Indians abroad to send home record $100bn in remittances
Indians living and working abroad are forecasted to send home a record amount of remittances this year. At $100 billion, remittance flows to India are likely to rise by 12 per cent on a year-on-year basis, according to a World Bank report published this week. The record remittances are set to boost the finances of world’s fifth largest economy amid efforts by foreign employers to woo the skilled Indian talent with wage hikes and post-pandemic high employment demand. A weakened rupee, too, supported the growth in remittance inflows.
The trend isn’t uniform across South Asia. Remittances earned by migrants from Bangladesh, Pakistan and Sri Lanka are expected to drop this year, the World Bank noted, as domestic and external shocks hit those countries especially hard.
“Migrants responded to exchange rate depreciations in home countries by sending less money through formal channels and opting for black-market premia in the parallel exchange markets,” the World Bank report said.
Demand for white collar Indian talent abroad
Highly-skilled white collar Indian workers living in high-income countries such as the United States, United Kingdom and Singapore were sending more money home, the World Bank report said. Indians at-large continue their substantial transition from low-skilled blue collar jobs to the white collar ones, especially in the Gulf region that hosts largest number of Indian migrants, it added.
Cash transfers to India from high-income countries climbed to more than 36 per cent in 2020-21, up from 26 per cent in 2016-17. The share from five Gulf countries, including Saudi Arabia and the United Arab Emirates, declined to 28 per cent from 54 per cent in the same period, the World Bank said, citing Reserve Bank of India data.
Remittances important to fill fiscal gap
Inflows from the Indian diaspora are a significant source of cash inflows for India. The country spent nearly $100 billion of foreign exchange reserves in the past year for its efforts related to fighting Covid pandemic and filling the fiscal gap amid challenging global conditions surrounded by conflicts, economic slowdown and prospects of looming recession.
