New Delhi, December 19: In a recent report released by the World Bank, it has been revealed that India has topped the global remittances list for 2023, with an inflow of USD 125 billion. This represents a significant increase of 12.3 percent from the previous year’s figure of USD 111.22 billion. The report highlights that India’s inward remittances now account for 3.4 percent of the country’s gross domestic product (GDP), highlighting their importance to the Indian economy.
The World Bank’s Migration and Development Brief disclosed that India remains the highest recipient of remittances worldwide, followed by Mexico with USD 67 billion and China with USD 50 billion. Furthermore, India now represents 66 percent of all remittances to South Asia, a higher percentage than the previous year’s 63 percent.
The growth rate of remittances was found to be highest in Latin America and the Caribbean at 8 percent, followed closely by South Asia at 7.2 percent, and East Asia and the Pacific at 3 percent.
One of the main factors contributing to the increase in remittances to India is the declining inflation and strong labor markets in high-income source countries. This has encouraged remittances from skilled Indian workers in countries such as the United States, the United Kingdom, and Singapore. These three countries alone account for 36 percent of the total remittance flows to India.
Another significant contributor to the growth in remittances is the inflow from the Gulf Cooperation Council (GCC) countries, particularly the United Arab Emirates (UAE), which is the second-largest source of remittances after the US, accounting for 18 percent of India’s total remittances.
The report highlights the importance of the February 2023 agreement between India and the UAE, which established a framework to promote the use of local currencies for cross-border transactions and cooperation in payment and messaging systems. This agreement is seen as instrumental in channeling more remittances through formal channels.
The lower cost of remittances in South Asia is also cited as a contributing factor, with the cost of sending USD 200 to the region being 30 percent lower than the global average in the second quarter of 2023. Malaysia stands out as the cheapest country to send remittances from to India, with a cost of only 1.9 percent.
Looking ahead, the World Bank expects the growth rate of remittances to soften to 3.1 percent in 2024 due to the risks posed by global inflation and low growth prospects, which may result in a decline in real income for migrants.
India’s position at the top of the global remittances list is a testament to the strong ties that Indian expatriates maintain with their home country. The significant inflow of funds not only supports the families and communities of the migrants but also contributes to the overall development of the Indian economy.
With the continued growth of remittances to India and the efforts to lower costs and promote formal channels for transactions, the country is poised to maintain its position as a global leader in inward remittances, further bolstering its economic stability and growth.
