{"id":3005,"date":"2022-12-09T00:00:00","date_gmt":"2022-12-09T00:00:00","guid":{"rendered":"https:\/\/www.nextias.com\/current_affairs\/uncategorized\/09-12-2022\/indias-inward-remittance-flows\/"},"modified":"2022-12-09T00:00:00","modified_gmt":"2022-12-09T00:00:00","slug":"indias-inward-remittance-flows","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/editorial-analysis\/09-12-2022\/indias-inward-remittance-flows","title":{"rendered":"India\u2019s inward Remittance flows"},"content":{"rendered":"<p><span style=\"font-size:13pt\"><strong>In News\u00a0<\/strong><\/span><\/p>\n<p><span style=\"font-size:12pt\">Remittances to India are set to touch a record $100 billion in 2022, according to the World Bank\u2019s latest Migration and Development Brief titled, \u2018Remittances Brave Global Headwinds\u2019.\u00a0<\/span><\/p>\n<ul>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\">India received $89.4 billion in 2021 \u2014 this is the first time a country will reach the $100 billion mark<\/span><\/li>\n<\/ul>\n<div>\n<table cellspacing=\"0\" style=\"border-collapse:collapse; border:none; table-layout:fixed; width:624px\">\n<tbody>\n<tr>\n<td style=\"background-color:#d9ead3; border-bottom:1px solid #000000; border-left:1px solid #000000; border-right:1px solid #000000; border-top:1px solid #000000; vertical-align:top\">\n<p><span style=\"font-size:13pt\"><strong>The Migration and Development Brief\u00a0<\/strong><\/span><\/p>\n<ul>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\">It analyzes trends in migration-related SDG indicators: increasing the volume of remittances as a percentage of GDP, reducing remittance costs, and reducing recruitment costs.<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p><span style=\"font-size:13pt\"><strong>What is\u00a0 Remittance?\u00a0<\/strong><\/span><\/p>\n<ul>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\">It denotes a <\/span><span style=\"font-size:12pt\"><strong>sum of money sent by one party to anothe<\/strong><\/span><span style=\"font-size:12pt\">r. These days, the term describes the money sent by someone working abroad to their family back home.\u00a0<\/span><\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\">In the case of India, the largest sources of remittances have been from Indians working in the Gulf Cooperation Council (GCC) countries (UAE, Bahrain, Saudi Arabia, Oman, Qatar, Kuwait), and the U.S.\/U.K.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-size:13pt\"><strong>General Trend in Remittances this year<\/strong><\/span><\/p>\n<ul>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\">World remittances are expected to touch $794 billion in 2022, up from $781 billion in 2021.\u00a0<\/span>\n<ul>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\">This represents a growth of 4.9%, compared to 10.2% in 2021, which was the highest since 2010.\u00a0<\/span><\/li>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\">Of the $794 billion, $626 billion went to low\u00ad and middle\u00ad income countries (LMICs).\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\">Remittances represent an even larger source of external finance for LMICs in 2022, compared to foreign direct investment (FDI), official development assistance (ODA), and portfolio investment flows.\u00a0<\/span>\n<ul>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\">The top five recipient countries this year are expected to be India ($100 billion), followed by Mexico ($60 billion), China ($50 billion), the Philippines ($38 billion), and Egypt ($32 billion)<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><span style=\"font-size:13pt\"><strong>Reasons behind sustained growth in remittances<\/strong><\/span><\/p>\n<ul>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\">Globally: <\/span><span style=\"font-size:12pt\">According to the World Bank, one of the main reasons is the <\/span><span style=\"font-size:12pt\">gradual reopening of various sectors i<\/span><span style=\"font-size:12pt\">n host\u00adcountry economies, following pandemic\u00adinduced closures and travel disruptions.\u00a0<\/span>\n<ul>\n<li style=\"list-style-type:square\"><span style=\"font-size:12pt\">This <\/span><span style=\"font-size:12pt\"><strong>\u201cimproved migrant workers\u2019<\/strong><\/span><span style=\"font-size:12pt\"> incomes and employment situations and thereby their ability to send money home.\u201d<\/span><\/li>\n<\/ul>\n<ul>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\">\u00a0An allied reason was the \u201cmigrants\u2019 determination to help their families back home\u201d during the tough post\u00adpandemic recovery phase.<\/span><\/li>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\">A lot to the stimulus measures enacted \u201cto underpin faltering high\u00adincome economies\u201d, especially in the U.S. and Europe, which helped to support employment levels and maintain or increase incomes of migrant workers, enabling them to send money home.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\">Reasons behind the resilience of India\u2019s inward remittance flows<\/span>\n<ul>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\">The report points to a structural shift in India\u2019s remittance economy, both in terms of the t<\/span><span style=\"font-size:12pt\">op destination countries and the nature of the jobs held by migrants.