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Remittances to India set to hit record $100bn this year, 25% higher than FDI flows


NEW DELHI: Remittance flows to India are estimated to grow 12%, hitting $100 billion for the first time this year—far ahead of Mexico, China and the Philippines—according to the Bank’s Migration and Development Brief The world, help India keep the leading position.
The multilateral body says a number of long- and short-term trends obscured by the pandemic are catalyzing the inflow of remittances to India. It turns out that remittances have benefited from a gradual structural change in the main destinations of Indian migrants – from informal, low-skilled employment in the Gulf countries to a large share of the population. jobs in high-income countries such as USA, UK, Singapore, Japan, Australia & New Zealand.
At $100 billion, remittances from overseas Indians will be 25% higher than FDI inflows, which the government estimates will reach around $80 billion this year.
Between 2016-17 and 2020-21, the share of remittances from the United States, the United Kingdom, and Singapore increased from 26% to more than 36%, while the rates from the five GCC countries (Saudi Arabia, UAE, Kuwait, Oman and Qatar) fell from 54% to 28%,” said the World Bank.
In 2020-21, the United States overtook the UAE to become the top source of remittances, with a share of 23% of total remittances. Citing the US Census, the report said that of the approximately 5 million Indians in the US in 2019, about 57% had lived in the country for more than 10 years. Elaborating further, the report says that during this time, many people earned graduate degrees that helped them quickly move into the top earners.
Remittances are considered an important source of foreign exchange. At $100 billion, remittances from Indian workers abroad would be 25% higher than FDI inflows, which the government estimates will reach around $80 billion this year. Money that workers send home will also help close the gap caused by a higher trade deficit, that is, the gap between imports and exports.
Thanks to higher prices of oil and other commodities, imports have grown at a faster rate than exports this year. The report says structural shifts in qualifications and destinations have driven the growth of remittances associated with high-paying jobs, particularly in the service industries.
“During the Covid-19 pandemic, Indian migrants in high-income countries have been working from home and benefiting from massive fiscal stimulus packages. Post-pandemic, record wage growth and employment conditions have supported remittance growth amid high inflation,” it said.
In addition, economic conditions in the Gulf states, which account for nearly a third of remittances, favor India as the majority of migrants, blue-collar workers, have returned home during the Great Depression. Translate.
“Vaccination and commuting again helped more migrants keep working in 2022 than in 2021. GCC’s price-supportive policies have kept inflation low in 2022 and prices Higher oil increases labor demand, facilitates Indian migrants to increase remittances and counters the impact of India’s economic crisis record high inflation on their family’s real income ,” according to the report.
Furthermore, the depreciation of the rupee against the dollar could lead to increased remittance flows.

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