Ziraat Times Economic Analysis Team

Thousands of Jammu & Kashmir residents work and live across the world. Although the exact number of J&K state subjects living outside the state is unknown, it has been generally known that substantial remittances are sent back home by this population through banking and other formal channels every year.

What, however, has remained unknown is the quantum of money exactly sent back by this population as remittances.

Ziraat Times is in the possession of a Reserve Bank of India (RBI) document which indicates that the residents of Jammu & Kashmir living abroad have sent back home Rs 870 crore as remittances in 2016-17. 

Although this amount, at first glance, looks huge, in comparison with other states, J&K’s share is a paltry one. 

Screen Shot 2018-11-20 at 11.36.01 PMWhile India received a total of USD 61.9 billion remittances from Non-Resident Indians (NRIs) in 2016-17, J&K’s share out of the total transfer kitty was a mere 0.2%. That makes Jammu & Kashmir among the lowest remittances-receiving states in India. Other states receiving similar remittances as Jammu & Kashmir are Uttaranchal, Pudducherry and Chandigarh.

Considering the broad nature of J&K’s educated non-resident pool and the business class doing their business across the world, the Rs 870 crore remittance share, in comparison with other states in India, does reflect on the not-so-deep nature of the possible incomes and remittances of non-resident population of J&K.

The RBI report accessed by Ziraat Times captures various aspects relating to remittances – source; destination; purpose of inward remittances; size; prevalent mode of transmission; and receivers’/ senders’ cost of remittances. 

The report reflects a survey conducted by the RBI for which responses were received from 42 major authorised dealers (ADs), accounting for 98.3 per cent of total remittances in 2016-17. A separate questionnaire was circulated among three major Money Transfer Operators (MTOs) that have large remittance operations in India.

The current size of the remittances received by India

In 2017, India received the biggest amount of remittances – $69 billion – among all the countries in the world. These remittances have come from its large pool of skilled, semi-skilled and unskilled migrants across the world, mainly in the Middle East.

Although J&K’s share of remittances in 2017 is not specified in the latest RBI figures, if the 0.2 % share of 2016-17 financial year is applied to 2017 calendar year as well,  J&K’s share of remittances for the year works out a total of Rs 979.8 crore.  

Which states get the biggest share of remittances?

Significantly, according to RBI, four southern states of Kerala, Karnataka, Tamil Nadu and Andhra Pradesh received almost half of India’s total remittances in 2017. These states had a share of about 46% or $31.74 billion – a whopping Rs 2,30,900 crore – of the total remittances of $69 billion that India received last year from its citizen working overseas.

Interestingly, Kerala tops all the states, accounting for about 19% share or approximately Rs 95,000 crore of the total remittances received by the country in 2017.

J&K’s remittances figure, in comparison, looks peanuts.

After Kerala, Maharashtra had the largest chunk of remittances at 16.7% ($ 11.52 billion), followed by Karnataka 15% (about $10.35 billion), Tamil Nadu 8% and New Delhi 5.9%.

How is this money spent?

According to an RBI study, over half of the remitted money to India was used for family maintenance (consumption), while 20% deposits in banks, followed by investments in land and property and shares (8.3%).

In case of Jammu & Kashmir, while the exact pattern of the use of remittances is not known, it is generally understood that  most of the remittances are invested in real estate. However, a significant chunk is used in domestic consumption as well.

Some basic analysis on the investment pattern carried out by Ziraat Times suggests that remittances are an important component of driving J&K’s economy in times when the local economy is doing badly. This money, routed through formal banking and non-banking systems, helps in maintaining a consumption level that sustains business and trade in the state in these turbulent times. This money also helps rupee circulation, creating livelihood opportunities in the overall economic system.   

Where from the remittances flow?

According to the Reserve Bank of India report, the top remittance sending countries to India are the United Arab Emirates, the United States, Saudi Arabia, Qatar, Kuwait, Oman, the United Kingdom and Malaysia. 

Although there is no country-wise break-up of J&K residents living abroad readily available, it is generally assumed that the Gulf region accounts for largest proportion of remittances J&K state receives from abroad. However, in the absence of reliable data, the exact source countries of the remittances are hard to determine.

What else does the RBI study says about the remittances received in 2016-17

Remittances to India were mostly routed through private sector banks (74.2 per cent), followed by public sector banks (17.3 per cent) and foreign banks (8.5 per cent).

82 per cent of the total remittances received by India originated from eight countries, viz., the United Arab Emirates, the United States, Saudi Arabia, Qatar, Kuwait, Oman, the United Kingdom and Malaysia.

Kerala, Maharashtra, Karnataka and Tamil Nadu together received 58.7 per cent of total remittances.

The rupee drawing arrangement (RDA) is the most popular channel of remittances which accounts for 75.2 per cent of remittances, followed by SWIFT (19.5 per cent), direct transfers (3.4 per cent) and cheques and drafts (1.9 per cent).

Size-wise analysis shows that 70.3 per cent of all reported transactions were of more than US$ 500 and only 2.7 per cent were of less than US$ 200.

More than half of remittances received by Indian residents were used for family maintenance, i.e., consumption (59.2 per cent), followed by deposits in banks (20 per cent) and investments in landed property and shares (8.3 per cent).

Cost to the remitter for sending remittances through RDA is relatively low in the case of private /foreign banks.

The cost of receiving remittances through the RDA route is lowest in the case of public sector banks.

MTOs operate mostly in the cash-to-cash services segment which accounts for 96.8 per cent of the total remittances routed through them.

The cost of sending remittances through MTOs using the cash mode varies between 0.6 to 11.1 per cent, depending upon the size of remittances.

Bank-wise Distribution of Inward Remittances

In %age terms

Bank Group

Share in Total Remittances

Private Banks

74.2

Public Sector Banks

17.3

Foreign Banks

8.5

Total

100.0

Country-wise Share in Inward Remittances

Per cent

Source Country

Share in Total Remittances

United Arab Emirates

26.9

United States

22.9

Saudi Arabia

11.6

Qatar

6.5

Kuwait

5.5

Oman

3.0

United Kingdom

3.0

Malaysia

2.3

Canada

1.0

Hong Kong

0.9

Australia

0.7

Germany

0.6

Italy

0.05

Philippines

0.03

Others

14.8

Total

100.0

 State-wise Share in Inward Remittances

Per cent

Destination State

Share in total remittances

Kerala

19.0

Maharashtra

16.7

Karnataka

15.0

Tamil Nadu

8.0

Delhi

5.9

Andhra Pradesh

4.0

Uttar Pradesh

3.1

West Bengal

2.7

Gujarat

2.1

Punjab

1.7

Bihar

1.3

Rajasthan

1.2

Goa

0.8

Haryana

0.8

Madhya Pradesh

0.4

Orissa

0.4

Jharkhand

0.3

Uttaranchal

0.2

Puducherry

0.2

Chandigarh

0.2

Jammu and Kashmir

0.2

Assam

0.1

Himachal Pradesh

0.1

Chhattisgarh

0.1

Others

15.5

Total

100.0

Note: “Others” also includes those remittances for which banks could not identify the specific destination and therefore covered such transactions under “Others”.

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