Inward remittances, accounting for around 3% of India’s GDP, surged 12% from 2021.

Besides a large working population of Indians living abroad, there were other reasons, too, for this increase. For instance, students are the other big constituents of the Indian diaspora. They eventually form high-income groups, with direct implications for remittances.

The depreciation of the Indian rupee has also helped. Since January, the currency has fallen 10% against the dollar. This has made sending money from South Africa to India cheaper by 26%, from Thailand by about 17%, and from Japan by 14% in the past year or so, the World Bank has said.

Eoin Treacy's view

The dilemma for countries with high rates of emigration is they end up sending the most ambitious, adventurous, and well-educated abroad. The so-called “brain drain” is mourned by society and people lament that if these productive people could stay at home, they would better society. However, the reality is those people probably have better personal opportunities overseas and would not reach their full potential at home. The benefit is they send cash home which is a significant source of inward foreign currency.

India’s diaspora is more successful than most. That’s an important source of currency flow but it also heightens the country’s sensitivity to the global economy. Many EB-1 visa holders work in the tech sector and “temporary” employees tend to be let go first. That suggests, $100 billion might take a while to exceed.   

The RBI is actively attempting to fight inflation so additional rate hikes appear likely. Nevertheless, the Rupee is still retreating, with the dollar holding a sequencing of higher reaction lows.