Inward Remittances To India Rise 12.3% To $125 Billion In 2023, Outlook For 2024 Remains Strong: World Bank

In the ‘Migration and Development Brief’ released by the global financial body, it said that India’s inward remittances are projected to beat the previous estimates by $14 billion in 2023.

Inward remittances to India increased 12.3 per cent in 2023 to touch $125 billion, estimates released by the World Bank revealed. The data stated that the remittances counted for 3.4 per cent of the gross domestic product (GDP) of the country. Comparatively, in 2022, the inward remittances for India stood at $111.22 billion. 

In the ‘Migration and Development Brief’ released by the global financial body, it said that India’s inward remittances are projected to beat the previous estimates by $14 billion in 2023. The World Bank further said that India continued to remain the highest recipient of remittances in the world, followed by Mexico at $67 billion, and China at $50 billion, reported Business Standard.

The data further stated that the growth of remittances was highest in Latin America and the Caribbean at 8 per cent, followed by South Asia at 7.2 per cent, and East Asia and the Pacific at 3 per cent. Currently, India accounts for 66 per cent of all remittances to South Asia, against its contribution of 63 per cent in 2022.

The World Bank noted that it anticipates total remittances to low and middle-income countries (LMIC) to dampen to 3.1 per cent in 2024, due to the risk of a decline in real income for migrants amidst global inflation and low growth prospects. Notably, the total remittances to LMICs logged an estimated growth of 3.8 per cent in 2023.

In the last decade, India has seen inward remittances climb 78.5 per cent. In 2013, the figure stood at $70.38 billion and crossed the $100 billion mark in 2022 after soaring 24.4 per cent to touch $111.22 billion.

The financial body stated that a fall in inflation and robust labour markets in high-income source countries were majorly responsible for the growth in remittances to India. Amongst the overall remittance inflow for India, the US, the UK, and Singapore accounted for 36 per cent. 

Another factor that contributed to the rise in remittances was the increase in inflows from the Gulf Cooperation Council (GCC), specifically the UAE, which contributed to 18 per cent of the overall remittances for India, becoming the second-largest contributor after the US.

The report noted, “Remittance flows to India benefited particularly from its February 2023 agreement with the United Arab Emirates for establishing a framework to promote the use of local currencies for cross-border transactions and cooperation for interlinking payment and messaging systems. The use of dirhams and rupees in cross-border transactions would be instrumental in channelling more remittances through formal channels.”

The low remittance cost in South Asia also helped significantly in adding a boost to the remittances. The cost of sending $200 to South Asia remained at 4.3 per cent, less by 30 per cent against the global average of 6.2 per cent in the second quarter of 2023. Notably, remittance cost from Malaysia to India marks the cheapest globally at 1.9 per cent. 

Giving an outlook for India, the World Bank said the remittance expectations for 2024 remain strong. At the same time, it noted that growth in remittances is estimated to dampen to 8 per cent, taking the remittance levels to $135 billion. “This trend will be shaped by labour market conditions and inflation in the main host economies for its high- and less-skilled migrants,” it added.