India's remittances strong amid west Asia conflict, but govt support needed to reintegrate returning workers domestically: Morgan Stanley

New Delhi [India], May 4 (ANI): India's remittance inflows remain a key pillar supporting the country's external balance, but the ongoing West Asia conflict has raised concerns over employment conditions for Indian workers in the Gulf, highlighting the need for government support for returning migrants, as per a report by Morgan Stanley.
According to the report, India received around USD 120 billion in FY2024, which increased by 15 per cent to USD 138 billion in FY2025 as the global economy rebounded. These inflows have financed roughly 40-45 per cent of India's merchandise trade deficit in recent years, easing pressure on the balance of payments.
It stated, "policymakers may consider measures to support returning workers as they reintegrate into the domestic economy".
At the same time, the composition of remittance sources has been undergoing a gradual shift. Traditionally, the Gulf Cooperation Council (GCC) countries -- including the UAE, Saudi Arabia, Kuwait, Qatar, Oman and Bahrain -- accounted for a large share of inflows. Their contribution has declined from about 47 per cent in 2016-17 to 38 per cent in 2023-24.
The UAE alone contributed 19.2 per cent, making it the second-largest source of remittances after the United States.
However, the share of advanced economies has increased significantly, rising from 30 per cent in 2016-17 to 42 per cent in 2023-24.
The report stated this shift as positive, as remittances from advanced economies tend to be more stable and less dependent on commodity cycles, while higher-skilled migration supports stronger per capita remittance flows.
Despite this improving diversification, the report flagged near-term risks due to the ongoing conflict in West Asia. The crisis has dampened business confidence and economic activity in Gulf countries, with sectors such as tourism, logistics and trade already witnessing a slowdown.
A large number of Indian migrants in the Gulf are employed in blue-collar and service sectors such as construction, hospitality and domestic work, which are particularly vulnerable to economic downturns. This raises concerns over potential job losses and reduced income flows.
The impact is likely to be uneven across India, with states such as Kerala particularly exposed. The state accounts for nearly 20 per cent of India's remittances, with around 80 per cent of its overseas workers based in the Gulf. A slowdown in Gulf employment could therefore affect household incomes and consumption in such regions.
The report also noted that uncertainty during the conflict may lead to a precautionary dip in remittance flows, as some expatriates may delay transfers or hold on to savings due to disruptions in money transfer channels.
In this context, the report suggested that policymakers may need to consider measures to support returning workers as they reintegrate into the domestic economy. It also emphasised the need for stronger diplomatic engagement to safeguard the welfare and employment of Indian citizens abroad. (ANI)

(This article was generated from news agency ANI without modifications to the text.)