Q.6. Write a short note on the contribution of the Indian diaspora towards economic structure in India.

The Indian diaspora has made significant contributions to India’s economic structure. Here are some key points:

• Remittances:
  • Remittances are funds sent by migrants to their families and friends in their home countries. They serve as vital income and foreign exchange for numerous developing nations, particularly in South Asia.
  • Private remittances significantly contribute to India’s current account, helping offset the trade deficit that often arises from merchandise trade.
  • Remittances are typically classified as part of the current account in a country’s balance of payments.
  • According to the World Bank, in 2015, Indian migrants sent about $69 billion, which amounted to roughly 3%of India’s gross domestic product (GDP). While during the fiscal year 2021-22, remittances reached up to US$ 89.1 billion.
  • The United States holds the highest share at 23.4% of total remittances, followed by the United Arab Emirates (18%), the United Kingdom (6.8%), Singapore (5.7%), and Saudi Arabia (5.1%).
  • These remittances help meet daily living expenses, support education, and contribute to local economies.
• Trade Deficit Financing:
  • Inward remittances play a crucial role in financing India’s trade deficit.
  • According to the Reserve Bank of India, remittances helped finance 43%of the country’s trade deficit in 2017-18.
  • They contribute to foreign exchange reserves and stabilize the economy.
• Investment and Entrepreneurship:
  • The Indian diaspora actively invests in India’s economy.
  • They participate in sectors such as technology, real estate, and start-ups.
  • Many successful entrepreneurs and business leaders abroad maintain strong ties with India.
• Brain Gain, Not Brain Drain:
  • Prime Minister Narendra Modi views the diaspora as an asset, not a liability.
  • He encourages them to reconnect with their Indian roots and contribute to the country’s development.
  • India’s intellectual power beyond borders is seen as a brain gain rather than a brain drain.
• Cultural Diplomacy and Soft Power:
  • The Indian diaspora acts as a bridge, promoting Indian culture, traditions, and values globally.
  • Their success stories enhance India’s soft power and influence.

In summary, the Indian diaspora’s economic contributions extend beyond remittances, impacting trade, investment, and cultural diplomacy. Their role as a strategic asset continues to shape India’s economic landscape.