In the most recent Migration and Development Brief from the World Bank, it is reported that India maintained its status as the foremost destination for remittances, receiving an approximate sum of 125 billion dollars in 2023. This is a mark-up of 13 percent from 2022’s $111 billion – an inflow that has significantly propelled the growth of remittances in South Asia as a whole (7.2 percent). The Indian economy surpassed earlier projections, benefitting from a competitive job market in the US and robust employment growth in Europe.

In the current year, it is anticipated that India's remittances will surpass those of China by more than double. Similarly, in 2022, the remittances flowing into India, amounting to $111 billion, were more than double the corresponding figure for China, which stood at $51 billion.

The United States continues to be the top source of remittances. The top five remittance recipient countries include Mexico (67 billion dollars), China (50 billion dollars), the Philippines (40 billion dollars), and Egypt (24 billion dollars). The robust labour markets in advanced economies and Gulf Cooperation Council (GCC) nations played a crucial role in enabling migrants to sustain their capacity to remit money back to their home countries.

Remittance is the transfer of money by a foreign worker to his family or other individuals in their home countries. These remittances can contribute to enhancing a country's capacity to repay debt and may also function as collateral, potentially reducing the costs of international borrowing for national banks in developing countries.

India’s remittances are expected to touch $135 billion in 2024, the report said, mainly because of unemployment rates “edging up” marginally in the US and UK.

In terms of regions, Latin America and the Caribbean saw the highest growth of remittances at 8 percent followed by South Asia at 7.2 percent.

This year, remittances to South Asia were predicted to total $189 billion.

According to World Bank data, the growth seen in South Asia is “attributable entirely” to remittance flows to India.

“The increase (in remittances in South Asia) is attributable entirely to remittance flows to India, which are expected to beat previous forecasts by $14 billion and reach $125 billion in 2023,” the report added.

Additionally, the report stated that the regional average growth resulted from substantial economic expansion in four South Asian countries (Bangladesh, India, Nepal, and Sri Lanka), while the other half of the region (Afghanistan, Bhutan, Maldives, and Pakistan) experienced declines.

According to the reports, digitalization in India, especially through UPI payments, has facilitated higher remittance flows to India.

“Mobile phones and digitalisation have revolutionised India’s fintech ecosystem, which has positive spillovers for Indian migrants and how they remit funds to India,” the report said.

“The government’s initiatives such as the Unified Payments Interface (UPI-PayNow) linkage for cross-border remittances between India and Singapore, launched in February 2023, is being extended to other countries to reduce transaction costs and facilitate higher remittance flows,” it added.

India's prominence in the global remittance landscape is a testament to the significant role played by the Indian diaspora in supporting the country's economy.

While challenges and risks persist, the report emphasizes the need for inclusive labour markets and social protection policies to sustain remittance flows, which serve as vital lifelines for developing countries like India.

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