Abroad Money: People working abroad sent a record amount to India in 2022, know where this money is being spent?

Posted on 19th Dec 2022 by rohit kumar

In 2020, Indian expatriates were sending money home in record amounts. In that year, migrants sent about 80 billion dollars to India. Even amid the pandemic, the flow of money from the migrants continued. Most of the money that was coming to India from abroad was from those who came by selling their properties located in Gulf countries. During that time the epidemic was in full swing. Oil prices were falling. People were losing their jobs. In such a situation, the people who settled outside were thinking it appropriate to sell their properties and return to the country. These people were not completely sure whether these people would ever be able to go back or not. In such a situation, it was expected that the amount sent from abroad would decrease in the future. However, this guess turned out to be wrong.

 

In a World Bank report, citing RBI data, it has been said that the amount sent by migrants to India is expected to reach a record $ 100 billion this year. More than one crore of 80 lakh expatriates spread across the world can send a record amount to their homes in the year 2022. So, the question is what is causing this boom and where is this money coming from? Let's start with the remittances from Gulf countries. It accounts for 30% of the total remittances to India and we are seeing further growth here. Admittedly, many expatriates lost their jobs in Middle East countries in 2020, but the economies of these countries opened up very quickly. Oil prices soon skyrocketed. The demand for labor also started increasing. Inflation in the Gulf countries remained modest compared to most parts of the world. People had more money to spend and they sent some part of it back home i.e. India.

 

Depreciation in the rupee against the dollar leads to a rise in inflows

An important fact related to the increase in remittances from expatriates to the country is that the Indian currency has declined against the dollar. Most Middle Eastern currencies are pegged to the dollar, so now that expatriates send money home after the rupee's fall, here in India they get more rupees than before. For example, if people were sending $1,000 back home two years ago, they would have received 70,000 rupees. Now if the same person is sending 1,000 thousand dollars, then he is getting 81,000 to 82,000 rupees. So whenever the rupee depreciates, Indian expatriates usually struggle to save every penny and send it home. Many people even borrow money at low-interest rates to take advantage of these opportunities. This is the reason why there is an increase in the amount coming from abroad.

 

# Migrants settled in America are sending maximum money to the country

There is another reason why there is an increase in the money coming from abroad. Now the pattern of those who go abroad and earn has changed. Especially for skilled Indians. Now people are moving to places like America and Canada in large numbers. 57% of the 5 million Indians in the US have been living there for more than 10 years. This means that they too are now reaching their 'peak' earning potential. They are high earners in the service sector. In 2021 and 2022 (till a few months ago) people working in the field of tech abroad saw an increase in their income. People saved and sent some of that extra cash back home. Since expatriates in developed countries like the US and Canada earn much more than expatriates in the Gulf countries, their contribution to remittances back home is also high. Since 2017, remittances from the US, UK, and Singapore to the country have increased from 26% to 36% of the total remittances sent to India by expatriates. Now the maximum amount of money is coming to India from America and it has overtaken UAE.

 

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