Indian Americans pip UAE as top source of remittances to India during pandemic
For Indians leaving the country for a better life, America has emerged as the top choice. But after attaining the American dream, they donâ€™t forget the motherland. In fact during the pandemic, Indian Americans displaced UAE as the top source of remittances to families back home.
More than 163,000 Indians, the highest in the past five years, gave up their citizenship in 2021, according to official data.
Of the 163,370 individuals who gave up citizenship of India in 2021, a major chunk of 78,284 chose the US as their adoptive country. Other top choices were Australia (23,533), Canada (21,597), the UK (14,637), and Italy (5,986).
US citizenship was the most sought for â€œreasons personal to them,â€ officials told the Indian parliament.
While a catastrophic second wave of covid-19 induced many to seriously consider leaving the country permanently, the pandemic saw an uptick in remittances from the US.
Amid job losses in the Gulf region, the US surpassed the United Arab Emirates (UAE) as the top source country, accounting for 23% of total remittances in 2020-21, according to Reserve Bank of India (RBI) research on the impact of Covid on remittances, in 2020-21.
This corroborates with the World Bank’s report in 2021, citing economic recovery in the US as one of the important drivers of India’s remittances growth.
The share of remittances from the Gulf Cooperation Council (GCC) region in India’s inward remittances is estimated to have declined from more than 50% in 2016-17 (last surveyed period) to about 30% in 2020-21, according to RBI
Amid the steady migration of skilled workers, the US, the UK and Singapore emerged as important source countries of remittances, accounting for 36% of total remittances in 2020-21.
The UAE, the US and Saudi Arabia have been the three major destinations of Indian migrants for the past two decades. Out of the total migrants from India, 48.6% were in the UAE, the US and Saudi Arabia as of end-2020.
Historically, the GCC region accounted for half of India’s remittances, making up for a major chunk of the oil trade deficit with the region.
The decline in the share of Gulf countries in total remittances reflected slower pace of migration and presence of Indian diaspora in informal sectors which was hit the most during the pandemic period, RBI said.
Cross-country remittances inflows are found to be driven by altruism motive, captured by the infection rate in the destination country and the stringency of the lockdown in the source countries, it said.
The proportion of small sized transactions increased, reflecting Covid-19 led stressed income conditions. The divergence was also reflected in the bank-group wise performances as public sector banks lost market share while private banks retained their dominance in the remittances business, RBI said.