According to the latest World Bank report, India has secured the top position in global remittances, totaling USD 125 billion in 2023. The report anticipates a 3.1 per cent growth in remittances to Low- and Middle-Income Countries (LMICs) in 2024.
Cautionary notes accompany the positive news, underlining the impact of volatile oil prices, currency exchange rates, and the potential for a more profound economic downturn in high-income countries.
The World Bank’s Remittances Prices Worldwide Database reveals that remittance costs persistently remain high, averaging 6.2 per cent to send USD 200 as of the second quarter of 2023.
The report underscores that banks remain the costliest channel for sending remittances, with an average cost of 12.1 per cent.
A special section of the report highlights the potential of leveraging remittances for development finance, particularly through diaspora bonds. Diaspora bonds can tap into savings held by diaspora communities abroad, offering a stable source of funds.
The report suggests that remittances have exceeded the combined sum of foreign direct investment and official development assistance in recent years, opening opportunities for private capital mobilization.
India’s prominent position in the global remittance landscape underscores the substantial role played by the Indian diaspora in supporting the country’s economy.
While acknowledging persistent challenges and risks, the report underscores the importance of inclusive labor markets and social protection policies to sustain remittance flows, which serve as vital lifelines for developing countries like India.
