WORLD BANK REMITTANCES REPORT 2025 : IMPACT ON INDIA

 INFLOW OF REMITTANCES 

Remittances of  diaspora  working abroad play a crucial role in buttressing  the Balance of Payments particularly in the economies of developing countries.  The people who move to other  countries for work send back funds to their home countries which is known as remittances, Remittances not only support lower income households to  secure access to essential needs like food, housing, education health care services etc, but also  Provide as  an additional source of  finance  to relatively  wealthy households which can be further invested in  different businesses and entrepreneurial ventures. Such investments  promote creation of jobs  economic and social development etc.in remittances recieving countries. It has been observed that above 60 countries reported remittances accounting for more than 3% of  Gross Domestic Product (GDP ).Recent  advances in fintech technology , UPI coupled  with digitalisation,  both  remittances senders and receivers have access to a multitude of Payments methods and channels with lesser and economical costs.

GLOBAL SCENARIO 

World Bank Remittances Report 2025 is prepared based on data collected from sources like Global  Findex 2025,Remittances Prices Worldwide(RPW)etc.While India leads as the largest recipient of remittances with a record level of $ 135.46 billion  in the financial year 2024-25 .Remittances  flows to Low and Middle Income Countries (LMICs)are projected to grow by 2.8% in 2025,reaching $690 billion.Countries like Sub-Saharan Africa, Latin America and South Asian regions heavily rely on remittances with high percentage of their  households recieving it.As far as transfer costs and digitalisation are concerned  mobile money is the cheapest transfer method (around 3.63% in Q1 2025) as against digital platforms facilitate increasing flows. The world Bank Remittances Report for 2024 estimated total remittances to Low and Middle Income Countries as $685 billion .India topped the list with $129 billion followed by Mexico $ 68 billion, China $48 billion, Phillipines $ 40 billion and Pakistan $33 billion. Analysts showed that  India's reciept of remittances account  for 3.5% of GDP Mexico 3.7% , Phillipines 8.7% Pakistan 9.4 % Bangladesh 6.0% and China only 0.2%.Apart  from  that  ten Least developed countries namely  Tonga (50%) Tajikistan (47.9 %),Leba non 33.3% ,Nicaragua (26.6%) ,Samoa (26.4%),ElSavador (24.4%,Bermuda (23.7%)Lesotho (22.0 % ), Comorus (21.64)Gambia  (21.1%)and Kyrgyzstan(18.8%)remittances is so crucial contributing   half to one fifth of their total GDP in respective countries.  World Bank's new Global Findex report also reveals that  nearly half of adults in Senegaland and Tajikistan recieve international remittances whereas in Gambia, Kosovo ,Honduras and  Dominican Republic  one third recieve same. Nearly half of women in Tajikistan and Senegal recieved remittances in the past year. Global remittances market is expanding from $ 865 billion in 2023 to $ 905 billion in 2024 and projected to grow to $ 1065 trillion, by 2029 driven by spurt in overseas migration and financial innovation. 

REMITTANCES FLOWS TO INDIA 

Remittances flows to India are money transfers from Indian diaspora or non resident Indians ( NRIs) working abroad to their friends or relatives working in India. Since 2008 India has been in the forefront in recieving remittances and surpassed $ 100 billion during the last three years. Remittances record of  India for  the last 7 years is shown below. 

  Year                 Remittances flow in billion  $  US     % of GDP                 Remarks

1990- 91              $ 2.10  billion                                         0,70%    

1995-96                 $  8.50 billion                                         3.22% 

2000-001                $ 12.85 billion                                        2.84%

2004-005                 $ 20.25 billion                                     3 .03"

2009-10                     $ 55,08                                               3.28 %     

20014-15                     $ 6 6 ,30                                             3.15%                                                                    

2017-18                 $69.13 billion                                         2.95 %                            

2018-19                  $76.40  billion                                        2.78 %                               

2019- 20                 $83.19 billion                                          3.12%

