For India to increase the contribution of remittances to GDP, it does not need more workers, but skill and better management
For India to increase the contribution of remittances to GDP, it does not need more workers, but skill and better management
While the incident of Indian-origin executives becoming CEOs of top US companies highlights the contribution of Indian talent to the US economy, the role played by Indian semi-skilled migrant workers in the global economy is no less spectacular. According to the Ministry of External Affairs, there are over 13.4 million NRIs worldwide. Of them, 64% live in Gulf Cooperation Council (GCC) countries, the largest number in the United Arab Emirates, followed by Saudi Arabia and Kuwait. According to International Labor Organisation’s estimates, around 90% of the Indian migrants living in GCC countries are low and semi-skilled workers. The other important countries of destination for overseas Indians are the US, UK, Australia and Canada.
high dispatch
Every year about 2.5 million workers from India go to different parts of the world on employment visas. Apart from being involved in nation-building of their destination countries, Indian migrant workers also contribute to the socioeconomic development of the motherland through remittances. According to a report by the Office of National Statistics, urban and rural households (both international and domestic) receiving remittances have about 23% and 8% better financial capacity than non-remittance receiving households, respectively.
According to the World Bank Group report (2021), annual remittances transferred to India are estimated to be $87 billion, the highest in the world, followed by China ($53 billion), Mexico ($53 billion), the Philippines ($36 billion). is the location. ) and Egypt ($33 billion). In 2021, remittances transferred to India saw a growth of 4.6% as compared to 2020. Remittances into India have been much higher than Foreign Direct Investment (FDI) and remittance flows are much less volatile than FDI. Nevertheless, according to the World Bank report, the contribution of remittances to GDP is less at 3% compared to countries such as Nepal (24.8%), Pakistan (12.6%), Sri Lanka (8.3%) and Bangladesh (6.5%).
In addition to being an advantageous situation for both the destination and the source country, labor migration is a good hedging strategy for any economy against illiquid risks. Human capital should also be invested in the same diversified portfolio as financial capital. For many countries, remittances have been of vital support to the domestic economy after a setback. For example, after the 2015 earthquake in Nepal, foreign Nepalese remittances increased to an estimated 30% of GDP.
Can India increase remittances to say 10% of GDP? Can the Philippines model of promoting labor mobility be replicated in India? Both the cost of recruiting such workers and the cost of sending remittances back to India should come down. The safety and well being of migrant laborers is the top priority of the government. Due attention is being paid to reducing informal/undocumented migration and formalizing all remittances. Recruitment agencies leveraging information technology should also be regulated to ensure the safety of migrant workers leaving India. An integrated grievance redressal portal, ‘MADAD’ was launched by the government in 2015. Of the nearly 78,000 complaints filed by Indian expatriates so far, more than 95% have been resolved.
Provisions of the Emigration Bill
The Government of India proposed a new Emigration Bill in 2021 that aims to integrate emigration management and streamline the welfare of migrant workers. It proposes to modify the system of Emigration Check Required (ECR) category of workers applying for migration in 18 notified countries. The ECR category mainly includes those who have not passed 10th standard and who face the challenge of risky informal emigration and later difficulties abroad. The Bill makes it mandatory for all categories of workers to register before moving to any country in the world to ensure better protection, support and protection for them in case of vulnerabilities. The proposed Emigration Management Authority will be the principal authority to provide policy guidance.
If the skill set of the workers is improved, there is no need to increase the number of migrant workers for remittance. The provisions of the Bill such as registration of all migrants, skill up-gradation and training, and pre-departure orientation will enhance security measures. Apart from workers, about 0.5 million students also migrate from India for education every year, the bill covers such students as well. It will provide a comprehensive data set for efficient management of Indian expatriates. The skills of migrant workers have the potential to boost the domestic economy and low-cost interventions such as foreign language training can be of great help to such workers.
Rajesh Gupta is the Director and Rakesh Ranjan is an associate in NITI Aayog. thoughts are personal