The Southern states of Kerala, Karnataka, Tamil Nadu and Andhra Pradesh accounted for a share of 46 per cent — or $31.74 billion (Rs 2,30,900 crore) — of total remittances of $69 billion from abroad with Kerala, which received $13.11 billion (over Rs 95,000 crore), topping the list during the year 2017, a Reserve Bank of India (RBI) survey has said. The RBI survey reveals that 58.7 per cent of total remittances of $69 billion in 2017 was received by four states — Kerala, Maharashtra, Karnataka and Tamil Nadu. Of this Kerala accounted for 19 per cent of the remittances, followed by Maharashtra 16.7 per cent ($11.52 billion) and Karnataka 15.0 per cent ($10.35 billion). However, the RBI study said the survey results are largely corroborated by surveys independently conducted by multilateral agencies (viz., ILO, 2018), which have also highlighted a shift in cross-border migration flow from prosperous states such as Kerala and Karnataka to states such as Uttar Pradesh and Bihar largely comprising of low or semiskilled contractual workers with low level of income. These two states accounted for 4.4 per cent of total remittances in 2016-17, it said. India continues to be the top recipient country with $69 billion of remittances in 2017 sent by a large pool of skilled, semi-skilled and unskilled Indian migrants across the globe. According to the RBI, 82 per cent of the total remittances received by India originated from seven countries — the United Arab Emirates (UAE), the United States, Saudi Arabia, Qatar, Kuwait, the UK and Oman. “With over 90 per cent of overseas Indians working in the Gulf region and South East Asia — mostly semi-skilled and unskilled workers — the Gulf Cooperation Council (GCC) countries accounted for more than 50 per cent of total remittances received in 2016-17, notwithstanding a sharp decline in oil prices and fiscal tightening in these countries,” the RBI said. The Indian diaspora in the US, characterised by high skills and high earnings, is the second largest contributor. A size-wise analysis by the RBI has revealed that that 70.3 per cent of all reported transactions were of more than or equal to $500 and only 2.7 per cent were of less than or equal to $200 category. This indicates that a large number of remittances were by unskilled workers in the GCC countries. Based on responses gathered from banks, the RBI has estimated that more than half of remittances received by Indian residents were used for family maintenance (consumption), followed by deposits in banks (20 per cent) and investments in land property and shares (8.3 per cent), the RBI has said. The RBI study reveals that Rupee Drawing Arrangement (RDA) is the most preferred mode accounting for 75.2 per cent of remittances, particularly from the GCC countries. RDA enables tie-ups between banks and non-resident exchange houses for opening and maintaining their vostro accounts. “Banks disburse remittances to the final recipient immediately after the cheque/ draft is deposited in the rupee/foreign currency vostro account of the non-resident exchange houses. A maximum of 20 such tie-ups are allowed per bank. “The cost of transaction through this channel is less than other channels. The second most popular channel is the SWIFT, followed by direct transfers and cheques and drafts, the RBI said. Despite banks having greater access to RDA, the overall cost charged by money transfer operators (MTOs) is significantly lower probably due to their core advantages in low value remittance business and dynamic cost structure. However, the average cost of sending $200 to India declined from 9.1 per cent in 2013 to 5.6 per cent in Q1 of 2018 (from 4.9 per cent to 3.3 per cent for sending $500).
