Addressing the Challenges of Migration for Development in South Asia

South Asia is one of the largest sources of migrant labour in the world. Millions of workers from India, Bangladesh, Nepal, Pakistan, and Sri Lanka leave home each year, mostly for the Gulf and Southeast Asia, and the money they send back has become a lifeline for households and national economies alike. Yet the relationship between migration and development is far from simple. While remittances fund education, healthcare, and small businesses, the journey is riddled with obstacles: expensive money transfers, the loss of skilled workers, weak legal protection abroad, and difficult reintegration on return. Understanding these challenges is the first step toward turning migration into a genuine engine of development.

Why migration matters for development 🔗

Migration drives economic growth by allowing people to move to where they are more productive. The World Bank has argued that facilitating labour mobility is vital to the region’s economic recovery and its resilience to future shocks. For families left behind, remittances raise household incomes, support spending on schooling, and help reduce poverty.

The scale of these flows is striking. India is the highest remittance-receiving country in South Asia, but when measured as a share of the economy, the picture shifts dramatically. In Nepal, remittances account for roughly 30% of GDP, making the entire economy heavily dependent on workers abroad. This dependence is exactly why the challenges of migration deserve serious attention. When so much rides on remittances, anything that weakens or distorts them carries real development costs.

The high cost of sending money home 🔗

One of the most persistent challenges is the cost of moving money across borders. Every rupee lost to transfer fees is a rupee that does not reach a migrant’s family. The United Nations Sustainable Development Goal target (SDG 10.c) aims to reduce remittance costs to 3% of the transfer value by 2030, yet many corridors remain far above this benchmark.

The Nepal example is instructive. The average cost of sending remittances to Nepal sits around 4.7%, which is below the global average but still well above the SDG target. Several factors push these costs up: regulations designed to curb money laundering and terrorism financing, and a lack of competition between money transfer companies. These high transaction costs are deeply regressive because they fall hardest on the world’s most vulnerable workers.

The informal channel problem 🔗

High fees do more than reduce the value of transfers. They push money into informal systems such as hawala. In Nepal, only about half of workers use formal transfer channels, partly because of high fees. This matters for development because remittances are far better leveraged when they flow through formal banking systems, where they can support financial inclusion and be tracked, taxed, and reinvested.

The Asian Development Bank notes that South Asian countries have not fully maximised the benefits of remittances because of limited financial sector development and the large share of funds channelled informally. Addressing this requires coordinated action by governments, regulators, and the financial sector to improve formal systems and educate customers about safer, cheaper options.

The loss of skilled labour 🔗

A second major challenge is brain drain, the departure of skilled and educated workers from countries that badly need them. When doctors, engineers, and technicians leave, sending countries lose the expertise required for their own development. Research on Bangladesh, India, Pakistan, and Sri Lanka found that the brain drain effect lowers the average level of skilled workers in sending countries, which can slow economic growth.

The damage is felt unevenly across sectors. In Nepal, the migration of skilled workers has created critical gaps in healthcare, engineering, and technology. While unskilled labour is abundant, skilled labour is becoming scarce, which hampers technological progress and keeps the economy stuck in traditional, low-wage industries.

Brain drain versus brain circulation 🔗

There is an important nuance here. In Bangladesh, the bulk of remittances actually comes from low- and semi-skilled workers in the Gulf, not from professionals who migrate to the West. As one analysis points out, these funds largely cover household expenses rather than productive investment, and rarely generate technology transfer or industrial development. The departure of skilled professionals deepens a knowledge gap and increases reliance on foreign expertise.

The policy goal, therefore, is not to stop migration but to turn brain drain into brain circulation, a two-way flow where knowledge, skills, and resources move between migrants and their home countries. This can be encouraged through return incentives, diaspora networks for mentorship and investment, and migration agreements that include training partnerships and skills recognition.

Safety, exploitation, and weak protection 🔗

For the millions of South Asians working in the Gulf, physical safety and fair treatment are constant concerns. A large share of these workers are tied to their employers under the kafala sponsorship system, which links a foreign worker’s legal status to their employer. The British Safety Council explains that this gives employers enormous power over workers’ lives, sometimes even barring them from leaving the country, and leaves many exposed to low wages, poor conditions, and abuse.

