Home Remittance from GCC countries to India and Pakistan

The GCC bloc has been a magnet for all kind of workers from white to blue collars from all over the world because of tax free income and low cost of living compared to the western countries (although the cheap cost of living is now just a myth). Geographically, South Asian countries like Pakistan, Bangladesh, India, Nepal etc are close to GCC countries resulting the workers from these places fascinates to the opportunities due to rapid growth of the region and generous government spending to modernize national infrastructure.

Due to oil exploration and now for the purpose of diversified economy, spending on infrastructure has been the top reason for jobs creation in GCC region which comprises of Saudi Arabia, Qatar, UAE, Oman, Bahrain and Kuwait. The region also enjoys the stability and relatively better rule of law compared to South Asian countries.

The expats which come to work in these countries mostly consist of construction workers and other laborers from South Asian countries. However, white collar workers are also present in large numbers which includes bankers, engineers, doctors, businessmen etc. The aim of any expat worker in a foreign land is to make money and make money rather quickly as none of the GCC countries provides permanent residence and the only way to survive in there is either with employment or business. The expat workers send money back home to support the families and investments.

Indian and Pakistani expats combined will exceed even the 50% of total population of a country like UAE, hence it will be interesting to see the trend of remittances sent by the citizens of these countries back home as a comparison.

The following should be kept under consideration while reading the data presented here:

– Remittance data for Pakistan is authentic based on the reports of State Bank of Pakistan’s (SBP) website
– Remittance data for India is not published by Reserved Bank of India (RBI), hence various sources were consulted to get accurate data as much as possible.
– There is no published authentic records of expat population from India or Pakistan and even from the hosting countries, the figure is also changing rather quickly so best sourced data in the particular time domain is taken.
– All derived data based on best sourced data can be slightly skewed but gives an overall picture. However, the data inaccuracy may not deviate +/- 10% at max.

According to SBP’s declaration of remittance to Pakistan, the top country for home remittance is USA with last year’s remittances reaching 2.46 billion USD while KSA stands on the second number where remittances accounting to almost 2.2 billion USD.

Pakistan vs Indian expats in GCC

Pakistan vs Indian expats in GCC

Chart 1: Total Pakistani expats vs Indian Expats in various GCC countries

 

Interestingly although as the Chart 1 shows KSA being the top remittance originator for Pakistan, Bahrain has the best Per Capita for remittance probably because of tiny population of expats there. However, India although have more expats in KSA but as can be seen from Chart 2, the per capita remittance from UAE to India is beating all peers. Indian per capita remittance touches 8,000 USD (29k AED) showing the quality of Indians working and earning in UAE are not only better off than other GCC countries but even much better than their Pakistani counterparts. This spread is further confusing when we look at the Indian domestic per capita income of 5,777 USD and Paksitan standing at 4,699 USD.

 

Pakistan vs Indian expats remittances from GCC countries

Pakistan vs Indian expats remittances from GCC countries

Chart 2: Annual Per Capita Remittance from GCC countries to Pakistan and India

 

Chart 3 indicates towards the expat Pakistani and Indian population as a percentage of total population in the country. Here, UAE is heavily occupied by the two countries, infact a total of more than 55% of population living in UAE hails from the two South Asian countries. However, despite in large numbers, the expats from India and Pakistan are still in small percentage if compared with KSA. The reason is the Saudi Arabia’s large local population itself.

Pakistan vs Indian expats percentage in GCC

Pakistan vs Indian expats percentage in GCC

Chart 3: Total Pakistani expats vs Indian Expats in various GCC countries as a percentage of local population

 

The next two charts compare the remittances sent to Pakistan and India VS the GDP and total population of hosting country. Showing the existing potential in other countries which has been shown already by UAE.

Pakistan vs Indian expats remittances from GCC countries VS GDP

Pakistan vs Indian expats remittances from GCC countries VS GDP

Chart 4: Total Remittances from GCC countries to India and Pakistan compared to the respective GDP

 

Pakistan vs Indian expats remittances from GCC countries VS Population

Pakistan vs Indian expats remittances from GCC countries VS Population

Chart 5: Total Remittances from GCC countries to India and Pakistan compared to the respective population of the country

Here it must be remembered while comparing India and Pakistan in numbers, Pakistani is yet a small country as compared to India. India is six times bigger than Pakistan in population and if we consider that, the number of Pakistanis residing in GCC countries are in higher proportion, although the per capita remittance does not show a rosy picture for Pakistan specially in UAE.

There could only be 2 reasons of low per capita remittances from Pakistan as compared to India. Either Indians are actually earning a whole lot than their Pakistani counterparts, or they are saving more to send back home. The first narrative or Indians having higher earnings is slightly supported with high numbers of Indian businesses which are having heavier weightage than mostly professional Pakistanis. However, living in GCC countries it has been noted that Indians are better in saving money and living a frugal life style compared to their Pakistani counterparts hence supporting the statistics.