Urban remittances to hinterland drop 30%

Fund remittances to the less-affluent hinterland from the shuttered urban pockets have dropped up to 30% in May, reflecting the impact of localized lockdowns on business activity – and employment in the unorganized sector.Remittance companies say the impact is more visible in Maharashtra and Delhi, compared with Gujarat and Karnataka, with migrant labour returning to their rural homes from several of the affected pockets.“The second Covid wave is worse than the first. We have already seen a significant drop in momentum of up to 30% in our remittance business and we process more than Rs 2,000 crore in such domestic transfers every month,” said the CEO of a large remittance company. “Our field agents, merchants and their families have been affected. While some have recovered from the infection, others have succumbed to the virus.”82891691Domestic money transfer companies say persistent reverse migration could further dent the industry. “Our business is already down by 20-25%, and this could widen further as the strict lockdown continues in most parts of the country,” said Anand Kumar Bajaj, MD, PayNearby. “We have also seen significant reverse migration among the labour force, though the more organised markets like Karnataka and Gujarat have given us some hope.”Maharashtra is one of the biggest contributors to the domestic remittance industry, with a 15-20% share, followed by Gujarat and Karnataka. There are predominantly six major corridors within India from where a large chunk of the remittances originates: Delhi, Maharashtra, and Gujarat are among them. On the other hand, the states of Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh are among the biggest receivers of these flows.Remittance players say that prolonged lockdowns and the sudden spread of the virus in April had prompted a large section of the migrant workforce to leave the big cities. Those leaving the cities couldn’t escape, however, as the second covid wave in May even engulfed the hinterland in several parts of the Gangetic belt.

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