Home Business Remittances to India all set to reach $100 billion milestone this year

Remittances to India all set to reach $100 billion milestone this year

India will soon reach the milestone of $100 billion in total remittances

According to the latest ‘Migration and Development Brief’ of the World Bank, India is expected to receive $100 billion in remittances in 2022.

It noted that remittances to India, the world’s largest recipient, stood at $89.4 billion last year and will grow at 12 per cent in 2022.

Mexico will be second with $60 billion in remittances, while China will receive an estimated $51 billion this year, the report said.

The report noted that the increase in remittances to India is accompanied by a gradual structural shift in immigration from low-skilled employment in Gulf countries to high-skilled jobs in high-income countries.

“Between 2016-17 and 2020-21, the share of remittances from the United States, the United Kingdom and Singapore increased from 26 per cent to over 36 per cent, while the share from the 5 Gulf countries (Saudi Arabia, United Arab Emirates), Kuwait , Oman and Qatar) fell from 54 to 28 per cent,” the report said, quoting the RBI survey.

Gulf countries also played a role in the increase in remittances, with the report suggesting that Covid-19 vaccination and resumption of travel helped more Indian blue-collar workers resume work in 2022.

Price support policies in these countries kept inflation low and helped boost remittances to India.

“Higher oil prices have increased labor demand, helping Indian expatriates to increase remittances and counter the effects of India’s record-high inflation,” the report further said.

The report also speculated that Indian ex-pats may have taken advantage of the depreciation of the rupee against the US dollar to increase remittances.

Yet, unlike neighboring Nepal, where the figure is expected to reach 22 per cent, remittances to India are expected to account for only three per cent of GDP this year.

In general, remittances to low- and middle-income countries are set to increase to $626 billion in 2022 – an estimated five percent increase over the previous year.

Remittances globally are likely to be affected in 2023 due to volatile oil prices and currency exchange rates, the war in Ukraine and economic slowdown in advanced economies such as the United States.

“Global remittance growth is expected to fall to two per cent in 2023,” it said, adding that high inflation and economic slowdown in the United States will “soften remittance flows” to India.

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