Jun 27, 2024 06:09 PM IST
India’s remittance growth may slow down in 2024 compared to 2023 when it surged, as inflation dampened in US and Europe, with labour markets remaining strong.
India’s remittance flow for next year is forecasted to grow at just half the rate it grew this year, according to the World Bank’s 40th Migration and Development Brief.
What are remittances?
Migrants often send a part of what they earn to their family in their home country, in the form of either cash or goods to support them. These transfers are known as remittances. India sent out 18.7 million emigrants in 2023.
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How much is India’s flow of remittances expected to grow?
India’s inflow of such remittances is forecasted to grow at 3.7% in 2024, while it grew at 7.5% in 2023. The growth estimate for 2025 is 4%.
India received $120 billion in remittances in 2023. The expectation for 2024 is $124 billion, and it is $129 billion in 2025.
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India was the country which received the highest amount in remittances in 2023, followed by Mexico at $66 billion, China at $50 billion, the Philippines at $39 billion, and Pakistan at $27 billion.
Why did India’s remittance inflow grow a lot in 2023?
The high growth in 2023 was attributed to deceleration in inflation and strong labour markets in the United States, which is the largest destination for India’s skilled migrants.
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Similarly, high employment growth in Europe, due to extensive worker retention programs, and a general dampening of inflation in high-income countries, contributed to increase in remittances worldwide.
Who are the migrants who come from India?
The United States, United Kingdom, and Singapore, which collectively account for 36% of total remittance flows to India, are the primary destinations for highly skilled Indian migrants in the IT and business services industries.
The diversification of India’s migrant pool between a large share of highly skilled migrants employed mostly in high-income OECD markets and the less-skilled migrants employed in the GCC markets is said to likely improve stability to remittance inflows in the event of external shocks.
How did India’s remittances from the Middle East grow?
Flow of remittances from the United Arab Emirates, benefited from the February 2023 agreement which established a framework to use local currencies for cross-border transactions and cooperation for interlinking payment and messaging systems between India and the United Arab Emirates.
The use of the UAE’s Dirhams and India’s Rupees in cross-border transactions helped in bringing more remittances to India through formal channels. The UAE accounted for 18% of India’s remittance flows.
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Saudi Arabia, Kuwait, Oman, and Qatar, collectively accounted for 11% of India’s total remittances.
The World Bank also notes that India’s efforts to link Unified Payments Interface (UPI) with countries that are a large source of remittances such as the United Arab Emirates and Singapore will reduce costs and speed up remittances.