Tragic incidents have repeatedly exposed these vulnerabilities. The 2024 fire that killed dozens of Indian workers in Kuwait highlighted the unsafe and overcrowded housing that many migrants endure. These episodes have intensified calls for stronger safeguards.

The gap between policy and practice 🔗

India’s legal framework for emigration rests on the Emigration Act of 1983, which provides for a Protector General of Emigrants and seeks to safeguard the welfare of workers in the Emigration Check Required (ECR) category. Yet this framework is now over four decades old, and critics argue it is narrow and outdated for today’s migration realities.

Even existing protections often fail in practice. A study of women domestic workers migrating from Kerala found that although the government sets Minimum Referral Wages to protect workers, this has led to contract substitution, where duplicate contracts at the destination reflect lower wages than those agreed during emigration clearance. Many women also reported not knowing their destination country before they left. The proposed Emigration Bill has been under consideration for years as an attempt to modernise this system, but progress has been slow.

Social integration and reintegration 🔗

Migration tests social systems at both ends of the journey. Abroad, poor migrants in temporary, informal jobs face precarious labour conditions, visas tied to employment, and limited access to social protection. The COVID-19 pandemic laid these vulnerabilities bare, as migrant workers were disproportionately affected by movement restrictions.

Migration also reshapes society at home. It can deepen inequality, since families receiving remittances see their living standards rise while those without such inflows remain economically stagnant. At the same time, migration can transform gender roles, giving women greater mobility and a stronger voice in household decisions. The return journey brings its own difficulties. Reintegrating returning workers, helping them find employment or start businesses, is becoming a critical policy priority across the region.

Policies to harness migration for development 🔗

Addressing these challenges requires deliberate, coordinated policy. Several priorities stand out from the evidence.

Investing in skills. The World Bank stresses that skills development is crucial for securing higher-paying jobs and making workers less vulnerable to exploitation. Skilled workers can access a wider range of destinations, including Japan, Malaysia, and South Korea, and they bring valuable human and financial capital home when they return. A single skilled professional often sends home far more than a low-skilled labourer, making skilling a higher-return migration strategy.

Reducing remittance costs and expanding formal channels. Cutting fees toward the SDG target, expanding mobile banking into remote villages, and increasing competition among transfer providers would put more money in families’ hands and draw funds out of informal systems.

Strengthening worker protection. Modernising outdated emigration laws, regulating recruitment agents strictly, expanding welfare and insurance schemes, and deploying more labour attachés in destination countries would help close the gap between policy and reality. The Observer Research Foundation has proposed creating a coordinated migration authority, a universal migrant welfare and insurance fund, and clearer reintegration pathways linking returning workers with skilling platforms and credit schemes.

None of this can be achieved by governments alone. As the evidence consistently shows, harnessing migration’s full potential requires concerted efforts by governments, regulators, the financial sector, and international organisations working together.

What do you think? Should South Asian governments focus more on protecting and skilling the millions of low-skilled workers who send home the bulk of remittances, or on retaining and attracting back the highly skilled professionals lost to brain drain? And where should the line be drawn between regulating migration for workers’ safety and restricting their freedom to seek opportunity abroad?

References

1. https://www.worldbank.org/en/news/press-release/2022/11/07/migration-can-boost-south-asia-s-recovery-and-support-long-term-development.print
2. https://blogs.lse.ac.uk/southasia/2024/05/13/exporting-talent-importing-cash-nepal-youth-migration-and-remittances/
3. https://english.nepalnews.com/s/long-reads/206401/
4. https://devpolicy.org/remittances-migration-the-case-of-nepal-20181129/
5. https://www.adb.org/publications/worker-migration-and-remittances-south-asia
6. https://link.springer.com/article/10.1007/s42495-020-00034-1
7. https://niice.org.np/archives/12259
8. https://www.britsafe.in/safety-management-news/2024/india-s-overseas-migrant-workers-exploitation-remains-a-problem
9. https://gulfmigration.grc.net/media/pubs/book/grm2017book_chapter/Volume%20-%20Migration%20to%20Gulf%20-%20Chapter%209.pdf
10. https://csesindia.org/migration-of-women-domestic-workers-from-kerala-to-the-gulf-challenges-and-policy-options
11. https://www.worldbank.org/en/events/2025/05/20/south-asia-labor-mobility
12. https://www.orfonline.org/research/policy-pathways-to-enhance-the-global-mobility-of-indian-emigrants