Katyayani Sinha
Every month, millions of Indian workers in the Gulf send part of their wages home to their families. Each transfer is a private choice made by one household. Added together, they form one of the most significant financial relationships India has with any region. In 2023-24 India received a record $118.7 billion in inward remittances, and the six Gulf Cooperation Council (GCC) countries sent about 38% of it.
Around half of all Indian migrants abroad live in the GCC, and between 2010-11 and 2023-24 remittances paid for roughly 42% of India’s merchandise trade deficit in a typical year (Reserve Bank of India, 2025). Even so, policy debate usually treats this money as a statistic to report rather than a dependency to manage.
This article argues that the India-Gulf corridor should be read as a security question, and that once it is, a gap appears that only regular measurement can fill. The Remittance Security Vulnerability Index (RSVI) is being built to fill it.
From Household Insurance to National Exposure
Migration economists have long treated remittances as insurance. In the new economics of labor migration, sending a family member abroad is a way for a household to spread its income across places and protect itself from bad years at home (Stark & Bloom, 1985). The same logic holds at the national level: remittances tend to be steadier than other foreign inflows and often rise when the home economy is struggling (Kapur, 2004).
The weak point is that insurance only works if the insurer stays safe. The model assumes the shock hits India, not the place where the money is earned. When the trouble starts in the Gulf, the cover can disappear at exactly the moment it is needed.
The 1990 Gulf crisis showed what that looks like. After Iraq invaded Kuwait on 2 August, India flew more than 170,000 of its citizens out on 488 flights over 59 days. The crisis added an estimated $4 billion to India’s foreign exchange burden that year, through lost remittances, costlier oil and the cost of bringing people home (Sreenivasan, 2020). Within months India was in a full balance-of-payments crisis, and economists identify the Gulf War as its immediate trigger (Acharya, 2002).
Sensitivity Is Not Vulnerability
International Relations has sharper words for this. Keohane and Nye (1977) separated sensitivity, how quickly and expensively a change in one country is felt in another, from vulnerability, how costly it is to adjust once the relationship breaks, even after governments respond. Most commentary on the Gulf corridor is about sensitivity: how much money might be hit if a conflict escalates. The harder question is vulnerability. Can workers who lose their jobs find similar ones elsewhere? Can the states they return to absorb them?
Saudi Arabia’s Nitaqat policy is a useful test. It required private firms to employ a set share of Saudi nationals, and when enforcement began in 2013, more than half of the roughly 2.8 million Indian workers in the kingdom were affected. About 1.4 million regularized their status, while around 140,000 who lacked proper documents had to return (Indo-Asian News Service, 2014). In remittance terms the shock was modest. What it revealed was how quickly a host government’s labor rules, over which India has no say, can change the position of hundreds of thousands of its citizens.
Chokepoints in the Network
Hirschman (1945) showed that lopsided economic ties can be turned into political leverage. Farrell and Newman (2019) carried the idea into a networked world with weaponized interdependence: when flows pass through a few nodes, those nodes
become chokepoints that can be squeezed on purpose or broken by events. The Gulf corridor has several. Most workers are tied to their employers through sponsorship systems, and host budgets rise and fall with the oil price. Then there is the Strait of Hormuz, through which about a fifth of the world’s oil consumption passes; India is one of the four largest buyers of the crude shipped through it (U.S. Energy Information Administration, 2025). Therefore, any disruption in the strait could affect India significantly.
What the National Total Hides
The COVID-19 pandemic and the oil price collapse of 2020 show why headline numbers are not enough. About 716,000 workers came home from the six Gulf states under the Vande Bharat Mission (Press Trust of India, 2021). Yet India’s total remittances fell by only 3.6% in 2020-21 (Reserve Bank of India, 2025). Seen from Delhi, the corridor held.
The breakdown says otherwise. Between 2016-17 and 2020-21, the UAE’s share of India’s remittances dropped from 26.9% to 18%, Saudi Arabia’s from 11.6% to 5.1% and Kuwait’s from 6.5% to 1.5%. Kerala’s share of the national total fell from 19% to
about 10% (Reserve Bank of India, 2025). Money from the US and other advanced economies filled the gap in the aggregate, but not in the Kerala households that lived on Gulf wages. The national figure simply averaged their loss away.
Why Risk Has to Be Measured, Not Narrated
If the exposure is structural, why is it mostly discussed after each crisis? Part of the answer lies in Knight’s (1921) distinction between risk, which can be measured, and uncertainty, which cannot. Institutions plan for risk. As long as Gulf instability is filed
under uncertainty, it gets emergency responses such as evacuations and relief packages instead of advance planning.
