Growth in remittances to India may halve in 2024, says World Bank

India received remittances worth $120 billion in 2023, supported by strong labour markets in the United States and Europe The growth in remittances to India is likely to halve in 2024 to 3.7 per cent from 7.5 per cent in 2023, according to the World Bank.

However, in its latest Migration and Development Brief, the multilateral bank said India’s efforts to link its Unified Payments Interface with source countries such as the United Arab Emirates (UAE) and Singapore are expected to reduce costs and speed up remittances.

 India received remittances worth $120 billion in 2023, supported by strong labour markets in the United States and Europe. “Reduced outflows from GCC (Gulf Cooperation Council) countries, amid declining oil prices and production cuts, contributed to the slowdown,” the World Bank said. Remittances are projected to rise marginally to $124 billion in 2024 and to $129 billion in 2025.

 India remained the top recipient among remittance-recipient countries, followed by Mexico ($66 billion), China ($50 billion), the Philippines ($39 billion), and Pakistan ($27 billion). India also remained the largest origin countries of emigrants (18.7 million), followed by Ukraine (11.9 million), China (11.1 million), Mexico (11 million), and República Bolivariana de Venezuela (8.9 million).

“The diversification of India’s migrant pool between a large share of highly skilled migrants employed mostly in high-income OECD (Organization for Economic Cooperation and Development) markets and the less-skilled migrants employed in GCC markets is likely to lend stability to migrants’ remittances in the event of external shocks,” the World Bank said.

 The multilateral bank said remittance flows to India from the UAE, which account for 18 per cent and are the second-largest source of India’s remittances after the US, benefited from the February 2023 free trade agreement (FTA).

“The latter (FTA) established a framework to promote the use of local currencies for cross-border transactions and cooperation for interlinking payment and messaging systems between India and the UAE. The use of dirhams and rupees in cross-border transactions is instrumental in channelling more remittances through formal channels. In addition to the UAE, Saudi Arabia, Kuwait, Oman and Qatar account for 11 per cent of India’s total remittances,” it added.