India is likely to emerge as the largest recipient of foreign remittances again, totalling $125 billion in 2023, according to a new World Bank report.
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).
On Monday, the World Bank released its latest “Migration and Development Brief” which lists the top five recipients as India, Mexico, China, the Philippines and Egypt.
Last year, too, India, Mexico, China and the Philippines were the top four, but Egypt has now replaced Pakistan in the fifth spot.
The US continues to be the top source of remittances, which is the transfer of money by a foreign worker to his family or other individuals in their home countries.
Remittances can play a role in improving a country’s ability to repay debt and may even serve as collateral to lower the costs of international borrowing for national banks in developing countries.
This year, India’s remittances are expected to be more than double that of China. In 2022, too, the remittances entering India ($111 billion) were more than double the amount entering China ($51 billion).
Data from the World Bank’s report shows that in 2023, Mexico will emerge as the second after India, with an inflow of $67 billion this year, followed by China ($50 billion), the Philippines ($40 billion) and Egypt ($24 billion).
Digitalisation in India, especially through UPI payments, has facilitated higher remittance flows to India, the report added.
“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 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.
But this will also hinge on developments in the Middle East and with regard to the Gulf Cooperation Council (GCC) countries, as almost 29 percent of India’s remittances come from this region.
Remittance growth in South Asia ‘attributable’ to India
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.
Remittance flows to South Asia were estimated to reach $189 billion this year.
According to World Bank data, the growth seen in South Asia is “attributable entirely” to remittance flows to India.