By Satish Kumar and Anjali Mehra | Issue #22
The Gulf Cooperation Council (GCC) states encircling the Persian Gulf are endowed with huge reservoirs of oil and natural gas. In the early seventies, the oil boom led to the formation of OPEC (Organization of the Petroleum Exporting Countries) which has resulted in the member countries becoming an attractive destination for work for low-skilled workers from neighbouring Asian countries, particularly India. The practice of Indian migration to GCC nations is not new, but dates back to pre-partition days. This phenomenon has shown exponential growth since the 1970s. As per the latest data, there are estimates of about 10 million Indians living in six GCC countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates).
Seventy percent of Indians work in the construction sector as cleaners, domestic servants and drivers. It has been observed that migration to these nations is temporary and lasts a relatively short period of time. Remittances sent by these emigrants to their families not only help them to escape from abject poverty but also fuel economic growth in the home states in India as well as the nation at a macro level. At the micro level, remittances help migrant families to secure social protection against unemployment, health hazards, education as well as providing other benefits.
The macro level impact of migration to GCC countries can easily be seen in the local and national economy of India as immigrants in Gulf countries send money back home. Most emigrants to the Gulf from India travel from rural rather than urban areas.
According to an estimate by the World Bank in 2022, India receives the highest amount of remittances from abroad (about $100 billion), which has contributed approximately 3% of Indian GDP. Currently India receives one third of total remittances from Gulf countries. During the global economic crisis in 2008-09, Gulf countries accounted for nearly 35% of the total remittance inflows to India. In 2011-12, India’s trade deficit increased to nearly $120 billion. However, during the crisis, remittances played an important role for foreign currency, as well as helping in the balance of payment issues in India.
At the state level, this study reveals that approximately 65 % of total remittances are received by four states: Maharashtra (35.2 %), Kerala (10.2 %), Tamil Nadu (9.7 %) and Delhi (9.3 %). 31% of Indian remittances are channelled to Kerala. This is almost 10 times higher than the share of remittances received by the rest of India (3% of total GDP in 2020). According to NSDP data, Kerala's per capita income was Rs. 37,000/- in 2000. After two decades in 2020, per capita income of Kerala was Rs. 265,000. At the same time (2000-2020), the per capita net domestic product (NDP) at the national level was recorded from Rs. 35,000 to Rs. 150,000.
Remittances play a very significant role at the micro level, for instance at the village, household and family level. It has significant importance in the poorer households in Indian society, and plays a crucial role for reducing abject poverty in certain areas. In the case of the Indian diaspora in the Gulf, most migrants are unskilled and semi–skilled. They have no choice or any alternative jobs in India. They are marginalised in different ways, live in abject poverty, no regular job, housing, education, or savings. Job opportunities play a very significant role in their life when they come along. Once they get jobs abroad, their lives tend to improve by way of housing, sanitation, children’s education, savings, purchasing power, paying debts, etc.
Remittances have a lasting impact on improving living standards when used not only to ensure food security for households, but also to improve the skills and productivity of recipients. It has been observed that the impact of remittances can be quite considerable at the family and village level (the micro level) but at the regional or national level (the macro level) their impact is less clear.
Satish Kumar is a Research Scholar with a PhD in Economics, currently at the Guru Nanak Dev University in Punjab, India. He is currently working on Transnational and Diaspora Studies related to international labour migration from India to GCC states. You can reach him at sksarwa1010@gmail.com.
Dr Anjali Mehra is an Associate Professor and Research Guide and Head of School of Social Science at Guru Nanak Dev University in Punjab, India. You can reach her at anjalieco@gmail.com.