\u00a0<\/span><\/li>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\">\u201cremittances have benefitted from a<\/span><span style=\"font-size:12pt\"> gradual structural shift in Indian migrants\u2019<\/span><span style=\"font-size:12pt\"> key destinations from largely low\u00adskilled, informal employment in the Gulf Cooperation Council (GCC) countries to a dominant share of high\u00adskilled jobs in high\u00adincome countries such as the U.S., the U.K., and East Asia (Singapore, Japan, Australia, New Zealand).\u201d<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\">the structural shift in qualifications and destinations has accelerated <\/span><span style=\"font-size:12pt\"><strong>growth in remittances tied to high-salaried job<\/strong><\/span><span style=\"font-size:12pt\">s, especially in services,<\/span>\n<ul>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\">This made a big difference during the pandemic when \u201cIndian migrants in high\u00ad income countries worked from home and benefitted from large fiscal stimulus packages\u201d while in the post\u00adpandemic phase, \u201cwage hikes and record\u00adhigh employment conditions supported remittance growth in the face of high inflation\u201d.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\">In the GCC countries, Indian migrants benefited from governments\u2019 direct <\/span><span style=\"font-size:12pt\"><strong>support measures to keep inflation low<\/strong><\/span><span style=\"font-size:12pt\">.\u00a0<\/span><\/li>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\">Finally, Indian migrants may also have \u201ctaken advantage\u201d of the <\/span><span style=\"font-size:12pt\"><strong>depreciation of the Indian rupee vis\u00ad\u00e0-vis the U.S. dolla<\/strong><\/span><span style=\"font-size:12pt\">r \u2013 it fell by 10% between January and September 2022 \u2013 to increase their remittances.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-size:13pt\"><strong>Future Prospects\u00a0<\/strong><\/span><\/p>\n<ul>\n<li style=\"list-style-type:disc\"><span style=\"font-size:12pt\">The report predicts that growth in remittances will fall to 2% in 2023 as the GDP growth in high\u00adincome countries continues to slow, eroding migrants\u2019 wage gains.\u00a0<\/span>\n<ul>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\">For South Asia as a whole, the growth in remittances is expected to fall from 3.5% in 2022 to 0.7% in 2023.\u00a0<\/span><\/li>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\">In the U.S., higher inflation combined with a slowdown will limit remittance flows, while the GCC countries will also see a cooling of remittance outflows following a slowdown.\u00a0<\/span><\/li>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\">The demand for labour is expected to soften as construction activities for the FIFA World Cup in Qatar have ended.\u00a0<\/span><\/li>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\">Nonetheless, remittances to India are forecast to grow by 4% next year, \u201csupported by the large share of Indian migrants earning relatively high salaries in the U.S., the U.K. and East Asia\u201d.\u00a0<\/span><\/li>\n<li style=\"list-style-type:circle\"><span style=\"font-size:12pt\">Their salaries \u201cmay be more resilient than those of lower\u00adwage migrants, for example in the GCC\u201d<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<div>\n<table cellspacing=\"0\" style=\"border-collapse:collapse; border:none; table-layout:fixed; width:624px\">\n<tbody>\n<tr>\n<td style=\"background-color:#d9ead3; border-bottom:1px solid #000000; border-left:1px solid #000000; border-right:1px solid #000000; border-top:1px solid #000000; vertical-align:top\">\n<p style=\"text-align:center\"><span style=\"font-size:13pt\"><strong>Mains Practsie Question\u00a0<\/strong><\/span><\/p>\n<p><span style=\"font-size:12pt\"><strong>[Q]<\/strong><\/span><span style=\"font-size:12pt\"> What has been the general trend in remittances across the globe this year? Discuss the reasons behind the resilience of India\u2019s inward remittance flows.\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>In News\u00a0 Remittances to India are set to touch a record $100 billion in 2022, according to the World Bank\u2019s latest Migration and Development Brief titled, \u2018Remittances Brave Global Headwinds\u2019.\u00a0 India received $89.4 billion in 2021 \u2014 this is the first time a country will reach the $100 billion mark The Migration and Development Brief\u00a0 [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":3006,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[22],"tags":[30],"class_list":["post-3005","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-editorial-analysis","tag-gs-2"],"acf":[],"jetpack_featured_media_url":"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2023\/07\/40557412962218D1C2BEA-B42D-44CA-AC90-12BFBC61D8CC.png","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/3005","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=3005"}],"version-history":[{"count":0,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/3005\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media\/3006"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=3005"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=3005"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=3005"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}