Remittances to India are set to touch a record $100 billion in 2022, according to the World Bank’s latest report titled ‘Remittances Brave Global Headwinds’.
India received $89.4 billion in 2021 — this is the first time a country will reach the $100 billion mark
General trend in Remittances in 2022:
- World remittances are expected to touch $794 billion in 2022, up from $781 billion in 2021.
- This represents a growth of 4.9%, compared to 10.2% in 2021, which was the highest since 2010.
- Of the $794 billion, $626 billion went to Low- and Middle-Income Countries (LMICs).
The top five recipient countries this year are expected to be –
- India ($100 billion),
- Mexico ($60 billion),
- China ($50 billion),
- Philippines ($38 billion)
- Egypt ($32 billion)
Reasons behind the sustained growth in Remittances to India:
- One of the main reasons is the gradual reopening of various sectors in host-country economies, following Covid-19 pandemic-induced closures and travel disruptions.
- Structural shift: It notes that remittances moved from largely low-skilled, informal employment in the GCC countries to a dominant share of high-skilled jobs in high-income countries such as the U.S., the U.K., and East Asia.
- In fact, between 2016-17 and 2020-21, while the remittances from the U.S., U.K. and Singapore increased from 26% to 36%, the share from five GCC countries dropped from 54% to 28%.In 2020-21, the U.S., with a share of 23%, surpassed Saudi Arabia to become India’s top source country for remittances.
- The report also adds that Indian migrants may also have “taken advantage” of the depreciation of the Indian rupee vis-à-vis the U.S. dollar – it fell by 10% between January and September 2022 – to increase their remittances.
What does the report say about future trends?
- The report predicts that growth in remittances will fall to 2% in 2023 as the GDP growth in high-income countries continues to slow, eroding migrants’ wage gains.
- For South Asia as a whole, the growth in remittances is expected to fall from 3.5% in 2022 to 0.7% in 2023.
- Nonetheless, remittances to India are forecast to grow by 4% next year, “supported by the large share of Indian migrants earning relatively high salaries in the U.S., the U.K. and East Asia”.