Remittances To India Set To Hit A Whopping $100 Billion Milestone This Year

India to soon reach $100 billion milestone in total remittances
India to soon reach $100 billion milestone in total remittances

India is expected to receive a whopping $100 billion in remittances in 2022, according to the World Bank's latest ‘Migration and Development Brief'. 

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

The report added that Mexico would be a distant second with $60 billion in remittances, while China will receive an estimated $51 billion this year. 

The report offered several reasons for the rise in remittances to India, including a gradual structural shift in immigration from low-skilled employment in Gulf nations to high-skilled jobs in high-income countries.

“Between 2016–17 and 2020–21, the share of remittances from the United States, 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) dropped from 54 to 28 per cent,” the report noted quoting a Reserve Bank of India survey. 

The Gulf nations, too, played a role in the spike in remittances, with the report suggesting that Covid-19 vaccinations and resumption of travel helped more Indian blue-collar workers to resume work in 2022.

The price support policies in these nations kept inflation low and helped boost remittances to India. 

“Higher oil prices increased demand for labour, enabling Indian migrants to increase remittances and counter the impact of India's record-high inflation on the real incomes of their families,” the report further added. 

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

Nevertheless, remittances to India are expected to account for just three per cent of the Gross Domestic Product this year, unlike neighbouring Nepal, where the figure is likely to reach 22 per cent.

In general, remittances grew in low- and middle-income countries to $626 billion in 2022 - an estimated five per cent rise from last year. 

Globally, remittances are likely to take a hit in 2023 due to volatile oil prices and currency exchange rates, the war in Ukraine, and the economic downturn in advanced economies such as the United States. 

“Growth in global remittances is expected to fall to two per cent in 2023,” it noted, adding that higher inflation and economic slowdown in the United States will “soften remittance flows” to India.