 "remittance, inward remittance")
The inward remittances to India in 2023 rose 12.3 per cent to $125 billion, accounting for 3.4 per cent of its gross domestic product (GDP), according to estimates released by the World Bank. In 2022, India's inward remittances stood at $111.22 billion. In 2023, India's inward remittance is expected to beat the previous estimates by $14 billion.
In its "Migration and Development Brief", released on Monday, the World Bank said that India continues to be the highest recipient of remittances globally, followed by Mexico ($67 billion) and China ($50 billion).
The high receipts by India also pushed inward remittances to South Asia. According to the data, the growth of remittances was highest in Latin America and the Caribbean (8 per cent), followed by South Asia (7.2 per cent) and East Asia and the Pacific (3 per cent). India currently accounts for 66 per cent of all remittances to South Asia, higher than 63 per cent in 2022.
The total remittances to low- and middle-income countries (LMICs) grew an estimated 3.8 per cent in 2023. The World Bank said that it is expected to soften to 3.1 per cent in 2024 mainly owing to the risk of a decline in real income for migrants in the face of global inflation and low growth prospects.
Further, inward remittances to India have jumped 78.5 per cent in the last 10 years. In 2013, they stood at $70.38 billion. They crossed the $100 billion mark in 2022 when the inward remittances jumped 24.4 per cent to $111.22 billion.
The main contributing factor to rising remittances to India was declining inflation and strong labour markets in high-income source countries, which boosted remittances from skilled Indians in the United States, United Kingdom, and Singapore. These three countries account for 36 per cent of total remittance flows to India.
Another factor was higher inflows from the Gulf Cooperation Council (GCC), especially the United Arab Emirates, which accounts for 18 per cent of India's total remittances, the second-largest source after the United States.
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"Remittance flows to India benefited particularly from its February 2023 agreement with the United Arab Emirates for establishing a framework to promote the use of local currencies for cross-border transactions and cooperation for interlinking payment and messaging systems," the report said.
"The use of dirhams and rupees in cross-border transactions would be instrumental in channelling more remittances through formal channels."
Another important factor was the low remittance cost in South Asia. At 4.3 per cent, the cost of sending $200 to South Asia was 30 per cent lower than the global average of 6.2 per cent in the second quarter of 2023. In fact, remittance cost from Malaysia to India is the cheapest in the world at 1.9 per cent.
For 2024, the World Bank said that the remittance outlook for India is strong. However, growth in remittances is expected to moderate to 8 per cent, taking remittance levels to $135 billion.
"This trend will be shaped by labour market conditions and inflation in the main host economies for its high- and less-skilled migrants," it highlighted.
