Revision summary
The Indian diaspora contributes mainly through remittances, then FDI, skills, and host-country market access. India is among the world’s largest remittance recipients, stabilising the current account and migrant-origin districts. Professionals and entrepreneurs thicken IT, pharma, and start-up investment circuits. PIO/OCI and Pravasi forums try to lower friction on return and circular movement. Diaspora money is not a substitute for home jobs, skilling, and an investment climate.
Model answer
Introduction
The Indian diaspora is a global labour, professional, and entrepreneurial stock whose money and skills enter India’s external and domestic accounts. A short note must treat remittances as the largest regular flow, then FDI, knowledge, and soft power, without confusing the diaspora with the entire external sector.
Body
Remittances and the external account
- India has for years been among the world’s top remittance recipients; Gulf labour and OECD professionals together cushion the current account and village consumption in Kerala, Punjab, Bihar, eastern UP, and coastal Andhra.
- Remittances are more stable than portfolio flows, finance housing and education, and reduce extreme poverty in high-migration belts, though they can also raise local inequality and a culture of waiting for the next transfer.
Investment, trade, and skills
- Diaspora entrepreneurs and executives channel FDI, start-ups, and market access in IT, pharma, and now electronics, and they populate boards and venture funds that price Indian risk.
- Returnees and circular migrants bring process knowledge; PIO/OCI status and Pravasi Bharatiya engagement are meant to lower the friction of that two-way flow.
- Diaspora lobbying in host capitals is an economic asset when it protects H-1B-type mobility, student pipelines, and trade talks, which feed India’s services surplus.
Limits
- Remittances are private transfers, not a substitute for manufacturing jobs at home; over-reliance can delay skilling and local enterprise.
- Origin-state capture of rents and informal hawala still leak some of the development gain.
Flow diagram
flowchart TD D[Diaspora labour and firms] --> R[Remittances] D --> F[FDI and start-ups] D --> K[Skills and markets] R --> E[Household and current account]
Conclusion
The diaspora props India’s external stability and several state economies through remittances, and it thickens FDI and skill circuits. It cannot replace a domestic investment climate; it multiplies one that already works.
Quick related
Students also ask
-
In what ways does the Indian federal system differ from the federal system in the United States of America (USA)? Explain.
Next question in the 2018 paper (Q7). View answer →
-
Is every foreign investment in India diaspora investment?
No. FDI includes multinational and institutional money. Diaspora is one important but not exclusive channel.
-
Does OCI confer Indian citizenship?
No. It is a registration status with defined rights. Dual citizenship is not recognised under the Citizenship Act.
PYQ trend
When UPSC asked this
Related PYQs from other years, newest first. Open a question to read it.
-
2019 · Q1 · UPGS2 · 8 marks
Describe the objectives and impact of Atal-Bhujal Yojana. -
2018 · Q1 · UPGS2 · 8 marks
Why is India opposed to mediation on Kashmir? -
2018 · Q8 · UPGS2 · 8 marks
Describe those special powers of the Council of States (Rajya Sabha) which are not enjoyed by the Lok Sabha under the Indian Constitution. -
2018 · Q10 · UPGS2 · 8 marks
Examine the constitutional position of the Comptroller and Auditor General of India. -
2018 · Q11 · UPGS2 · 12 marks
How will the withdrawal of U.S. troops from Afghanistan affect India? Comment. -
2018 · Q15 · UPGS2 · 12 marks
What are the main issues related to poverty and hunger? -
2018 · Q17 · UPGS2 · 12 marks
In the monsoon session of the Indian Parliament in 2019, Amendments were made in the anti-terror law and the Right to Information Act. What are the significant changes as a result of these Amendments? Analyse. -
2018 · Q18 · UPGS2 · 12 marks
Examine Right to Equality as a Fundamental Right in the Constitution of India.
More from this paper
Q1 · UPSC Mains 2018 · UPGS2 · 8 marks
Why is India opposed to mediation on Kashmir?
Indian Constitution
India treats Jammu and Kashmir as an integral Union subject after accession in 1947. Simla 1972 and later bilateral texts require peaceful settlement without a mediator. Mediation would internationalise what New Delhi now frames as an internal constitutional and security issue. Pakistan is a counterpart for talks on terror and peace, not a co-sovereign over Indian territory. India therefore rejects UN, great-power, or other good-offices formulas that write a Kashmir settlement.
Q2 · UPSC Mains 2018 · UPGS2 · 8 marks
Critically examine the jurisdiction of the International Court of Justice.
India and its neighbours
The ICJ is the UN’s principal judicial organ under the Charter and the ICJ Statute. Contentious cases lie only between states and only with consent via special agreement, treaty, or optional clause. The Court rules on its own jurisdiction, as in Jadhav under the consular Optional Protocol. Advisory opinions go to authorised UN organs and are not binding judgments. Enforcement depends on states and the Security Council; individuals are not on trial at the ICJ.
Q3 · UPSC Mains 2018 · UPGS2 · 8 marks
Throw light on the challenges and problems of farmers and the agriculture sector in Uttar Pradesh. Suggest measures for improvement.
Social sector services
Uttar Pradesh leads in foodgrain output but farm incomes stay low on tiny holdings and uneven water. Eastern floods and Bundelkhand droughts sit beside western groundwater stress and cane-payment delays. Paddy–wheat lock-in and thin mandi–FPO reach keep farmers as price-takers. Remedies are last-mile irrigation, statutory cane dues, FPO and e-NAM markets, and a shift to pulses, millets, milk, and processing. Land-lease clarity and working crop insurance must travel with those measures.
Toppers' copies
Toppers' copies for this question will be uploaded soon.