Pandemic effect: US overtakes UAE to become top source of remittances

MUMBAI: The United States has been playing an important role in the supply of foreign exchange not only in terms of investment and trade but also in remittances from non-residents – a region that has hitherto been dominated by the Gulf region. Since COVID, the structure of remittances has changed, and India’s linkage to the US economy has increased.
According to an article by the Reserve Bank of India (reserve Bank of IndiaOn the impact of COVID on remittances, in 2020-21, the US overtook the United Arab Emirates (UAE) as the top source country, accounting for 23% of the total remittances in 2020-21. This corroborates with the World Bank report in 2021, which cited the economic recovery in the US as one of the important drivers of India’s remittance growth.
Remittances from foreign workers – one of the largest suppliers of foreign exchange to India – have helped the country live with a current account deficit. Money sent by non-residents has helped the economy during past crises, including after the collapse of Lehman Brothers, with remittances at 4% of GDP in 2009. In fiscal year 2011, remittances were $87 billion, about 2.75% of GDP.
The RBI article states that part of the remittances from the Gulf Cooperation Council (gcc) The sector in India’s inward remittances is projected to decline from over 50% in 2016-17 (previous survey period) to around 30% in 2020-21. Amid continuous migration of skilled workers, the US, UK and Singapore emerged as important source countries of remittances, accounting for 36% of total remittances in 2020-21.
UAE, US and Saudi Arabia have been the three major destinations of Indian expatriates for the past two decades. By the end of 2020, 48.6% of the total expatriates from India were in UAE, USA and Saudi Arabia.
Historically, the GCC region accounted for half of India’s remittances, which made up a substantial portion of the oil trade deficit with the region. Post-Covid, the migration pattern in GCC countries has changed significantly with a sharp contraction in the number of Emigration Clearances (ECs) issued since 2015, usually for unskilled or semi-skilled workers and women seeking overseas employment. is issued to.

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