India Becomes the Highest Recipient of Remittances

• 19 Nov 2021

Why in News

According to the World Bank’s Migration and Development Brief, India has become the world’s largest recipient of Remittances, receiving USD 87 billion (a gain of 4.6 % from previous year) in 2021.

• India is followed by China, Mexico, the Philippines, and Egypt.
• The United States being the biggest source, accounting for over 20% of all Remittances.

Key Points

• Factors for Remittance Growth:
  
  • Migrants’ determination to support their families in times of need, aided by economic recovery in Europe and the United States which in turn was supported by the Fiscal Stimulus and employment support programs.
  • In the Gulf Cooperation Council (GCC) countries and Russia, the recovery of outward remittances was also facilitated by stronger oil prices and the resulting pickup in economic activity.
  • The severity of Covid-19 caseloads and deaths during the second quarter (well above the global average) played a prominent role in drawing substantial flows (including for the purchase of oxygen tanks) to the country.
  • Flows from migrants have greatly complemented government cash transfer programs to support families suffering economic hardships during the Covid-19 crisis.
• Projection for 2022:
  
  • Remittances are projected to grow 3% in 2022 to USD 89.6 billion, because of a drop in overall migrant stock, as a large proportion of returnees from the Arab countries await return.
• Other Countries:
  
  • Remittances registered strong growth in most regions.
    
    • Latin America and Caribbean (21.6 %), Middle East and North Africa (9.7 %), South Asia (8 %), Sub-Saharan Africa (6.2 %), Europe and Central Asia (5.3 %).
  • In East Asia and the Pacific, remittances fell by 4 % - though excluding China, remittances registered a gain of 1.4 % in the region.
  • Factors: In Latin America and the Caribbean, growth was exceptionally strong due to economic recovery in the United States and additional factors, including migrants’ responses to natural disasters in their countries of origin and remittances sent from home countries to migrants in transit.
• Suggestions:
  
  • To keep remittances flowing, especially through digital channels, providing access to bank accounts for migrants and remittance service providers remains a key requirement.
  • Policy responses also must continue to be inclusive of migrants especially in the areas of access to vaccines and protection from underpayment.

World Bank’s Migration and Development Brief

• This is prepared by the Migration and Remittances Unit, Development Economics (DEC)- the premier research and data arm of the World Bank. .
• The brief aims to provide an update on key developments in the area of migration and remittance flows and related policies over the past six months.
• It also provides medium-term projections of remittance flows to developing countries..
• The brief is produced twice a year.

Remittances

• Remittances are usually understood as financial or in-kind transfers made by migrants to friends and relatives back in communities of origin.
• These are basically sum of two main components - Personal Transfers in cash or in kind between resident and non-resident households and Compensation of Employees, which refers to the income of workers who work in another country for a limited period of time.
• Remittances help in stimulating economic development in recipient countries, but this can also make such countries over-reliant on them.

Source: IE