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Remittances in India: Facts and Issues

Chinmay Tumbe

Indian Institute of Management (IIM), Bangalore - Department of Economics and Social Sciences

March 1, 2011

Indian Institute of Management Bangalore Working Paper No. 331

This paper provides a fact sheet of domestic and international remittances at the State level and across household characteristics and discusses the extent of remittance dependency, it’s growth since the 1990’s, the different uses of remittances across States, the possible impact on source region inequality and its importance in enhancing ‘financial inclusion.’ Data from the 49th and 64th round migration related National Sample Surveys, the Reserve Bank of India and the 2001 Census are used for the analysis. Some of the findings are: (a) The domestic remittance market was estimated to be $10 billion in 2007-08, 60% being Inter-State transfers and 80% directed towards rural households (b) Domestic remittances financed over 30% of household consumption expenditure in remittance receiving households that formed nearly 10% of rural India (c) Domestic remittance dependency was high in Bihar, Uttar Pradesh and Rajasthan and has generally grown since the 1990s, most notably in Orissa. (d) The top 25% households received around 50% of domestic remittances suggesting that remittances could be increasing source region inequality (e) 70% of domestic remittances were estimated to be channeled in the informal sector as against 25% in China revealing a huge opportunity for financial institutions to serve migrant workers (f) Kerala, Punjab and Goa accounted for over 40% of international remittance flows and are among the top remittance-dependent economies of the world.

Number of Pages in PDF File: 38

Keywords: International Remittances, Domestic Remittances

JEL Classification: F22, F24, O15, R23

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Date posted: March 7, 2011  

Suggested Citation

Tumbe, Chinmay, Remittances in India: Facts and Issues (March 1, 2011). Indian Institute of Management Bangalore Working Paper No. 331. Available at SSRN: http://ssrn.com/abstract=1780289 or http://dx.doi.org/10.2139/ssrn.1780289

Contact Information

Chinmay Tumbe (Contact Author)
Indian Institute of Management (IIM), Bangalore - Department of Economics and Social Sciences ( email )
Bannerghatta Road
Bangalore, Karnataka 560 076

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