Indian American remittances soar to $125 billion, cementing India’s global lead

• The World Bank’s Migration and Development Brief, unveiled on December 18, underscores India’s dominance in remittances, outpacing other leading nations such as Mexico ($67 billion) and China ($50 billion)

• Within South Asia, India commands a significant 66 percent share of total remittances, a notable rise from 63 percent in 2022

PRAVASISAMWAD.COM

In 2023, India secured its position as the world’s top recipient of remittances, receiving a substantial $125 billion, marking a noteworthy 12.3 percent increase from the previous year’s $111.22 billion, according to recent data disclosed by the World Bank. This surge in remittances now constitutes 3.4 percent of India’s gross domestic product (GDP), as reported by IANS.

The World Bank’s Migration and Development Brief, unveiled on December 18, underscores India’s dominance in remittances, outpacing other leading nations such as Mexico ($67 billion) and China ($50 billion). Within South Asia, India commands a significant 66 percent share of total remittances, a notable rise from 63 percent in 2022.

A key catalyst for the escalating remittances to India is attributed to the combination of diminishing inflation and robust labor markets in high-income source countries, notably the United States, United Kingdom, and Singapore. These three nations collectively contribute to a substantial 36 percent of India’s total remittances.

Looking ahead, the World Bank anticipates a modest softening in remittance growth to 3.1 percent in 2024. This projection is primarily influenced by potential risks such as a decline in real income for migrants amidst global inflation and subdued growth prospects

Additionally, heightened inflows from the Gulf Cooperation Council, particularly the United Arab Emirates (UAE), played a pivotal role, constituting 18 percent of India’s total remittances—a close second to the United States.

The World Bank report underscores the positive impact of the February 2023 agreement between India and the UAE. This agreement laid the foundation for promoting local currencies in cross-border transactions, fostering cooperation in interlinking payment and messaging systems. The use of dirhams and rupees in cross-border transactions is expected to channel more remittances through formal channels.

Another contributing factor to India’s remittance surge is the relatively low cost of remittances in South Asia, standing at 4.3 percent—30 percent lower than the global average of 6.2 percent in the second quarter of 2023. Notably, the cost of remitting $200 from Malaysia to India is the world’s lowest at 1.9 percent.

Looking ahead, the World Bank anticipates a modest softening in remittance growth to 3.1 percent in 2024. This projection is primarily influenced by potential risks such as a decline in real income for migrants amidst global inflation and subdued growth prospects.

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