Low-skilled emigration, remittances and economic development in India

ABSTRACT

This study explores the recent trends, state-wise changing patterns and determinants of low-skilled emigration from India to Gulf Cooperation Council using both familiar and unexplored sources of data. Moreover, it examines the developmental impacts of remittances in India at a great detail. We find that Indian diaspora across the globe is on the rise, with a shifting destinations from backward Asian regions to relatively advanced regions of the North America, Europe and Oceania. In India, when a state is backward in terms of development and well-being, it had the tendency to push its labour to the low-skilled migration streams, with a tendency to ‘withdraw’ when the state advances further. Poverty and unemployment are among the major determinants of the low-skilled emigration in India. Although we do not find any direct impact of remittances on growth of Gross Domestic Product (GDP), its impact on development and well-being is enormous. As overall unemployment is rising, a pro-emigration foreign policy is the immediate need of the hour. Moreover, endorsing skill development of youths could sustain overall development through increased skilled emigration to the North America, Europe and Oceania regions, and consequently increased inflow of remittances in the long run.

KEYWORDS:

• Emigration
• remittances
• development
• India

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. Out of total remittance receipts in India, about 56 percent (in 2017) has come from only GCC countries.

2. As the reports of these ministries (including Ministry of Labour, Ministry of Overseas Indian Affairs, and Ministry of External Affairs) provide emigration data from time to time in India.

3. At constant price 2004–05.

4. MYS is computed for the age group 25 and above years of population.

5. We preferred to use xtivreg2 to simple xtivreg because it gives identification test results along with estimates. See Schaffer (2010).

6. Mexico ranked two (13 million) followed by Russian Federation (11 million), China (10 million) and Bangladesh (7 million) etc. See International Migration Report (United Nations, 2016) for detail.

7. The purpose of the policy is to provide employment opportunities to Saudi nationals by replacing foreign work force.

8. The Distribution of non-resident Keralites by profession shows that 11.85 percent of them are working as drivers, 10.99 percent as salesmen, 6.37 percent as nurses, 3.78 percent as engineers, 2.23 percent as IT professionals and 0.53 percent as doctors and the remaining 67.78 percent are professionals like businessmen, teachers, bank professionals etc. (Economic Review, 2017, State Planning Board, Government of Kerala, p. 341).

9. It was reported that until the late 1980s, nearly 40%of money was transferred through informal channels, often called Havala networks – outside of the formal banking system (Sasikumar & Hussain, 2007) which is now barely 4% (Zachariah & Rajan, 2012).

Additional information

Notes on contributors

A. P. Noushad

A. P. Noushad is currently a PhD scholar, Department of Economic Studies, Central University Punjab. He is working on the topic „International Migration, Inter-generational Linkages and Households’ Spending Behaviour in Kerala and Punjab”.

Jajati K. Parida

Jajati K Parida is currently an Assistant Professor, Department of Economic Studies, Central University Punjab, India. Until recently, he was Deputy Director, National Institute of Labour Economics Research and Development, NITI Aayog, Government of India and Assistant Professor (Ad-hoc), College of Vocational Studies, University of Delhi. He has several contributions in esteemed journals like: World Development, Social Indicators Research, Economic and Political Weekly, Indian Economic Review, Indian Journal of Labour Economics, Indian Journal of Human Development, and Migration and Development etc. He teaches Econometrics and Microeconomics and his areas of research include: migration, employment, poverty and human development.

Ravi K Raman

Ravi K Raman is currently a member, State Planning Board, Government of Kerala. Until recently, he was senior fellow at the Nehru Memorial Museum and Library, New Delhi. He was a visiting fellow in Oxford, Cambridge and Manchester for varying periods. He is also honorary research fellow in the Department of Development Studies, SOAS, London, and affiliated researcher on Egalitarianism, University of Bergen. He is the author of Global Capital and Peripheral Labour (Routledge, 2010/2012/2015), editor of Development, Democracy and the State (Routledge, 2010) and Corporate Social Responsibility (with Ronnie Lipschutz) (Palgrave Macmillan, 2010) and has contributed to journals such as Review of International Political Economy, Review of Radical Political Economics, Cambridge Journal of Regions, Economy and Society, Nature and Culture, Social Analysis and Business History Review.