone, India received a remittance transfer of $83.15 billion, the highest in the world. China, which is second on the list, only managed to receive $59.51 billion.
The main source of international remittances in the world is the United States, which accounts for $68 billion of the total money. Indians represent 5.5% of the migrant population of the United States. It is followed by the United Arab Emirates ($43.2 billion) and Saudi Arabia ($34.6 billion). Indians are very present in all these countries.
World Bank data from 1975 to 2020 shows international remittances to India peaked in 2019, a year before Covid hit. That year, India received a huge remittance of $83.3 billion. It rose steadily from 2017 to 2019, until it dropped by $0.2 billion in 2020.
NRI deposits are another way Indian emigrants support the rupee and the economy. NRI deposits grew from $40 billion towards the end of 2008 to $139 billion in April 2022, registering an average annual increase of 9%. These deposits have averaged around $140 billion since 2020, despite the difficulties caused by the pandemic indicating that these flows may improve once the effects of the pandemic wear off.
Can these overseas Indians be exploited to help the rupee which has been falling lately?
Arun Singh, Chief Economist, Dun and Bradsheet says high foreign remittances to India are certainly a good sign. “Even though it has declined slightly due to Covid, international remittances are still helping the economy. In fact, it accounts for around 3% of India’s GDP,” he says.
Singh agrees that the influx of this money will stabilize the Indian rupee, which hit an all-time high in the second week of June 2022.
“There is potential to reduce the average transaction cost for Indians residing abroad. It is much lower in Mexico, which is the second highest middle-income and low-income country receiving the highest remittances. high,” he says, adding that remittances will increase in the coming years, as many projections have predicted that India will overtake China in terms of population soon.
Sumit Shekhar, an economist at Ambit Capital, believes that the increase in migration should encourage the Reserve Bank of India to reintroduce its 2013 policy on non-resident (bank) deposits in foreign currency, thereby allowing emigrating Indians to deposit cash surpluses for a fixed interest rate. “
“The INR depreciated by about 5% against the dollar last year. In such a scenario, the reintroduction of the FCNR(B) policy could bring some relief to the RBI. RBI successfully rolled out the program during the taper-tantrum crisis in 2013 to control INR volatility and attract foreign deposits,” he says.
June 27, 2022