India Receives Highest Remittances, Trend Will Continue: World Bank
Indian diaspora has retained the top position when it comes to sending money back home this year. With $80 billion of remittance in 2018, India is closely followed by China that received $67 billion, says the World Bank. In 2016, India received $62.7 billion in remittance. By 2017, the number had grown to $65.3 billion, constituting almost 2.7 per cent of the gross domestic product.
Leading the pack
In the last two decades, India has been among the top countries when it comes to remittances. Although remittances dipped in between owing to a slowdown in the global economic activity, it was a temporary phase as migrant workforce took time to cope with the situation.
Also, while the wave of disturbances affected new migrants, most of the settled ones could adjust faster and better. Adjustments were mostly made with regards to the rent that they paid or by cutting down on consumption expenditures. Do note that when the Indian currency fell against the US dollar, this helped the situation to some extent. There were also cases when Indian migrant workforce opted for other jobs — a clear example is that of Indians in the construction industry in Dubai. When the industry was not faring well, they switched to retail trade.
What does the future hold?
The World Bank estimates that remittances to developing countries are set to increase by 10.8 per cent, and will reach $528 billion in 2018. Outward flows to high-income countries will also grow by 10.3 per cent to $689 billion.
The two most populous countries in the world, China and India, are among those who send the largest volume of money back home. But, India manages to send more back home.
Speaking to The Wall Street Journal, Dilip Ratha, head of the World Bank’s Migration project, said earlier: “Families in China are now better off. So, they don’t need (remittance) money to survive, but families of Indian construction workers in the Gulf are still poor.”
Also, the Chinese may be sending money home to invest or start a new business so the money shows up as foreign direct investment (FDI) rather than remittances.
In India, remittances are usually used to pay for a family member’s education, marriage, health or buying a property. Experts also suggest that among migrant workforce, Indians are the most connected to their families. This is a strong reason why they feel the need to send money home even if they have spent years abroad.
Globally, India and China are followed by Mexico, the Philippines and Egypt.
Outbound flow is heavy, too
Outbound remittances from India are also high as families continue to spend on vacations, fund children’s education or spend on gifts and send money abroad to relatives. Together, these account for 90 per cent of total outward remittances.
It has been noticed that after 2015, after the Reserve Bank of India (RBI) broadened the scope of outflows, the momentum gathered pace. Indians can now send up to $250,000 per year to their relatives abroad. This can also be used for certain investments as well. RBI data suggest that between April 2017 and January 2018, Indians sent $8.2 billion to their relatives abroad.
With inputs from Housing News