INWARD REMITTANCES: IS IT RESELIENT?

 The subject of remittances or personal income transfers associated with migration has been impacting households, investment( both private and Government) Government policy making, macro economy in general and external sector in particular. The money that migrant workers send home country continues to provide stable and vital income to  millions of people particularly in developing countries . According to world bank report Remittances became the financial life line of many economies  during the pandemic period and will become even more so in the foreseeable future.It may be noted here the money sent home through  banking or authorised official channels will benefit the welfare of the households and resulting foreign exchange recieved willl buttress the balance of payment position and  accrue to  the foreign exchange reserves of the country. The transfer of money that immediately utilised is accounted in the Current Account of Balance of Payment.Whereas Investment and long term payment time deposit etc are accounted in the Capital Account of Balance of Payment .While inflows through legal channels can be estimated, Illegal remittances through hawala  methods for funding of smuggling,drug trafficking, terrorist activities, illegal arms trade and money laundering etc cannot be estimated authentically .In addition to cash remittances  kind remittances like in gold, precious metals, drugs, ivory, precious animals and rare species etc are made in connivance with the unholy alliance of vested interest groups both in the bureaucracy and political hierarchy.

As per  official data aggregate global remittances reached a peak of $ 647 billion in 2022 after achieving  annual growth of 8% equivalent to thee times of Official Development Assistance provided by multilateral institutions like World Bank. Analysis of region wise inflows offers remittances showed growth of 0.7% in East Asia and Pacific, 19% in Europe and Central Asia, 11.3% in Latin America and the Carribbean, 12.2% in South Asia, and 6.1% in Sub Saharan Africa. On the contrary remittance inflows decelerated by 3.8% in the Middle East and North Africa region. Aggregate remittances can be higher because many send money through informal channels which is not captured by official statistics. According to the World Bank study India's remittances inflows are the highest in 2022 with a whopping $111 billion followed by Mexico($61billion), China ( $51 billion) Philippines ($ 38 billion), and Pakistan ($ 30 billion)as major recipients.State wise distribution of  receipts of remittances as per 2022 data showed that in India the traditional dominance of Kerala has been replaced by Maharashtra with 35.2% followed by Kerala 10.2% and Tamil Nadu 9.7 % respectively. It has been observed that Egypt's remittances receipts are much higher than the revenue earned from Suez Canal.Simillarly remittances of Srilanka are higher than its export earnings from tea and Morocco's income from tourism sector is less than remittances. Surprisingly in  certain countries remittances accounted for large share of GDP like 51% in Tajikistan, 44% in Tonga, 36% in Lebanon and 34% in Samoa clearly indicating that remittances have become the financial life line in many countries .

After the introduction of economic reforms in 1991 India witnessed tremendous growth in remittances from $2.1 billion in 2006 to $22 billion in 2009 ,$ 67.6 billion in2012-13 and $ 112 billion in 2023., The major source of remittances flows to India are from UAE,USA,Saudi Arabia and Kuwait respectively.While globally USA continues to be the main source of remittances to Latin America and Carribbean, The Gulf Cooperation Council (GCC) countries like Saudi Arabia and UAE)are the second largest source of remittances flows .The proportion of foreign workers generally exceed 70 percent of the population in GCC countries and Saudi Arabia and the UAE remained the largest source remittances to South Asia.

World Bank economist Dilip Ratha observed that remittances will continue to grow. And by  2050 more than one billion people mainly from Africa and South Asia are expected to join the working age population  .On the contrary ageing population will rapidly increase in advanced economies.  Consequently the demographic imbalance will impact both demand and supply of migrant workers across the globe, which in turn would also be impacted by the climate change and extreme weather conditions as well.Inward remittances can be more effectively channelised for poverty alleviation. Improvement in standards of living, support to health and education which in turn will stimulate further economic growth.In any case measures adopted to attract remittances through official channels should be continued more vigorously. In India measures taken to enhance remittances inflows officially through Unified Payment Interface (UPI) got a major boost when the National Payment Corporation of India (NPCI) allowed Non Resident Indians living in 10 countries to transfer remittances through UPI using their mobile numbers. The countries included are Singapore, Australia, Canada, Hong Kong, Oman,Qatar, USA, Saudi Arabia, UAE and UK. Concerted effort towards rigorous and committed approach in utilizing artificial Intelligence and other modern technologies including digital technology needs to be  effectively applied to tackle grave  issues like smuggling,and other illegal activities like malpractices in usage of financial technologies and unauthorized speculation in private digital assets.