Buzan, Wæver and de Wilde (1998) add that issues become security matters through the way they are talked about. Remittances have mostly been described as a development success, which kept them off the security agenda. Headlines warning that over $50 billion is ‘at risk’ (CNBC, 2026) flip that framing overnight, but say little about how much, how fast or for whom.
Measurement is the way through. Caldara and Iacoviello (2022) showed that geopolitical risk, long seen as too vague to quantify, can be turned into a consistent
index with measurable economic effects. The RSVI applies the same idea to one corridor. It combines remittance flows, conflict and geopolitical risk in the Gulf, and the exposure of the Indian diaspora, then asks whether security, labor-policy and oil-price shocks hit the corridor in different ways. The episodes above suggest they do.
What an Index Makes Possible
A score with a clear threshold turns a vague worry into a trigger. The Ministry of External Affairs could review evacuation plans when the score crosses a set level, rather than after the first flights are booked. Kerala and other high-migration states could prepare support for returning workers earlier. The Reserve Bank of India could treat the score as one input into stress tests of the external accounts, much as banks already use country risk scores.
Conclusion
The Gulf corridor is usually told as a story of migrant success, and it is one. It also runs through one of the least stable regions in the world, and it came under strain in 1990, 2013 and 2020, each time for a different reason. Each time, the response came after the damage was done. The RSVI is meant to change that order, giving the people who plan evacuations, budgets and reserves a reason to act before the next shock arrives. The empirical work in the rest of this fellowship will test whether it can.
References
Acharya, S. (2002). India: Crisis, reforms and growth in the nineties (Working Paper No. 139). Stanford Center for Research on Economic Development and Policy Reform.
https://kingcenter.stanford.edu/sites/g/files/sbiybj16611/files/media/file/139wp_0.pdf
Buzan, B., Wæver, O., & de Wilde, J. (1998). Security: A new framework for analysis. Lynne Rienner.
Caldara, D., & Iacoviello, M. (2022). Measuring geopolitical risk. American Economic Review, 112(4), 1194–1225. https://doi.org/10.1257/aer.20191823
CNBC. (2026, March 5). Inside India newsletter: Energy, airlines and now over $50 billion in remittances to India at risk as Middle East conflict deepens. https://www.cnbc.com/2026/03/05/iran-conflict-india-impact-remittance-pipeline.html
Farrell, H., & Newman, A. L. (2019). Weaponized interdependence: How global economic networks shape state coercion. International Security, 44(1), 42–79. https://doi.org/10.1162/isec_a_00351
Hirschman, A. O. (1945). National power and the structure of foreign trade. University of California Press.
Indo-Asian News Service. (2014, January 18). 1.4 mn workers got regularised, 250 Indians still stuck in Saudi Arabia. Business Standard. https://www.business-standard.com/article/news-ians/1-4-mn-workers-got-regularise d-250-indians-still-stuck-in-saudi-arabia-114011800335_1.html
Kapur, D. (2004). Remittances: The new development mantra? (G-24 Discussion Paper No. 29). United Nations Conference on Trade and Development. https://ideas.repec.org/p/unc/g24pap/29.html
Keohane, R. O., & Nye, J. S. (1977). Power and interdependence: World politics in transition. Little, Brown.
Knight, F. H. (1921). Risk, uncertainty and profit. Houghton Mifflin.
Press Trust of India. (2021, December 10). Over 7 lakh workers returned from six Gulf countries under ‘Vande Bharat Mission’: Govt. Deccan Herald. https://www.deccanherald.com/india/over-7-lakh-workers-returned-from-six-gulf-coun tries-under-vande-bharat-mission-govt-1059660.html
Reserve Bank of India. (2025, March 19). Changing dynamics of India’s remittances: Insights from the sixth round of India’s remittances survey. RBI Bulletin. https://rbi.org.in/Scripts/BS_ViewBulletin.aspx?Id=23260
Sreenivasan, T. P. (2020, May 16). Before Vande Bharat, India airlifted 1.7 lakh expats when Iraq annexed Kuwait in 1990. Onmanorama. https://www.onmanorama.com/news/global-indian/2020/05/16/vande-bharat-airlift-ku wait-iraq-india-1990.html
Stark, O., & Bloom, D. E. (1985). The new economics of labor migration. American Economic Review, 75(2), 173–178.
U.S. Energy Information Administration. (2025, June 16). Amid regional conflict, the Strait of Hormuz remains critical oil chokepoint. https://www.eia.gov/todayinenergy/detail.php?id=65504
About the Contributor: Katyayani Sinha is a second-year MA International Relations student at the University of Glasgow. Her focus is foreign Policy and strategic affairs, and for the past few months she been involved in political research at various organisations.
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
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Acknowledgement: This article was posted by Ninchen Tamang, a Research and Editorial Intern at IMPRI.
