We’ve long been the world’s biggest foreign remittance recipients but this year’s inflow promises to be especially rich. According to World Bank estimates, India will get $100 billion in non-resident inflows in 2022, a 12 per cent jump from last year’s $89-billion total — not a bad achievement in a world just emerging from Covid-19 and also hit by the Russia-Ukraine war. Our remittance growth also way exceeds the global 4.9 per cent rise.

The figures are remarkable in one other crucial way. For nearly 40 years, the money has poured into India from the millions of Indians working in the Gulf. Now that scenario has flipped. The World Bank says the largest contributors are from affluent English-speaking countries like the US, the UK and Canada. They account for over 36 per cent of inflows, up from 26 per cent five years earlier. Meanwhile, the Gulf countries’ share has plummeted to 28 per cent from 54 per cent in the same time-frame. The US accounts for 23 per cent of remittances, putting it slightly ahead of mostly lower-paid UAE workers who are in second spot.

The World Bank has sought to explain this turnaround by noting the five-million “Indian diaspora in the US is highly skilled” and they’ve also become high-earners, especially in the last decade. It’s a plausible explanation but there’s still a catch. There are big differences between workers in the GCC (Gulf Cooperation Countries) who mostly leave their families behind in India and send back as much money as they can to cover daily expenses, build new homes and suchlike. Says Irudaya Rajan, chairman of The International Institute of Migration and Development: “I buy the $100-billion figure. But as far as my knowledge, people in US, UK and Canada won’t send (so much) money back.”

To be sure, Gulf conditions have changed. Workers are lower paid. And the Gulf states are now recruiting from other places aside from India with cheaper workers flooding in from countries like Kenya, Uganda and Nigeria. The Reserve Bank of India notes that since 2015, GCC has been hiring fewer Indians. It points to government figures showing, for instance, 310,000 Indians received emigration clearance in 2015 to work in Saudi Arabia. That number plummeted to 40,000 in 2020.

What’s the explanation, though, for the larger sums coming from countries like the US, the UK, Canada, Singapore and East Asia? Rajan says one possible reason is more money is coming via legal routes. In the past, large amounts came by unofficial channels but the ease of online banking could have changed the picture, especially since Covid-19 made sending money via unofficial avenues harder.

“It might be the informal sector is slowly getting into formal so automatically the money is coming more to India, but it’s not the remittances that have increased. Earlier, they were sending through some other source not captured by RBI data. I still believe you cannot write off the Gulf” as a key remittance player, Rajan said.

Different ecosystem

Anyone who’s lived in countries like the US and the UK knows most Indians are struggling to pay mortgages and many don’t have family in India to whom they need to send money. Also, they have plenty of investment opportunities. Rajan, points out that in Canada, “Indians can buy land, they can have mortgages, they can do anything.” By contrast, only a very few can buy homes in the GCC and investment opportunities are limited. Almost all migrants expect to retire to India and make provision accordingly.

Indians still comprise the largest share of the migrant Gulf population. In Qatar, for instance, Indians comprise 24 per cent of the inhabitants, followed by Nepalese at 16 per cent and Filipinos at 11 per cent or 250,000. Also, for the last decade, more people have been going to the GCC countries from Uttar Pradesh than from Kerala.

Rajan believes India’s, and particularly Kerala’s, links with the Gulf are so deeply entrenched it’s unlikely they’ll diminish massively even in coming decades. He points to families in north Kerala where grandfathers, sons and grandsons have all earned their living in the Gulf. At another level, Gulf governments have ambitious construction projects. Saudi Arabia plans a new Riyadh mega-airport and has designs for a city that will rise in the desert called The Line (it will be built in a straight line). Dubai is also planning a new city, Dubai South.

It remains to be seen if such projects materialise as envisaged. But it seems safe to say Indians will be heading to West Asia to reap their fortune for many years to come.