IANS | 19 Dec, 2023
The inward remittances to India in 2023 increased by 12.3 per cent 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 per cent of the country’s gross domestic product (GDP).
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 per cent of all remittances to South
Asia, higher than 63 per cent in 2022.
According to the data, the
growth rate of remittances was highest in Latin America and the
Caribbean (8 per cent), followed by South Asia (7.2 per cent) and East
Asia and the Pacific (3 per cent).
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 per cent of total remittance flows to India.
Higher
inflows from the Gulf Cooperation Council (GCC) also contributed to the
increase, especially the United Arab Emirates (UAE), which accounts for
18 per cent of India's total remittances, the second-largest after the
US.
"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 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 per cent, the cost of sending $200 to South Asia was
30 per cent lower than the global average of 6.2 per cent in the second
quarter of 2023.
In fact, remittance cost from Malaysia to India is the cheapest in the world at 1.9 per cent.
The total remittances to low- and middle-income countries (LMICs) grew an estimated 3.8 per cent in 2023.
The
World Bank said that it is expected to soften to 3.1 per cent 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.
