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Remittances To India Set To Hit A Whopping $100 Billion Milestone This Year

India, the third-largest economy in Asia, is expected to become the first nation to receive $100 billion in remittances from migrant workers abroad, according to a World Bank report. Notably, the World Bank report stated that India had received $89.4 billion in remittances in 2021, making India the top recipient globally.

According to the bank’s report, “remittance flows to India were enhanced by the wage hikes and a strong labour market in the United States” and other wealthy nations.

As a result, India is likely to continue to be the top recipient of remittances this year. Remittances to India will increase by 12% to reach $100 billion this year, according to the World Bank.

Other Nations’ growth in Remittances 

According to the report, China will receive an estimated $51 billion in remittances this year, with Mexico coming in second place with $60 billion.

The report provided a number of explanations for the increase in remittances to India, including a structural shift in immigration that took place over time from low-skilled jobs in Gulf countries to high-skilled jobs in high-income nations.

According to the report, which cited a Reserve Bank of India survey, “between 2016–17 and 2020–21, the share of remittances from the United States, United Kingdom, and Singapore increased from 26% to over 36%, while the share from the 5 Gulf countries (Saudi Arabia, United Arab Emirates, Kuwait, Oman, and Qatar) dropped from 54 to 28%.”

So why are remittances to India this year so high?

The World Bank claims that there has been a “gradual shift in destinations” for Indian migrants, helped by a “structural shift in qualifications” that allowed them to enter the “highest-income-earner-category,” particularly in the services sector.

According to the World Bank, “higher education mapped onto high-income levels with direct implications for remittance flows.” In the Gulf Cooperation Council (GCC) nations, migrants “moved from largely low-skilled, informal employment to a dominant share of high-skilled jobs in high-income countries such as the United States, the United Kingdom, and East Asia (Singapore, Japan, Australia, and New Zealand).”

The report claimed that during the COVID-19 pandemic, Indian migrants in high-income countries benefited from work-from-home opportunities and sizable fiscal stimulus programs. Despite high global inflation, wage increases and “record-high employment conditions” enabled migrants to send money home as the pandemic subsided.

“Price support policies kept inflation at bay… and demand for labor increased with higher oil prices, which in turn increased remittances for Indian labourers,” according to one study, despite the fact that Indian migrants in the Gulf Cooperation Council returned to India during the pandemic.

According to the report, wage increases and a robust labour market in the United States and other OECD (Organisation for Economic Co-operation and Development) countries increased remittances to India. Governments in the GCC destinations protected migrant workers’ ability to remit by taking direct support measures to ensure low inflation.

According to the brief, the depreciation of the Indian rupee against the US dollar—which fell 10% between January and September 2022—may have benefited Indian migrants and increased remittance flows

In 2022, travel and vaccinations helped migrants get back to work, which increased remittances to the nation.

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