The third-largest economy in Asia is poised to maintain its position as the leading recipient of remittances thanks to the record-high amount of money that the migrant workers from all of India are expected to send home this year.
As per a World Bank estimate released on Wednesday, remittances to India will increase 12% this year to reach $100 billion. This places its inflows far in front of those of nations like Mexico, China, as well as the Philippines.
The survey found that highly skilled Indian migrants were sending so much money home from developed countries like us and, UK, and Singapore. Indians have become less interested in performing lower-paying jobs in regions like the Gulf over time. Growth was also aided by wage increases, record-high employment, and a declining currency.
India lost approximately $100 billion in foreign exchange reserves over the last year due to changing global conditions that caused currencies, notably the rupee against the dollar, to drop. Inflows from the largest diaspora in the world are a major source of funding for India. Remittances, which make up roughly 3% of India’s GDP, are crucial for closing budgetary shortages.
Cash transfers from high-income nations to India increased from 26% in 2016–17 to over 36% in 2020–21. According to the World Bank, which used statistics from the Reserve Bank of India, the share from the five Gulf nations—which includes Saudi Arabia as well as the United Arab Emirates—fell from 54% at the same time to 28%.
South Asia as a whole does not exhibit the same pattern. The World Bank reported that migrant workers’ remittance earnings from Bangladesh, Pakistan, and Sri Lanka are anticipated to decline this year due to the severity of domestic and international shocks in those nations.
The research stated that “Migrants reacted to exchange rate devaluations in native countries by transferring less money through legal channels and choosing black-market risk premium in the alternative exchange markets.”
