India has emerged as the leading recipient of remittances globally, with a record-breaking $111 billion in 2022 alone. This tremendous inflow of funds from the Indian diaspora underscores the pivotal role of global migration in shaping India's economic landscape. As India's economy continues to experience rapid growth, international migration plays a crucial role in this transformation, contributing not only to the prosperity of migrant families but also to India's broader economic development.

In this blog, we will explore the broader impact of remittances on India's economy, the challenges faced by migrants, and how TERN helps individuals take charge of their careers through focused, strategic support.

The Role of Remittances in Economic Growth

India’s impressive remittance receipts are a testament to the scale and significance of migration in the country’s economy. They account for about 3% of India’s GDP, highlighting their centrality to the economy. According to the World Migration Report 2024, India continues to lead the world in remittance inflows, and more than 18 million Indian expats live and work abroad as per the United Nations. These workers send significant financial resources back home, contributing to family welfare, local economies, and the nation’s GDP.

On a micro level, remittances support millions of households by funding essential needs such as education, healthcare, and housing. This boosts consumption in India, which in turn drives economic growth, particularly in rural areas where remittance flows provide a much-needed financial lifeline. On a macro level, these financial inflows help stabilize India's economy, reduce dependency on foreign aid, and enhance the country’s foreign exchange reserves.

For India, remittances act as a key driver of economic resilience, particularly during periods of global economic uncertainty. The funds sent back home by migrants are not just a form of personal support, but a significant contribution to India's economic stability and growth.

Migration and Its Broader Impact on India’s Growth

India has the world’s largest diaspora, with over 18 million people working across Gulf nations, the U.S., and Europe, and the influence of migration and remittances goes beyond individual households. Indian migrants abroad, especially in high-demand sectors like IT, healthcare, and engineering, contribute not just through financial remittances but also by positioning India as a global hub for talent. Their expertise, combined with the financial contributions of remittances, helps elevate India’s economic growth and its standing in the global marketplace.

Moreover, return migration—the process by which skilled workers return to India after gaining international experience—provides an opportunity to leverage the knowledge, skills, and capital migrants bring back with them. This cycle of migration and reintegration creates a dynamic growth model, one that is beneficial for both the migrant workers and the nation.

In addition to the financial benefits, migration fosters a broader cultural and economic exchange between India and the countries where its citizens work. This exchange facilitates the transfer of knowledge, expertise, and innovation, which in turn benefits India’s domestic industries.

Barriers to Economic Growth and Migration

While the financial benefits of remittances are undeniable, migrants face several challenges in the process that can hinder the full potential of their contributions to India’s economic growth:

1. High transaction costs: The cost of sending remittances remains relatively high, with an average fee of about 6% according to World Bank data. These fees eat into the amount that migrants can send home, making remittances less effective for supporting their families and contributing to India’s economy.

2. Vulnerability to exploitation: Migrants, especially low-skilled workers in some nations often face poor working conditions and exploitation. Many are unable to access adequate legal protections, which increases their vulnerability to abuse. Ensuring that migrant workers are protected and treated fairly is essential for improving their quality of life and ensuring that their contributions to the economy are sustainable.

3. Dependence on informal channels: Many migrants rely on informal channels to send money back home, which can be cheaper but often lack security and transparency. These informal systems also do not contribute to the formal economy or promote financial inclusion.

 4. Barriers to accessing better employment: While many migrants come from rural areas, they often face barriers when trying to access better-paying jobs abroad due to a lack of skills, language barriers, or limited education. Providing skill development opportunities can help them access higher-paying roles and increase the amount of money they can send home.

Policy Recommendations for Sustainable Migration

The World Migration Report 2024 published by the International Organization for Migration (IOM) highlights the importance of policy reforms to enhance the benefits of migration. Several key areas need attention:

1. Reducing Transaction Costs: Efforts should be made to reduce the high costs of remittance transfers through greater competition and innovation in the financial sector. Lowering transaction fees will ensure that more money reaches migrant families.

2. Improving Worker Protection: India must advocate for stronger agreements with migrant destination countries to ensure better working conditions and legal protections for its citizens abroad.

3. Facilitating Skill Development: Expanding access to vocational training and certifications will help Indian workers meet the growing demand for skilled labour in global markets.

4. Supporting Return Migration: Creating opportunities for returning migrants to reintegrate into the workforce will ensure that the benefits of migration are long-lasting and sustainable for India.

How TERN Can Help

At TERN, we focus on helping individuals from India secure their dream jobs abroad through our expert career coaching and skill development programs. We aim to enhance the long-term success of Indian migrants by preparing them for global job markets and offering personalized guidance for individuals looking to build careers abroad, including:

1. Career Coaching: We provide one-on-one coaching to help individuals navigate their career paths, ensuring that they are well-prepared for job opportunities in international markets.

2. Skill Development: We assist individuals in enhancing their skills to meet the demands of high-growth global sectors. This includes offering training and certifications that make them more competitive in the international job market.

3. Interview Preparation: We provide targeted interview coaching, preparing individuals to excel in interviews with international companies and increasing their chances of securing high-paying jobs abroad.

4. Personalized Job Search Strategies: We guide individuals in developing effective job-search strategies, including optimizing their resumes and LinkedIn profiles for international job opportunities.

By focusing on these areas, TERN helps empower migrants to access better job opportunities, which in turn leads to higher earning potential and stronger financial contributions to their families and to India’s economy. Contact us today to know more or schedule a demo with us.

Conclusion

Global migration is not just a movement of people—it's a powerful engine driving India’s economic growth. The remittances sent by millions of Indian migrants fuel critical sectors of the economy, improving household incomes, reducing poverty, and stimulating development, particularly in rural areas. To truly capitalize on the potential of international migration, India must tackle key challenges like high remittance fees, inadequate worker protections, and limited access to opportunities for migrants. By enacting smart, forward-thinking policies that lower costs, enhance migrant welfare, and invest in skills development, India can ensure that migration becomes a cornerstone of its economic future, propelling sustainable growth and creating a more inclusive, prosperous nation for all.

At TERN, we understand the vital importance of migration and the opportunities it presents, particularly for skilled workers looking to build better futures. While remittances are central to the financial empowerment of migrant families, our focus is on helping individuals realize their potential in the global job market. Through career coaching, skill development, and tailored job-search strategies, TERN is dedicated to empowering individuals to thrive abroad and contribute meaningfully to both their families and India's growth.

‍