Determinants and Effects of International Remittances: Evidence from Ratnagiri District of Rural Maharashtra

The Indian Journal of Labour Economics https://doi.org/10.1007/s41027-022-00426-1 RESEARCH NOTE Determinants and Effects of International Remittances: Evidence from Ratnagiri District of Rural Maharashtra Bhupesh Gopal Chintamani1 · Lalitagauri Kulkarni2 Accepted: 21 December 2022 © The Author(s), under exclusive licence to Indian Society of Labour Economics 2023 Abstract International emigration and remittance inflow is not a novel phenomenon for India. The present study examines the factors influencing emigration and size of remittance inflow. It also examines the effect of remittances on the economic wellbeing in terms of expenditure of the recipient households. In India, the remittance inflows are important source of funding for the recipient households in rural India. However, the studies focusing on the impact of international remittances on rural household wellbeing in India are rarely found in the literature. The study is based on the primary data collected from the villages in Ratnagiri District, Maharashtra, India. It uses logit and probit models to analyse the data. The results show a positive association between inward remittances and economic welfare and subsistence of the recipient households. Findings of the study show a strong negative relationship between the education of the household members and emigration. Keywords Emigration · Remittances · Rural welfare · Subsistence JEL Classification F22 · F24 1 Introduction International remittances affect the recipient economy, both at the micro and macrolevels. The remittances can play a pivotal role in the development of the remote, rural regions. The present study draws attention toward international migration and receiving workers’ remittances to examine their impact on the rural households of * Bhupesh Gopal Chintamani Lalitagauri Kulkarni 1 Symbiosis Law School (SLS), Symbiosis International (Deemed University) (SIU), Vimannagar, Pune, Maharashtra, India 2 Gokhale Institute of Politics and Economics, BMCC Road, Pune, Maharashtra, India 13 Vol.:(0123456789) ISLE The Indian Journal of Labour Economics Ratnagiri, Maharashtra, India. The macro-level impact of remittances on the home country’s macroeconomic economic indicators, like economic growth rate of gross domestic product (GDP), exchange rate stability, import and export deficit, etc., has been well documented (Mallick 2008; Ratha 2004; Ratha 2003; Chami et al. 2005; Nayyar 1994a, 1994b; Gupta 2005), while some studies suggest that remittances reduce poverty dynamics in recipient countries both in single and multiple country context (Adams 2004; Adams 2005; Adams & Page 2005; Muhammad & Ahmad 2009; Ahmed et al. 2010). International remittances coming from Indian diaspora residing outside the territorial boundaries have always been one of the major contributors to the current account balance (CAB) and supporting external trade position. According to a World Bank, Migration and Development Brief 371 (World Bank 2022), India received remittances to the tune of $100 billion which is the highest among all the recipient countries. In a recent globalised scenario (World Bank 2021; RBI 2022) during the COVID-19 pandemic, remittances have proved to be resilient in some of the countries with India being one among them, with a marginal drop of 0.2%. In India, Kerala receives the maximum share of inward remittances, which has resulted in higher per capita income and has also dramatically altered the consumption patterns of the state (Zachariah & Rajan 2012; Sasikumar & Hussain 2007; Kannan & Hari 2002). Per capita consumption expenditure is highest in Kerala among all other Indian states since the 1980s. All the aforementioned facts have earned the state an alternative name as the remittance state (Zachariah & Rajan 2012, 2007). The overall economic impact of remittance on the state of Kerala has driven the study to inquire about such micro-level impacts in the state of Maharashtra which is second largest remittance receiving state (RBI 2018). There is great wealth of literature available on the socio-economic impact of remittances on household, the current status of the emigrants, and community development. These micro-level studies analyse valuable information from specific local samples at village, town, or block levels. Studies such as (Kannan & Hari 2002; Rajan et al. 2015; Parida et al. 2015) have documented the impact and role of remittances in the performance of the regional indicators and development of village economy. These studies help to understand the effects of remittances on the sample households which mitigate the economic subsistence. According to Taylor (1999), the choice of emigration might be a self-decision taken by the individual members, but other household features like the number of members in the household, and socio-economic conditions also play an essential role in the decision-making of the out-migrants. Extensive studies have been undertaken to understand the impact of remittances for the states of Kerala, Punjab, Goa, Gujarat, Andhra Pradesh, and Bihar by (Zachariah et al. 2002; Kaur 2018; Kapuria 2018; Guha 2013; Guha & Biplab 2013; Economic Times Paper 2014; Guha 2011; Sasikumar & Hussain 2007; Mohanty et al. 2014; Dey 2015; Chintamani 2017). The current studies (Chakraborty et al. 2022; Rahaman et al. 2021; World Bank 2021; Irudaya Rajan et al. 2020; Jolad et al. 2020) altogether affirm that an 1 India received remittances to the tune of $81 billion as per Migration and Development Brief 31 (World Bank 2019) https://www.knomad.org/publication/migration-and-development-brief-31. 13 ISLE The Indian Journal of Labour Economics unprecedented humanitarian crisis due to the COVID-19 pandemic has raised considerable concern among emigrant and migrant families. Besides, it perpetuated and broadly inferred a serious impact of COVID-19 on the cross-border migrants’ households in rural and urban areas all over the country. Turning to the consideration of the COVID-19 pandemic, we have thoroughly believed that it had placed two things at the bottom of the migrant society. Firstly, with the view of the individual migrant, it persistently brought unambiguous problems of pay cuts, job loss, restricted mobility, physiological distress, riskier accommodation, physical and financial constraint, social security-related issues, poor health treatment, and in some cases no healthcare services or high cost of health facilities at their work environment. Secondly, in the case of migrant households, it became a cause of sudden loss of expatriate income, financial concern, the anxiety of spreading COVID-19 viruses, ration shortage, poor livelihood, reduction in conspicuous consumption, concern about domestic chores management, restricted mobility and services which raise social cause and fear. This boosted poverty conditions and unemployment syndrome in every corner of the labour markets to the migrant society. In this regard, contract (...truncated)