Remittances to India

Context:

According to the World Bank’s Migration and Development Brief, India has become the world’s largest recipient of Remittances, receiving USD 87 billion (a gain of 4.6 % from previous year) in 2021.

Remittances to India:

• India continues to be the world’s largest recipient of remittances and received $87 billion in 2021, according to estimates from the World Bank’s Migration and Development Brief.
• India experienced a substantial 4.6 per cent gain in remittance inflows during 2021, as higher oil prices enabled stronger remittance payments from expatriate workers among the GCC economies, and the dramatic spread of COVID-19 yielded additional financial support from the diaspora.
• India is followed by China, Mexico, the Philippines and Egypt.
• The United States was the largest source country for remittances in 2020, followed by the United Arab Emirates, Saudi Arabia, and Switzerland. 
• As a share of gross domestic product, the top five remittance recipients in 2021 were smaller economies: Tonga, Lebanon, the Kyrgyz Republic, Tajikistan and Honduras.
• Remittances to low and middle-income countries are projected to have grown a strong 7.3 per cent to reach $589 billion in 2021.
• The recovery in 2021 follows the resilience of flows seen in 2020, when remittances recorded only a modest 1.7 per cent decline to $549 billion, in the face of one of the deepest recorded global recessions.
• This Migration and Development Brief provides updates on global trends in migration and remittances. It highlights developments related to migration-related Sustainable Development Goal (SDG) indicators for which the World Bank is a custodian: increasing the volume of remittances as a percentage of gross domestic product (SDG indicator 17.3.2) and reducing remittance costs.

Projection for 2022:

• Remittances are projected to grow 3% in 2022 to USD 89.6 billion, because of a drop in overall migrant stock, as a large proportion of returnees from the Arab countries await return.

Factors for Remittance Growth:

• Migrants’ determination to support their families in times of need, aided by economic recovery in Europe and the United States which in turn was supported by the Fiscal Stimulus and employment support programs.
• In the Gulf Cooperation Council (GCC) countries and Russia, the recovery of outward remittances was also facilitated by stronger oil prices and the resulting pickup in economic activity.
• The severity of Covid-19 caseloads and deaths during the second quarter (well above the global average) played a prominent role in drawing substantial flows (including for the purchase of oxygen tanks) to the country.
• Flows from migrants have greatly complemented government cash transfer programs to support families suffering economic hardships during the Covid-19 crisis.

What are remittances?

• The money workers send home to their families from abroad has become a critical part of many economies around the world. These money transfers are called remittances. They have been growing rapidly in the past few years and now represent the largest source of foreign income for many developing economies.
• Remittances have become an important consumption smoothing mechanism for the recipient households and, as such, they form an increasingly important (private) element of global social protection systems.
• Remittances now stand more than threefold above official development assistance and, excluding China, more than 50 per cent higher than foreign direct investment (FDI). This underscores the importance of remittance flows in smoothing consumption in recipient countries during periods of economic hardship.
• According to the United Nations Department for Economic and Social Affairs (UNDESA), the worldwide number of international migrants (including refugees) was estimated at 281 million in 2020. The top host countries for migrants are the United States (51 million), Germany (16 million), Saudi Arabia (13 million), Russia (12 million), the United Kingdom (9 million), the United Arab Emirates (9 million), France (9 million), Canada (8 million), Australia (8 million), and Spain (7 million).

Suggestions:

• To keep remittances flowing, especially through digital channels, providing access to bank accounts for migrants and remittance service providers remains a key requirement.
• Policy responses also must continue to be inclusive of migrants especially in the areas of access to vaccines and protection from underpayment.

World Bank’s Migration and Development Brief

• This is prepared by the Migration and Remittances Unit, Development Economics (DEC)- the premier research and data arm of the World Bank. .
• The brief aims to provide an update on key developments in the area of migration and remittance flows and related policies over the past six months.
• It also provides medium-term projections of remittance flows to developing countries..
• The brief is produced twice a year

Source: Indian Express

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