World Bank report on remittances

Context:

India received over $83 billion in remittances in 2020, a drop of just 0.2% from 2020, despite a pandemic that devastated the world economy, according to a World Bank report – Migration and Development Brief

Relevance:

GS-III: Indian Economy (Important International Institutions and their reports, Growth and Development of Indian Economy, Mobilization of Resources)

Dimensions of the Article:

1. Highlights of World Bank’s Migration and Development Brief
2. World Bank
3. World Bank Group
4. Introduction to the 5 organizations of World Bank Group

Highlights of World Bank’s Migration and Development Brief

• India is ranked at the top spot in remittances (Remittance is money sent to another party, usually one in another country; and the sender is typically an immigrant and the recipient a relative back home) received in 2020, a drop of just 0.2 per cent from 2019.
• The report said India’s remittances fell by just 0.2% in 2020, with much of the decline due to a 17% drop in remittances from the United Arab Emirates.
• Despite Covid-19, global remittance flows remained resilient in 2020, registering a smaller decline than previously projected.
• China is ranked second in terms of global remittances in 2020, and it is followed by Mexico, the Philippines, Egypt, Pakistan, France and Bangladesh.
• Remittance outflow was the maximum from the United States (USD 68 billion), followed by UAE, Saudi Arabia, Switzerland, Germany, and China.
• Reasons for the Steady Flow of Remittances:
• Fiscal stimulus that resulted in better-than-expected economic conditions in host countries.
• Shift in flows from cash to digital and from informal to formal channels.
• Cyclical movements in oil prices and currency exchange rates.

World Bank

• The World Bank (WB) is an international organization which provides facilities related to “finance, advice and research to developing nations” in order to bolster their economic development.
• It provides loans and grants to the governments of poorer countries for the purpose of pursuing capital projects.
• It comprises two institutions: The International Bank for Reconstruction and Development (IBRD), and the International Development Association (IDA).
• The World Bank is a component of the World Bank Group.

World Bank Group

• The World Bank Group is an extended family of five international organizations, and the parent organization of the World Bank, the collective name given to the first two listed organizations, the IBRD and the IDA:
  1. International Bank for Reconstruction and Development (IBRD)
  2. International Development Association (IDA)
  3. International Finance Corporation (IFC)
  4. Multilateral Investment Guarantee Agency (MIGA)
  5. International Centre for Settlement of Investment Disputes (ICSID)
• With 189 member countries, the World Bank Group is a unique global partnership: five institutions working for sustainable solutions that reduce poverty and build shared prosperity in developing countries.
• The Bank Group works with country governments, the private sector, civil society organizations, regional development banks, think tanks, and other international institutions on issues ranging from climate change, conflict, and food security to education, agriculture, finance, and trade.

Introduction to the 5 organizations of World Bank Group

I – The International Bank for Reconstruction and Development: The International Bank for Reconstruction and Development (IBRD) lends to governments of middle-income and creditworthy low-income countries.

II – The International Development Association: The International Development Association (IDA) provides interest-free loans — called credits — and grants to governments of the poorest countries. It is called the soft loan window of the World Bank. Together, IBRD and IDA make up the World Bank.

III – The International Finance Corporation: The International Finance Corporation (IFC) is the largest global development institution focused exclusively on the private sector. It helps developing countries achieve sustainable growth by financing investment, mobilizing capital in international financial markets, and providing advisory services to businesses and governments.

IV – The Multilateral Investment Guarantee Agency: The Multilateral Investment Guarantee Agency (MIGA) was created in 1988 to promote foreign direct investment into developing countries to support economic growth, reduce poverty, and improve people’s lives. MIGA fulfils this mandate by offering political risk insurance (guarantees) to investors and lenders.

V – The International Centre for Settlement of Investment Disputes: The International Centre for Settlement of Investment Disputes (ICSID) provides international facilities for conciliation and arbitration of investment disputes.

-Source: The Hindu