2020-21                   $80.19  billion                                          2.75%                              

                                                                                    ( margial dip due to Covid19 )

2021-22                   $89.13  billion India                              3.00%

2022-23                     $ 110 billion                                         3.30%  

 2  023-24                    $ 187.5 billion                                    3.40%   doubled from 2010-11 year f

2024- 25                    $135.46 billion.                                     3.5 %  New record  of remittances 

Historically remittances as a percentage of India's GDP estimates indicated  increase from  mere 0.70% in 1990-91  to 2.84% in 2000-01 to 3.69 % in 2003-04, 3.61% In in 2011-12, 3.12% in 2019-20.and 3.40 % in 2023-24.After reaching the threshold limit remittances of $100  billion India recorded $ 110 billion in 2022-23,  $187.5 billion in 2023-24  and  $ 135.46 billion in  2024-25 .While remittances were growing by 3.8 % globally in 2023 India emerged as the largest recipient among Low and Middle Income Countries (LMICs).United States contributed the largest share of remittances to India(28%)followed by UAE (19.2%) ,Saudi Arabia (6.7%).Singapore (6.6%, )Kuwait (3,9%), Canada(3.8%),Oman (2.5 %)of total inflows. whereas Australia's  share remained 2.3% of total remittances  as per Fy 2024.Advanced economies of USA, UK,Canada, Singapore, and Australia together contributed more than half of India's remittances in Fy 2024,Gulf nations.

STATE WISE DISTRIBUTION OF REMITTANCES AND  IMPACT  ON BALANCE OF PAYMENTS. 

India being  the largest recipient of remittances to the extent of $ 135.46 billion account for  only  GDP  share of 3.5  %  being an emerging developing country,.Where as Less developed countries like Tonga and Tajikistan showed their relative share of remittances as half and nearly of their GDP. Data regarding state wise distribution of remittances to India showed that as per 2023-24 estimate both states  Maharashtra (20.5% largest recipient) followed by Kerala (19.7% second highest) combined togethet ⁰account for 40 % of total remittances. Other  Southern states  like Tamil Nadu(10.4%), Telengana (8.1%),Karnataka (7.7%) together showed increasing Southern domination in remittances inflows which was driven by strong migration networks.When  the Gulf boom started in mid1970 s because of historical links Kerala emerged as the largest contributor of manpower exports to Gulf region, and since liberalised exchange rate reforms  were introduced  remittance flows to Kerala crossed even whopping half of  remittance flows to India.At present Maharashtra's prominence in emigrant remittances  is largel due to flow of   skilled migrants and professionals across the world including in western countries.RBI data also showed that India as the world's top remittance recieving country driven by skilled workers emigration to  the US, UK and Singapore etc which surpassed  earlier Gulf countries dominance in remittances At the same time  GCC countries staunchly continued their support of India's external sector balances,curtailed the burden of financing trade deficit and  enhanced  consumption and investment  domestically. However factors like strengthening of US dollar and inability to reach an Indo US trade agreement along with uncertain US tariff and immigration policies, increasing merchandise trade deficit, higher gold imports,Current Account Deficit(CAD) uncertainty in both  FDI and FPI  flows instability in both stock market and currency market etc are bound to affect adversely  external sector in general  and exchange rate in particular. However the foreign exchange remitted by Indian diaspora through official channels essentially act as private transfers it  do act as a resilient safety valve in  buttressing our balance of  Payments position.  Available remittances has got greater significance because it not only exceeds Foreign Direct Investment (FDI) flows to Indiarecieve remittances to the extent of half of their GDP but also cover above half of our merchandise trade deficit.In a sense recent sharp crash and  fall of  Indian rupee ( currently at 90.47 per $), and  further deterioration and fall were averted to a great extent by the Inflow of remittances from largest Indian diaspora working across the world. In other words inward remittances continue to be a reliable source of foreign exchange earnings in India. 


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