Context:
India received $87 billion in remittances in 2021, and the United States was the biggest source, accounting for over 20% of these funds, the World Bank said in its latest report.
Relevance:
GS-III: Indian Economy (Growth and Development of Indian Economy, Human Resource, Indian Diaspora)
Dimensions of the Article:
- What are remittances?
- World Bank’s Migration and Development Brief
- Highlights of the World Bank’s Migration and Development Brief
- Reasons for Remittance Growth
- Way Forward
What are remittances?
- A remittance is a payment of money that is transferred to another party.
- Broadly speaking, any payment of an invoice or a bill can be called a remittance. However, the term is most often used nowadays to describe a sum of money sent by someone working abroad to his or her family back home.
- Remittances represent one of the largest sources of income for people in low-income and developing nations, often exceeding direct investment and international development assistance.
World Bank’s Migration and Development Brief
- The World Bank’s Migration and Development Brief is prepared by the Migration and Remittances Unit, Development Economics (DEC)- the premier research and data arm of the World Bank.
- The brief aims to provide an update on key developments in the area of migration and remittance flows and related policies over the past six months.
- It also provides medium-term projections of remittance flows to developing countries.
- The brief is produced twice a year.
Highlights of the World Bank’s Migration and Development Brief
- According to the World Bank’s Migration and Development Brief, India has become the world’s largest recipient of Remittances, receiving USD 87 billion (a gain of 4.6 % from previous year) in 2021.
- India is followed by China, Mexico, the Philippines, and Egypt.
- The United States being the biggest source, accounting for over 20% of all Remittances.
- Remittances registered strong growth in most regions. Latin America and Caribbean (21.6 %), Middle East and North Africa (9.7 %), South Asia (8 %), Sub-Saharan Africa (6.2 %), Europe and Central Asia (5.3 %).
- Remittances to India are projected to grow 3% in 2022 to USD 89.6 billion, because of a drop in overall migrant stock, as a large proportion of returnees from the Arab countries await return.
- In East Asia and the Pacific, remittances fell by 4 % – though excluding China, remittances registered a gain of 1.4 % in the region.
- Factors: In Latin America and the Caribbean, growth was exceptionally strong due to economic recovery in the United States and additional factors, including migrants’ responses to natural disasters in their countries of origin and remittances sent from home countries to migrants in transit.
Reasons for Remittance Growth
- Migrants’ determination to support their families in times of need, aided by economic recovery in Europe and the United States which in turn was supported by the Fiscal Stimulus and employment support programs.
- In the Gulf Cooperation Council (GCC) countries and Russia, the recovery of outward remittances was also facilitated by stronger oil prices and the resulting pickup in economic activity.
- The severity of Covid-19 caseloads and deaths during the second quarter (well above the global average) played a prominent role in drawing substantial flows (including for the purchase of oxygen tanks) to the country.
- Flows from migrants have greatly complemented government cash transfer programs to support families suffering economic hardships during the Covid-19 crisis.
Way Forward
- To keep remittances flowing, especially through digital channels, providing access to bank accounts for migrants and remittance service providers remains a key requirement.
- Policy responses also must continue to be inclusive of migrants especially in the areas of access to vaccines and protection from underpayment.
-Source: The Hindu
