Note4Students
From UPSC perspective, the following things are important :
Mains level: Migration; Remittances;
Why in the News?
Recent data show a decline in remittances from Gulf countries to India, while contributions from advanced economies have grown.
Why has the share of remittances from Gulf countries to India declined while contributions from advanced economies have increased?
- Wage Stagnation and Cost of Living in the Gulf: Wages in Gulf countries have remained relatively stagnant, while the cost of living has increased, reducing the savings and ability to send money home of Indian workers. Example: The UAE introduced a Value Added Tax (VAT) in 2018, increasing living costs for migrant workers.
- Shift in Migration Patterns Toward High-Income Countries: More Indian professionals and skilled workers are migrating to advanced economies like the U.S., Canada, and the U.K., where salaries are higher. Example: The number of Indian students and skilled workers in Canada has surged, contributing to rising remittances from the country.
- Stringent Localization Policies in the Gulf: Gulf nations have implemented employment nationalization policies that push for localization in jobs (e.g., Saudization in Saudi Arabia, Nitaqat in UAE), shrinking opportunities for foreign workers, including Indians.
- Depreciation of Gulf Currencies Against the U.S. Dollar: The exchange rates of Gulf currencies, which are tied to U.S. dollar, have not appreciated significantly, while the Indian rupee has remained relatively stable. Example: A stronger U.S. dollar means remittances from the U.S. convert to more Indian rupees compared to Gulf remittances.
- Expansion of India’s IT and Healthcare Workforce Abroad: Skilled professionals in IT, healthcare, and finance are securing jobs in developed countries, leading to increased remittances from these sectors. Example: Indian tech workers in the U.S. under the H-1B visa program send substantial remittances back home, contributing to the U.S.’s growing share.
| Global Migration & Remittance Shifts: How India Compares with Other Nations | Traditional Remittance Sources | New Migration Trends | Key Drivers of Change |
| India | Gulf countries (UAE, Saudi Arabia, Qatar) | U.S., Canada, U.K., Germany | Wage stagnation in the Gulf, rise in high-skilled migration, better job opportunities in advanced economies |
| Philippines | Middle East, Southeast Asia | U.S., Canada, Australia | Strong demand for healthcare workers, education-driven migration, better worker rights in Western nations |
| Vietnam | Japan, South Korea, Taiwan | U.S., Europe, Australia | Economic ties with Western economies, investment in skilled workforce |
| Mexico | U.S. | Europe, South America | Stricter U.S. immigration policies, expansion of trade ties with Spain and Latin America |
| Bangladesh | Gulf countries, Malaysia | Limited shift; still Gulf-dependent | Fewer high-skilled migration pathways, reliance on traditional labor jobs |
| Pakistan | Saudi Arabia, UAE | Minimal change; remains Gulf-dependent | Economic constraints, limited alternative migration routes |
What are the reasons behind the decline in the number of blue-collar workers emigrating from the Southern States to the Gulf?
- Improved Employment Opportunities in India: Economic growth and industrial expansion in southern states have created more local job opportunities, reducing the need for migration. Example: Tamil Nadu and Telangana have seen growth in manufacturing (automobiles, electronics) and IT sectors, offering better wages compared to low-paying Gulf jobs.
- Stringent Gulf Employment Policies & Localization Programs: Gulf nations have implemented policies like Saudization and Emiratization, prioritizing local workers over foreign laborers, reducing demand for Indian blue-collar workers. Example: Saudi Arabia’s Nitaqat system has restricted Indian employment in sectors like retail and construction.
- Higher Migration Costs and Reduced Financial Returns: The cost of migration, including visa fees, recruitment charges, and living expenses, has risen, while wages in the Gulf have remained stagnant, making migration less attractive. Example: In Kerala, many workers are opting for European destinations (e.g., Italy, Germany) instead of the Gulf due to better wages and worker rights.
How has the shift in migration patterns impacted States like Bihar, Uttar Pradesh, Rajasthan, and West Bengal in terms of remittance inflows?
- Slower Growth in Remittance Inflows: These states still send large numbers of workers to the Gulf, where wages and remittances are lower compared to advanced economies. Example: Despite high migration from Uttar Pradesh and Bihar, their share in India’s total remittances remains low (around 3%), while Kerala and Maharashtra, with migrants in high-income countries, receive a higher share.
- Limited Economic Upliftment Due to Lower Earnings: Since Gulf remittances have lower financial returns, households in these states see limited improvements in savings and investments. Example: While Tamil Nadu and Kerala benefit from higher wages in the U.S. and the U.K., families in Rajasthan and West Bengal largely rely on low-wage Gulf jobs, leading to slower economic mobility.
- Higher Economic Vulnerability and Migration Dependency: With fewer alternative employment opportunities, many continue to migrate to the Gulf despite lower wages, reinforcing economic dependence on remittances. Example: Unlike Punjab, where migration to Canada has increased financial stability, states like Bihar still rely on remittances from Gulf labor, leaving them more vulnerable to economic downturns in the region.
Which factors contribute to the continued high migration from northern and eastern States to the Gulf despite lower financial returns?
- Skill Development and Certification Programs: Initiatives like the Pravasi Kaushal Vikas Yojana (PKVY) aim to enhance the skills of Indian workers, making them eligible for higher-paying jobs abroad. Example: The program aligns skill training with international standards, increasing employment prospects in advanced economies.
- Bilateral Agreements and Labour Welfare Measures: India has signed labor agreements with Gulf countries to ensure better working conditions, fair wages, and legal protection for migrant workers. Example: The India-UAE MoU on Labor Cooperation provides safeguards against exploitation and ensures wage protection.
Way forward:
- Enhancing High-Skilled Migration Pathways: The government should strengthen bilateral agreements with high-income countries to facilitate the migration of skilled professionals, particularly in IT, healthcare, and engineering.
- Expanding initiatives like the India-Germany Skilled Workers Pact and negotiating better visa policies with the U.S., Canada, and the U.K. will ensure higher remittance inflows.
- Skill Development and Certification for Diversified Destinations: To reduce dependence on Gulf remittances, India should invest in internationally recognized skill training through programs like Pravasi Kaushal Vikas Yojana (PKVY) and collaborate with European and East Asian countries for labor mobility agreements.
Mains PYQ:
Q Discuss the changes in the trends of labour migration within and outside India in the last four decades. (2015)
Reason: This PYQ asks for a discussion of changes in labour migration trends over a significant historical period (the last four decades) and across both internal and external migration.
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