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New Indian Express
20-07-2025
- Business
- New Indian Express
Slowing NRI deposits shows new investment trends
KOLLAM: In an interesting trend, domestic bank deposits in Kerala have been growing faster compared to NRI deposits. Between 2019 and 2024, domestic deposits grew by approximately 73% — from Rs 3.03 lakh crore to Rs 5.25 lakh crore — while NRI deposits increased by just 42.6%, from Rs 1.90 lakh crore to Rs 2.71 lakh crore. According to economists, the slower growth rate in NRI deposits reflects evolving migration patterns, global economic uncertainties and a growing preference for investments outside traditional bank deposits. 'The slowdown in the growth of NRI deposits in Kerala shows that more people are looking for long-term investments in foreign countries. These include countries like Australia, the US, Canada, European countries and the Gulf,' said S Irudaya Rajan, former faculty at the Centre for Development Studies and Chairman of the International Institute for Migration and Development.
Straits Times
21-04-2025
- Business
- Straits Times
Rising share of remittances sent home by Indians working in S'pore and other advanced economies
Skilled workers in advanced economies are a rising breed among the overseas Indian population estimated at around 18.5 million. PHOTO: ST FILE Rising share of remittances sent home by Indians working in S'pore and other advanced economies – While working in India, software engineer Abhinav Gupt a was on the lookout for better opportunities when one of his clients told him about an exciting role in Singapore to build programmes for contact centres. The offer came with an attractive salary and brought with it the opportunity to move to a city known for its high liveability index. 'I did a little bit of research and I was like, okay, it (Singapore) is basically the New York City of South-east Asia, so why not?' said Mr Gupta. Abhinav Gupta (name changed on request) relocated to Singapore in March 2023 and today earns a 'barely six-figure' annual salary, allowing him to invest $1,000 to $2,000 each month in India's stock market and mutual funds. 'I'm doing this because I do believe in the Indian market. I think it's a good return,' said Mr Gupta, who did not want to be identified publicly with his investments. Skilled workers in advanced economies such as Mr Gupta are a rising breed among the overseas Indian population, estimated at around 18.5 million – a group that has traditionally been dominated by migrants in Gulf countries, many of whom are low- or semi-skilled workers. This shift has also led to an increasing share of remittances from advanced economies such as the US and Britain, boosting India's total remittance inflow despite a decline in the money sent in by Indians from the Gulf Cooperation Council (GCC) countries in recent years. India's remittances could, in fact, reach as high as US$300 billion (S$394 billion) in the next 10 years if the country manages to send 'the right people with the right skills to the right place', Dr S. Irudaya Rajan, chairman of the International Institute for Migration and Development, told The Straits Times. This figure would be more than double the record US$129.4 billion in remittances India received in 2024 from abroad, the third consecutive year that remittances exceeded the US$100 billion mark. Money sent back home by Indians overseas has long been a reliable and critical source of external financing for the country's development. According to the World Bank, India has been the top recipient of remittances since 2008. India's annual remittances have also consistently been higher than the country's gross foreign direct investment since the 2000 to 2001 period. Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, which together comprise the GCC, were traditionally the biggest remittance contributors to India because of the large numbers of Indian workers employed there. But this is no longer the case. A recent paper published in March by researchers from the Reserve Bank of India (RBI) notes a shift in India's remittances away from GCC countries to advanced economies since the 2016 to 2017 period, when India's central bank began collecting country-specific data of remittance inflow into India. The GCC countries accounted for more than 46.7 per cent of India's remittances worth US$63 billion in the financial year that ended March 2017, but their share fell to 37.9 per cent of the total at US$118.7 billion in financial year 2024 . On the other hand, remittances from the US, Britain, Singapore, Canada and Australia jumped from a share of around 34.4 per cent to 51.2 per cent in the same period. The US was the largest source of remittances, with a 27.7 per cent share in FY24, dethroning the UAE, which held the top spot in FY17 with a 26.9 per cent contribution. Singapore's share in India's remittances also increased from 5.5 per cent in FY17 to 6.6 per cent in FY24. The paper, authored by researchers from RBI's department of economic and policy research, accentuates the growing remittance contribution of Indian skilled workers in advanced economies, reflecting the ongoing shift in the profile of Indian migrants overseas – from those engaged in less sophisticated jobs, to those in high or highly sophisticated jobs. For instance, it is estimated that 78 per cent of more than two million Indian migrants in the US are employed in highly remunerative sectors such as management, technology, business and science. The number of Indians migrating to Britain every year has also grown to about 250,000 as at end-2023 – more than three times the 76,000 as at end-2020 – of whom about half were for work-related purposes. Given the importance of remittances in ensuring India's growth, the government has sought to boost them by encouraging domestic skilling as a pathway for overseas migration in recent years, a strategy that also allows skilled Indians to find well-paying jobs abroad that are scarce domestically. Factoring in the shifting demands for skilled Indian workers abroad in its skilling programmes, therefore, has important implications for the government's ongoing efforts to further leverage remittances for the country's growth. According to the paper, it is important for Indian policy makers to take note of the shift in demand towards more sophisticated roles abroad so that Indian workers can be skilled or reskilled to meet evolving labour demands overseas, and remittances can be further leveraged for the country's development. The fall in remittances from GCC countries has been attributed to the Covid-19 pandemic, which resulted in widespread job losses and salary cuts, prompting a mass exodus of contractual Indian migrant workers from those countries. Also, since before the pandemic, there has been a drive to prioritise employment opportunities for locals in GCC countries and reduce dependence on expatriate workers . On the other hand, the rise in remittances from advanced economies has come from more Indian skilled workers as well as students moving there in recent years. Indians working there have a higher per capita earning than Indians in the GCC, and many students also work part-time to repay their educational loans back home. Moreover, currencies such as the US dollar, the euro and Great Britain's pound sterling have also considerably appreciated in value against the Indian rupee, possibly encouraging remitters to send more money back to India. In April 2020, the US dollar traded at around 76 rupees, which now has gone up to more than 85 rupees, appreciating by nearly 12 per cent on a nominal basis. But experts such as the International Institute for Migration and Development's Dr Rajan cautioned that the increase in remittances from advanced economies could be a short-term trend, as the rise of right-wing populist and anti-migrant sentiment in the US and other developed countries could restrict immigration. 'I don't think we should celebrate... the fact that we are getting more money from advanced economies as a great victory... In another five to six years, the Gulf countries may be back on the top,' he told ST. In such an evolving scenario, India's approach to overseas migration, said Dr Rajan, should be nimble and proactive, with the government and other agencies being able to identify countries with specific skill gaps and train Indian workers as well as possible to meet those needs. It is also important to further reduce the cost of sending money back to India so that the country can draw more remittances, noted the authors of the RBI's paper. According to the World Bank, the average cost of sending US$200 to India in the third quarter of 2024 stood at 5.3 per cent, lower than the global average of 6.62 per cent but still higher than the 3 per cent that the United Nations' Sustainable Development Goals recommended be reached by 2030. However, experts note that growing international links between Unified Payments Interface – India's real-time digital payments system – and its international counterparts such as Singapore's PayNow can bring down the cost of sending remittances to the country. Debarshi Dasgupta is The Straits Times' India correspondent covering the country and other parts of South Asia. Join ST's Telegram channel and get the latest breaking news delivered to you.
