Remittances to India may grow 3.7% in 2024 to $124 bn: Economic Survey

India's efforts to link its Unified Payments Interface (UPI) with source countries such as the United Arab Emirates and Singapore are expected to reduce costs and speed up remittances, the survey says

Remittances to India -- the second largest source of external financing after service exports -- are projected to grow at 3.7 per cent to $124 billion in 2024 and at 4 per cent to reach $129 billion in 2025, the Economic Survey said on Monday.

India's primary source of remittances is oil-exporting countries.

According to the World Bank, India has the largest emigrant population and is the top remittance recipient country. In 2023, remittances to India had hit $120 billion.

"The outlook for remittance in India for 2024 is strong, with the expectation that remittance growth will moderate to 3.7 per cent, taking... levels to $124 billion in 2024," the Economic Survey tabled in Parliament by Finance Minister Nirmala Sitharaman said.

The diversification of India's migrant pool -- between a large share of highly skilled workers employed mostly in high-income OECD markets, and the less-skilled migrants employed in the GCC markets -- is likely to lend stability to their remittances in the event of external shocks, it added.

"India's efforts to link its Unified Payments Interface (UPI) with source countries such as the United Arab Emirates and Singapore are expected to reduce costs and speed up remittances," the Survey said.

In 2023, the increase in remittances was driven mainly by declining inflation and strong labour markets in the United States and Europe -- the largest destinations for India's skilled migrants -- and other OECD destinations, as well as positive demand for skilled and less-skilled workers in the GCC countries.

Net services receipts increased from $143.3 billion during 2022-23 to $162.8 billion in 2023-24, primarily on account of rising exports of software, travel and business services.

The survey said remitters get better value in rupee terms when it depreciates in terms of foreign currencies, be it for UAE's Dirham, the US Dollar, the British Pound, or any other currency.

For every one dollar a worker earns in distant land, he returns an augmented amount after necessarily being converted according to the foreign land he works in.

Hence, remittances exhibited a positive association with the exchange rate movement.