India tops global remittances list for 2023 with $125 bn inflow

The inward remittances to India in 2023 increased by 12.3 per cent to
$125 billion from 111.22 billion in 2022, according to the latest data
released by the World Bank.

India's inward remittances now account for 3.4 per cent of the country’s gross
domestic product (GDP).

The World Bank’s "Migration and Development Brief", released, states that India
continues to be the highest recipient of remittances globally, followed by Mexico
($67 billion) and China ($50 billion). India currently accounts for 66 per cent of all
remittances to South Asia, higher than 63 per cent in 2022.

According to the data, the growth rate of remittances was highest in Latin America
and the Caribbean (8 per cent), followed by South Asia (7.2 per cent) and East Asia
and the Pacific (3 per cent).

The main factor behind rising remittances to India was declining inflation and strong
labour markets in high-income source countries, which boosted remittances from
skilled Indians in the US, UK and Singapore.

These three countries account for as much as 36 per cent of total remittance flows
to India.

Higher inflows from the Gulf Cooperation Council (GCC) also contributed to the
increase, especially the United Arab Emirates (UAE), which accounts for 18 per cent
of India’s total remittances, the second-largest after the US.

Remittance flows to India benefited particularly from its February 2023 agreement
with the UAE for establishing a framework to promote the use of local currencies for
cross-border transactions and cooperation for interlinking payment and messaging
systems, the report said.

The use of dirhams and rupees in cross-border transactions would be instrumental
in channelling more remittances through formal channels.

Another important factor was the low remittance cost in South Asia. At 4.3 per cent,
the cost of sending $200 to South Asia was 30 per cent lower than the global
average of 6.2 per cent in the second quarter of 2023.

In fact, remittance cost from Malaysia to India is the cheapest in the world at 1.9 per
cent.

The total remittances to low- and middle-income countries (LMICs) grew an
estimated 3.8 per cent in 2023.

The World Bank said that it is expected to soften to 3.1 per cent in 2024 mainly
owing to the risk of a decline in real income for migrants in the face of global
inflation and low growth prospects.