India Records a 12.3% Surge in Inward Remittances, Tops Global Rankings* New Delhi, December 19: According to the latest data released by the World Bank, India witnessed a substantial 12.3% increase in inward remittances in 2023, reaching $125 billion, up from $111.22 billion in 2022.
This surge positions India as the highest recipient of remittances globally, accounting for 3.4% of the country’s Gross Domestic Product (GDP). The World Bank’s “Migration and Development Brief,” unveiled on Monday, revealed that India’s dominance in remittances remains unchallenged, with Mexico ($67 billion) and China ($50 billion) following as the second and third highest recipients, respectively. India now represents 66% of all remittances to South Asia, showcasing a rise from 63% in 2022.
The growth rate of remittances saw significant increases in Latin America and the Caribbean (8%), South Asia (7.2%), and East Asia and the Pacific (3%). Key contributors to the surge in remittances to India include declining inflation and robust labor markets in high-income source countries, leading to increased remittances from skilled Indian expatriates in the US, UK, and Singapore.
These three nations collectively contribute 36% of total remittance flows to India. The Gulf Cooperation Council (GCC), notably the United Arab Emirates (UAE), played a vital role in this uptick, accounting for 18% of India’s total remittances, the second-largest after the US.
The report highlighted the positive impact of the February 2023 agreement between India and the UAE, fostering a framework for the use of local currencies in cross-border transactions and collaboration in payment and messaging systems. The use of dirhams and rupees in such transactions is expected to channel more remittances through formal channels.
Furthermore, South Asia benefits from lower remittance costs, with a cost of 4.3% for sending $200 – 30% below the global average of 6.2% in Q2 2023. Notably, the remittance cost from Malaysia to India stands as the world’s cheapest at 1.9%. While the total remittances to low- and middle-income countries (LMICs) grew an estimated 3.8% in 2023, the World Bank predicts a softening to 3.1% in 2024, primarily due to the risk of a decline in real income for migrants in the face of global inflation and low growth prospects.
