India is set to become the first country ever to receive $100 billion a year in remittances
Indians form the world’s largest diaspora group at around 18 million. That has led to India receiving ever-increasing remittances over the years.
In 2022, the amount has already touched $100 billion, making the country the first ever to reach the figure, World Bank data show.
“Remittance flows to India were enhanced by the wage hikes and a strong labor market in the United States and other OECD countries,” a Nov. 30 World Bank release said.
Inward remittances, accounting for around 3% of India’s GDP, surged 12% from 2021.
Besides a large working population of Indians living abroad, there were other reasons, too, for this increase. For instance, students are the other big constituents of the Indian diaspora. They eventually form high-income groups, with direct implications for remittances.
The depreciation of the Indian rupee has also helped. Since January, the currency has fallen 10% against the dollar. This has made sending money from South Africa to India cheaper by 26%, from Thailand by about 17%, and from Japan by 14% in the past year or so, the World Bank has said.
Structural shift in migration from India
Between January 2015 and September 2021, up to 8,81,254 people gave up their Indian citizenship. The trend accelerated post-pandemic after countries like Canada, New Zealand, Germany, and Ireland relaxed their immigration policies to attract skilled workers.
Such relocation has moved from the Arabian Gulf earlier, for often low-skilled and informal employment, to developed countries such as the US and UK for high-skilled jobs.
In 2020-21, the US became the largest remitter to India due to large stimulus packages and wage hikes in that country during the pandemic months and after.
“The structural shift in qualifications and destinations has accelerated growth in remittances tied to high-salaried jobs, especially in services,” the report said.
