Syllabus: GS3/Economy
Context
- As per the Monthly Economic Review by the Department of Economic Affairs, despite the West Asia crisis, net remittances from the region to India rose to $16 billion in April 2026, up 70% over the same period of last year.
About
- In FY26, remittances rose to a record $155.1 billion, up from $135.4 billion in FY25, registering a 14.5% year-on-year increase.
- As a share of GDP, remittances increased to 4.0% in FY26 from 3.6% in the previous year.
- Contrary to concerns that geopolitical tensions in the West Asia region could adversely affect remittance inflows from the Gulf economies, transfer receipts have remained robust.
- This resilience in remittances is because they are pegged to labour market conditions in the region and do not get affected by short-term crises, unlike more volatile flows like FDI, portfolio flows, or debt flows.
- The report found that remittances have historically been among the most stable components of external financing.
Remittances
- Remittances are a way to electronically send funds to people, often family, in another country.
- Usually sent by individuals working in foreign countries, especially those employed in blue-collar or skilled jobs.
- Modes of Transfer: Remittances can be sent through banks, money transfer operators, or digital platforms.
- Two Types of Remittances: There are two types of remittances based on the transaction purpose: Inward Remittance and Outward Remittance.
- Inward Remittance: The term inward remittance indicates transfer of funds from one account to another either domestically or internationally.
- Outward Remittance: The transfer of funds out of the country or overseas is termed as outward remittance.
- Impact: Remittances are a significant source of income for many countries, contributing to their economic stability, supporting local economies, and sometimes helping to finance national trade deficits.
Source: TH
Previous article
Digital Push for Criminal Justice System in India
