Nagpur: A World Bank report has stated that India, Asia’s third largest economy, is on track to become the first country to receive $100 billion in remittances from migrant workers abroad. Notably, according to the World Bank report, India received $89.4 billion in remittances in 2021, making it the top recipient globally.
“Remittance flows to India were boostInflowsed by wage increases and a strong labour market in the United States,” and other rich countries, according to the bank’s report.
This means that India will continue to be the top recipient of remittances this year. According to the World Bank, “remittances to India will rise 12% this year to reach $100 billion.” This puts it far ahead of countries such as Mexico, China, and the Philippines in terms of inflows.”
“Migrants responded to exchange rate depreciations in home countries by sending less money through formal channels and opting for black-market premia in parallel exchange markets,” according to the report.
Remittances to India are money transfers from non-resident Indians (NRIs) working outside the country to family, friends, or relatives in India.
What does the $100 billion remittance mean for India’s economy?
Many Indians have relocated to well-paying jobs in high-income countries such as the United States, the United Kingdom, and Singapore in recent years. Remittances account for nearly 3% of India’s total GDP (GDP). These are also necessary for closing fiscal gaps.
The inflow of money from Indians living abroad is a significant source of cash for India. The World Bank Report comes at a time when India has lost nearly $100 billion in foreign exchange reserves in the last year as global conditions tighten, weakening currencies such as the rupee against the dollar.
Cash transfers from high-income countries to India increased to more than 36% in 2020-21, up from 26% in 2016-17. According to the World Bank, which cited Reserve Bank of India data, the share of five Gulf countries, including Saudi Arabia and the United Arab Emirates, fell to 28% from 54% in the same period.