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  • Reviewing RBI remittances data
    Posted on May 30th, 2025 in Exam Details (QP Included)

    • 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.

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