Reviewing RBI remittances data
• Remittances are crucial to India’s external sector balance, surpassing FDI inflows and financing over half of its merchandise trade deficit.
• The Reserve Bank of India’s Sixth Round of India’s Remittances Survey shows that remittances are integral to the stability and structure of India’s external accounts.
• The changing spatial composition of remittance sources, with the U.S. accounting for 27.7% of India’s inward remittances, is reflected in macroeconomic shifts and a shift in the profile of Indian migrants.
• The growing concentration of large-value transactions suggests that remittances are increasingly driven by higher-earning, professionally mobile Indians.
• The shift towards digital modes of remittance is accelerating, with digital channels accounted for 73.5% of all remittance transactions in 2023-24.
• Despite progress, the transition to digital channels has not been uniform across remittance corridors, suggesting that the infrastructure and regulatory environment remain a constraint.
• The remittance map shows persistent asymmetries at the sub-national level, with Bihar, Uttar Pradesh, and Rajasthan receiving less than 6% of remittances, while Maharashtra, Kerala, and Tamil Nadu received about 51%.
• The policy challenge lies in deepening cross-border digital payment linkages to lower costs and increase efficiency.
• The round does not provide data on how remittances are used at the household level, limiting a fuller understanding of the developmental role of remittances beyond their macroeconomic contribution to the balance of payments.