Washington: India received $120 billion in remittances in 2023, almost twice the $66 billion received by Mexico in the same period, the World Bank said in a report released on Wednesday.
China ($50 billion), the Philippines ($39 billion), and Pakistan ($27 billion) figure among the top five nations in the list released by the World Bank. The list showed remittances in 2023 after a period of strong growth during 2021-2022. The total was an estimated $656 billion.
"Growing at 7.5 per cent, remittance flows to India touched $120 billion in 2023, reflecting the benefits of a deceleration in inflation and strong labour markets in the United States, the largest destination for India's skilled migrants, and other OECD destinations, as well as positive demand for skilled and less-skilled workers in the GCC countries (which, together, are the second largest destination for Indian migrants)," the World Bank said.
While the same external demand conditions could have favoured remittance flows to Pakistan, weak internal conditions due to a balance of payments crisis and economic difficulties caused remittances to plummet 12 per cent to $27 billion in 2023, compared with more than $30 billion in 2022, it said.
According to the World Bank, remittance flows to India from the United Arab Emirates, which account for 18 per cent and are the second largest source of India's remittances after the United States, benefited from the February 2023 agreement.
The latter established a framework to promote the use of local currencies for cross-border transactions and cooperation for interlinking payment and messaging systems between India and the United Arab Emirates.
The use of dirhams and rupees in cross-border transactions is instrumental in channelling more remittances through formal channels. In addition to the United Arab Emirates, Saudi Arabia, Kuwait, Oman, and Qatar account for 11 per cent of India's total remittances, it said.
The World Bank said remittances to India are expected to grow 3.7 per cent to $124 billion in 2024, and at four per cent to $129 billion in 2025.
India's efforts to link its Unified Payments Interface with source countries such as the United Arab Emirates and Singapore are expected to reduce costs and speed up remittances, it said.
"Most importantly, the diversification of India's migrant pool between a large share of highly skilled migrants employed mostly in high-income OECD markets and the less-skilled migrants employed in the GCC markets is likely to lend stability to migrants' remittances in the event of external shocks," the bank said.
"Migration and resulting remittances are essential drivers of economic and human development," said Iffath Sharif, Global Director of the Social Protection and Jobs Global Practice at the World Bank.
"Many countries are interested in managed migration in the face of global demographic imbalances and labour deficits on the one hand, and high levels of unemployment and skill gaps on the other… The resilience of remittances underscores their importance for millions of people," said Dilip Ratha, lead economist and lead author of the report.
"Leveraging remittances for financial inclusion and capital market access can enhance the development prospects of recipient countries. The World Bank aims to reduce remittance costs and facilitate formal flows by mitigating political and commercial risks to promote private investment in this sector," he said.