India’s Remittances Lead the World in 2021
Recent reports from the World Bank’s Migration and Development Brief show that India has outpaced all other countries as the leading receiver of remittances worldwide in 2021. The country received an impressive USD 87 billion, a 4.6% increase compared to the previous year. America stands as the main contributor, responsible for more than 20% of all remittances sent to India.
Influential Factors Behind Remittance Growth
Several key factors contributed to this considerable growth in remittances, with migrants’ commitment to supporting their families during challenging times being prime among them. Economic recovery in Europe and the US, stimulated by fiscal incentives and employment support programs, also played a crucial role.
Similarly, in Gulf Cooperation Council (GCC) countries and Russia, stronger oil prices and a corresponding economic boost facilitated increased outward remittances. Additionally, the severity of the impact of Covid-19 in India during Q2, with caseloads and death rates surpassing global averages, prompted substantial inflows from migrants, including funds for essential medical supplies like oxygen tanks.
These contributions have been critical in supplementing government cash transfer programs aiming to alleviate economic hardship among Indian families amid the Covid-19 crisis.
Remittance Projections for 2022
Looking ahead, remittances to India are expected to grow by approximately 3% in 2022, reaching about USD 89.6 billion. This is despite anticipation of a decrease in overall migrant numbers, primarily due to large numbers of returnees from Arab countries awaiting re-entry.
Performance of Other Countries
Other regions recorded notable growth in remittances as well. The Latin America and Caribbean region witnessed the most significant growth at 21.6%, followed by the Middle East and North Africa at 9.7%. South Asia saw an 8% increase, while Sub-Saharan Africa registered a 6.2% rise. Europe and Central Asia recorded a 5.3% increase.
In East Asia and the Pacific, remittances experienced a 4% decrease, but excluding China, the region noticed a modest growth of 1.4%.
Factors Fostering Growth in Other Regions
In Latin America and the Caribbean, the growth was unusually strong due to the region’s economic recovery guided by the US economy’s revival. Other contributing factors included migrants’ responses to natural calamities in originating countries and remittances sent from home countries to migrants in transit.
Policy Recommendations for Sustaining Remittance Flows
Key suggestions to keep remittance flows robust include providing migrants with access to bank accounts and remittance service providers, particularly through digital channels. Migrants must also be incorporated in policy responses for better access to essential resources like vaccines and ensure protection against underpayment.
About the World Bank’s Migration and Development Brief
The Migration and Remittances Unit of the Development Economics (DEC) wing of the World Bank prepares this brief. It offers updates on significant developments occurring within global migration and remittance flows along with related policies over the previous six months. The brief also provides mid-term projections of remittance flows directed towards developing countries and is released twice a year.
The Nature and Impact of Remittances
Remittances often take the form of financial or in-kind transfers made by migrants to friends and relatives in their home communities. These consist of personal transfers in cash or kind between resident and non-resident households and compensation for employees who work abroad temporarily.
While remittances can stimulate economic development in recipient countries, over-reliance on them can pose certain risks.
