India’s inward remittances now account for 3.4% of the country’s gross domestic product
The inward remittances to India in 2023 increased by 12.3 percent to $125 billion from 111.22 billion in 2022, according to the latest data released by the World Bank.
India’s inward remittances now account for 3.4 percent of the country’s gross domestic product (GDP).
The main factor behind rising remittances to India was declining inflation and strong labour markets in high-income source countries, which boosted remittances from skilled Indians in the US, UK, and Singapore.
These three countries account for as much as 36 percent of total remittance flows to India.
“Remittance flows to India benefited particularly from its February 2023 agreement with the UAE for establishing a framework to promote the use of local currencies for cross-border transactions and cooperation for interlinking payment and messaging systems,” the report said.
The World Bank’s “Migration and Development Brief”, released on Monday, states that India continues to be the highest recipient of remittances globally, followed by Mexico ($67 billion) and China ($50 billion). India currently accounts for 66 percent of all remittances to South Asia, higher than 63 percent in 2022.
According to the data, the growth rate of remittances was highest in Latin America and the Caribbean (8 percent), followed by South Asia (7.2 percent) and East Asia and the Pacific (3 percent).
Higher inflows from the Gulf Cooperation Council (GCC) also contributed to the increase, especially the United Arab Emirates (UAE), which accounts for 18 percent of India’s total remittances, the second-largest after the US.
“The use of dirhams and rupees in cross-border transactions would be instrumental in channelling more remittances through formal channels.”
Another important factor was the low remittance cost in South Asia. At 4.3 percent, the cost of sending $200 to South Asia was 30 percent lower than the global average of 6.2 percent in the second quarter of 2023.
In fact, remittance cost from Malaysia to India is the cheapest in the world at 1.9 percent.
The total remittances to low-and middle-income countries (LMICs) grew an estimated 3.8 percent in 2023.
The World Bank said that it is expected to soften to 3.1 percent in 2024 mainly owing to the risk of a decline in real income for migrants in the face of global inflation and low growth prospects.
[With Inputs from IANS]
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