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In the fiscal year 2023-24, Indians abroad sent a record $107 billion back home, marking the second consecutive year surpassing the $100 billion mark. According to an ET report, these net remittances are almost double the net foreign investments, including FDI and portfolio investments, which totaled $54 billion in the same period.
Studies indicate that remittances are linked to migration levels, job opportunities, and the economic situation in the source countries, with remittance costs also being a factor.
Gross remittances by the Indian diaspora, shown in private transfers in the balance of payments, reached $119 billion in FY 2023-24. After deducting repatriation of income by private foreign residents and other remittances, the net private transfers were $107 billion. The US remained the largest remittance source.
In 2023, the top five remittance recipient countries were India ($125 billion), Mexico ($67 billion), China ($50 billion), the Philippines ($40 billion), and Egypt ($24 billion).
An RBI survey post-Covid pandemic revealed the US as the largest source of remittances, accounting for 23% of the total, while flows from the Gulf region decreased. Most remittances are used for family needs, with some invested in assets like deposits.
The World Bank's "Migration and Development Brief" stated that India has been the top remittance recipient for over 20 years, driven by the increase in IT professionals moving to North America and Europe since the 1990s.
Remittance flows to developing countries have exceeded foreign direct investment and official development assistance, and the gap is widening, said Dilip Ratha, the lead economist and author of the World Bank report.
The World Bank predicts that remittance growth to low-and-middle-income countries will further soften to 3.1% in 2024 due to slowing global economic growth and weaker job markets in high-income countries.
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