India’s Remittance Flows Increases

India emerged as the global leader in remittances, receiving over USD 111 billion in 2022, surpassing the USD 100 billion milestone. The International Organisation for Migration's (IOM) World Migration Report 2024 highlighted India's prominence as both a remittance recipient and origin of international migrants.

Key Points: 

• Remittance Receipts: India topped the list of remittance recipient countries, with significant inflows from countries like the United Arab Emirates, the United States, and Saudi Arabia. The country's remittance inflows exceeded USD 111 billion in 2022.
• Migration Statistics: India was noted as the origin of the largest number of international migrants globally, with approximately 18 million migrants, accounting for 1.3% of the total population.
  • Additionally, India ranked 13th as a destination country for immigrants, with 4.48 million immigrants.
• Migration Corridors: Major migration corridors included India - United Arab Emirates, India - US, India - Saudi Arabia, and Bangladesh - India, driven primarily by labor migration from the subregion.
• Risks Faced by Migrant Workers: Financial exploitation, indebtedness, migration costs, xenophobia, and workplace abuses.
• High Migrant Labor Sectors: Construction, hospitality, security, domestic work, and retail, reflecting the diverse nature of migrant employment.
• Factors accelerating growth in remittances: Educated Indian diaspora, proficiency in English, skills, increased demand for labour due to higher oil prices, and others.

Significance of Remittances for India's Economy 

Remittances play a crucial role in India's economic landscape, accounting for a significant portion of the GDP and serving as a vital buffer for the external sector. Additionally, remittances bolster India's forex reserves, stabilize the rupee, and fuel consumption-driven economic growth.

• Macro-Economic Cushion: Remittances contribute approximately 3% of India's GDP, serving as a substantial source of external financing. During periods of trade deficit widening, remittances provide a vital cushion, stabilizing India's external sector amidst global economic challenges.
• Stability for Current Account: As the second-largest source of external financing after service exports, remittances play a pivotal role in maintaining stability in India's current account. By bolstering forex reserves, they help the Reserve Bank of India (RBI) safeguard the rupee against excessive volatility.
• Boosting Purchasing Power: Remittances enhance people's purchasing power, driving consumption in the domestic market. This increased demand stimulates economic activity, contributing to overall growth in the economy.

Furthermore, India's adoption of modern fintech tools like UPI linkages facilitates faster and cheaper remittance transactions for Non-Resident Indians (NRIs). This technological advancement attracts more NRI investments, further strengthening India's economic resilience.