Domestic Migration - Costs of Remittances

Research Associates: Shreyas Gopinath

Migrant laborers contribute up to 10% of India's GDP (Deshingkar and Akter 2009) and the remittances they send account for as much as half of their family income at migration sources (Sahu and Das 2008).Despite the obvious economic importance, there have been few studies investigating domestic remittances and associated transaction costs. To address the situation, CMF plans to study the costs involved at both source and destination points for domestic Indian migrants and their families. The study aims to guide policymakers, bankers, financial inclusions and academics through the following: a)Identifying all remittance expenses and risks at the source and destination including fees, bribes, costs of travel, theft and monetary loss. b) Understanding and identifying remittances patterns channels and mechanisms, frequency purposes etc that will help improve and offer appropriate products c) Identifying channels and expenses for other transfer like gifts to family and friends, business payments etc iv) Understanding the immediacy of remittances services amongst migrant workers and trust issues that migrants face with existing service providers v) Informing current debate on the remittance fees that formal channels should charge in light of existing informal alternatives vi) Informing policy on the recognition and regulation of some of the informal channels.This study, still in its preliminary stages, is made possible by funding from the Gates Foundation.