Remittance flows to India are estimated to grow 12% to reach $100 billion for the first time, way ahead of Mexico, China and Philippines, according to the World Bank’s Migration and Development brief, and helping it to retain the top position.
According to the multilateral organization, the pandemic obscured several longer and shorter-term trends that were catalytic in boosting remittance flows to India. Remittances have benefited from a gradual structural change in the top countries of choice for Indian migrants, from a predominance of low skilled, informal employment in the Gulf Cooperation Council (GCC) countries to a dominant share of high skilled employment in high income countries.
“Between 2016-17 and 2020-21, the share of remittances from the US, the UK and Singapore increased from 26% to over 36%, while the share from the five GCC countries (Saudi Arabia, UAE, Kuwait, Oman, and Qatar) dropped from 54% to 28%,” it said.
In 2020-21, US remittances surpassed that of the UAE as the top source country, with a share of 23% of total remittances. The report pointed out that nearly 20% of India’s emigrants are in the US and UK.
According to the US Census, of the five million or so Indians living in the US as of 2019, about 57% had been residents for more than 10 years. The report went on to say that many people obtained graduate degrees during this time, preparing them for a quick transition into the highest-earning group.
Remittances are seen as a crucial source of foreign exchange. At $100 billion, remittances from Indian workers overseas will be 25% higher than the FDI flows, which the government estimated will reach around $80 billion this year.
According to the report, the structural change in job requirements and final destinations has sped up the growth of remittances associated with high salaries, particularly in the service sector. "Indian migrants in high-income nations worked from home during the pandemic and benefited from sizable fiscal stimulus packages. In spite of high inflation, post-pandemic wage increases and record-high employment levels supported remittance growth, it said.
