Context

Though the phenomenon of Indian-origin executives becoming CEOs of top U.S. companies highlights the contribution of Indian talent to the U.S. economy, the role played by Indian semi-skilled migrant labour in the global economy is no less illustrious.

Destinations of Indian migrants

• Every year, about 2.5 million workers from India move to different parts of the world on employment visas
• According to the Ministry of External Affairs, there are over 13.4 million Non-Resident Indians worldwide.
• Significance of GCC: Of them, 64% live in the Gulf Cooperation Council (GCC) countries, the highest being in the United Arab Emirates, followed by Saudi Arabia and Kuwait.
• Low and semi-skilled: Almost 90% of the Indian migrants who live in GCC countries are low- and semi-skilled workers, as per International Labour Organization estimates.
• Other significant countries of destination for overseas Indians are the U.S., the U.K., Australia, and Canada.

Contribution of Indian migrant workers

• Besides being involved in nation-building of their destination countries, Indian migrant workers also contribute to the homeland’s socioeconomic development, through remittances.
• Highest remittances: As per a World Bank Group report (2021), annual remittances transferred to India are estimated to be $87 billion, which is the highest in the world, followed by China ($53 billion), Mexico ($53 billion), the Philippines ($36 billion) and Egypt ($33 billion).
•  Remittances in India have been substantially higher than even Foreign Direct Investment (FDI) and the flow of remittances is much less fluctuating than that of FDI.
• Still, remittances’ contribution of 3% in GDP is lower than that of countries such as Nepal (24.8%), Pakistan (12.6%), Sri Lanka (8.3%) and Bangladesh (6.5%), as per a World Bank report.
• Hedging strategy against risk: Besides being a win-win situation for both the destination and source country, labour migration is good hedging strategy against unsystematic risks for any economy.

Way forward

• Human capital should also be invested in a diversified portfolio akin to financial capital.
• Promoting labour mobility: For many countries, remittances have been of vital support to the domestic economy after a shock.
• India should aim to increase remittances to say 10% of GDP.
• The Philippines’ model of promoting labour mobility be replicated in India.
• Reducing the costs involved: Both the cost of recruitment of such workers and the cost of sending remittances back to India should come down.
• Skilling: The number of migrant workers need not go up for remittances to increase if the skill sets of workers are improved.
• Regulation of recruitment agencies: Recruitment agencies should also be regulated by leveraging information technology for ensuring protection of migrant workers leaving India.
• An integrated grievance redressal portal, ‘Madad’, was launched by the government in 2015.
• Proposed Emigration Bill 2021: The Indian government proposed a new Emigration Bill in 2021 which aims to integrate emigration management and streamline the welfare of emigrant workers.
• It proposes to modify the system of Emigration Check Required (ECR) category of workers applying for migration to 18 notified countries.
• The Bill makes it mandatory for all categories of workers to register before departure to any country in the world to ensure better protection for them, support and safeguard in case of vulnerabilities.
• The proposed Emigration Management Authority will be the overarching authority to provide policy guidance.
• Besides workers, as about 0.5 million students also migrate for education from India every year, the Bill also covers such students.

Conclusion

For India to increase remittances’ contribution to GDP, it doesn’t need more workers but skilling and better management.

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