India received $120 billion in remittances in 2023, most from US: World Bank
India received $120 billion in remittances in 2023, which is almost twice as $66 billion received by Mexico during the same period, the World Bank said in a report released on Wednesday.
China ($50 billion), the Philippines ($39 billion), and Pakistan ($27 billion) figure in top five countries’ list of remittances recipients as released by the World Bank, according to which remittances in 2023 after a period of strong growth during 2021-2022, officially recorded remittance flows to low- and middle-income countries (LMICs) moderated in 2023, reaching an estimated $656 billion.
“Growing at 7.5 per cent, remittance flows to India touched $120 billion in 2023, reflecting the benefits of a deceleration in inflation and strong labour markets in the United States, the largest destination for India’s skilled migrants, and other OECD destinations, as well as positive demand for skilled and less-skilled workers in the GCC countries (which, together, are the second-largest destination for Indian migrants)”, the World Bank said.
While the same external demand conditions could have favoured remittance flows to Pakistan, weak internal conditions due to a balance of payments crisis and economic difficulties triggered remittances to plummet 12 per cent to $27 billion in 2023 compared to more than $30 billion in 2022, it said.
According to the World Bank, remittance flows to India from the United Arab Emirates, which account for 18 per cent and are the second-largest source of India’s remittances after the United States, benefited from the February 2023 agreement.
The latter established a framework to promote the use of local currencies for cross-border transactions and cooperation for interlinking payment and messaging systems between India and the United Arab Emirates.
The use of dirhams and rupees in cross-border transactions is instrumental in channelling more remittances through formal channels. In addition to the United Arab Emirates, Saudi Arabia, Kuwait, Oman, and Qatar account for 11 per cent of India’s total remittances, it said.
The World Bank said remittances to India are forecast to grow at 3.7 per cent to $124 billion in 2024, and at four per cent to reach $129 billion in 2025.
India’s efforts to link its Unified Payments Interface with source countries such as the United Arab Emirates and Singapore are expected to reduce costs and speed up remittances, it said.
“Most importantly, the diversification of India’s migrant pool between a large share of highly skilled migrants employed mostly in high-income OECD markets and the less-skilled migrants employed in the GCC markets is likely to lend stability to migrants’ remittances in the event of external shocks”, the bank said.
“Migration and resulting remittances are essential drivers of economic and human development”, said Iffath Sharif, Global Director of the Social Protection and Jobs Global Practice at the World Bank.
“Many countries are interested in managed migration in the face of global demographic imbalances and labour deficits on the one hand, and high levels of unemployment and skill gaps on the other”.
“The resilience of remittances underscores their importance for millions of people”, said Dilip Ratha, lead economist and lead author of the report.
“Leveraging remittances for financial inclusion and capital market access can enhance the development prospects of recipient countries. The World Bank aims to reduce remittance costs and facilitate formal flows by mitigating political and commercial risks to promote private investment in this sector”, he said.