Huge drop in remittances from Gulf nations in FY21 because of Covid-19 | Economy News

New Delhi: The share of inward remittances from Gulf nations dipped sharply throughout 2020-21 on account of the financial stress created by the COVID-19 pandemic, mentioned an RBI article. On the opposite hand, superior economies just like the US, the UK and Singapore emerged as essential sources for the nation for remittances, accounting for 36 per cent of the whole funds in 2020-21, the article mentioned citing an RBI survey.

To analyze the elements contributing to the resilience of remittances and to grasp to what extent the pandemic has modified the underlying dynamics of remittances circulation, the Reserve Bank of India carried out the fifth spherical of the Survey on Remittances for the 12 months 2020-21. (ALSO READ: 6 of top-10 firms lose Rs 1.68 lakh cr in market-cap; TCS greatest laggard)

“…The share of remittances from the GCC (Gulf Cooperation Council) region in India’s inward remittances is estimated to have declined from more than 50 per cent in 2016-17 (last surveyed period) to about 30 per cent in 2020-21 ,” mentioned the article ready by the officers within the Department of Economic and Policy Research, RBI. (ALSO READ: Anand Mahindra shares design of ‘easy but artistic’ staircase, netizens go gaga)

The central financial institution, nonetheless, mentioned the views expressed within the article are these of the authors and don’t symbolize the views of the Reserve Bank of India.

Overall, however headwinds of COVID-19, India’s inward remittances have confirmed to be a resilient supply of present account receipts, the article revealed within the RBI’s July bulletin mentioned.

The decline in remittances from the Gulf nations throughout 2020-21 displays a slower tempo of migration and a bigger presence of Indian diaspora in casual sectors which was hit essentially the most in the course of the pandemic interval. As a consequence, the proportion of small measurement transactions in whole remittances elevated in 2020-21.

The US surpassed the UAE as the highest supply nation, accounting for 23 per cent of whole remittances in 2020-21.

This corroborates with the World Bank report (2021) citing an financial restoration within the US as one of many essential drivers of India’s remittances progress because it accounts for nearly 20 per cent of whole remittances, the article mentioned.

The share of the normal remittance recipient states of Kerala, Tamil Nadu and Karnataka, which had sturdy dominance within the GCC area, has nearly halved in 2020-21, accounting for under 25 per cent of whole remittances since 2016-17, whereas Maharashtra has emerged as the highest recipient state surpassing Kerala.

“Apart from the host nation dynamics, lowering wage differentials, altering occupational patterns in these states with rising white collar migrant staff to GCC area and entry of low-wage semi-skilled staff from different states and Asian nations could have led to this compositional shift , it mentioned.

By distinction, migration from Uttar Pradesh, Bihar, Orissa and West Bengal to the Gulf nations has elevated in recent times. According to the Ministry of External Affairs information, greater than 50 per cent of the authorized immigration clearances for the GCC area in 2020 had been for these states.

With the dominance of low-wage unskilled labourers, nonetheless, their share in remittances has remained considerably low whereas the share of Maharashtra and Delhi has elevated considerably in 2020-21, it mentioned.

The article additionally concludes that almost all of the remittances proceed to be routed by way of non-public sector banks, adopted by public sector banks though international banks have witnessed a marginal enhance in remittances transactions, notably from Singapore.

It additionally famous that burdened earnings circumstances are discernible from small measurement transactions gaining a share in whole remittances in the course of the pandemic interval.

“Notwithstanding, India is the second cheapest remittance receiving market in the G20 group after Mexico, the cost for certain remittance corridors has been consistently higher than others,” it mentioned.

Policy measures have to be undertaken that increase the scope of the Money Transfer Service Scheme (MTSS) in high-cost corridors, it mentioned, and added that remittance service suppliers have to adapt to the altering occasions by investing closely in digital applied sciences.

Source hyperlink

Leave a Reply

Your email address will not be published.