Remittances are financial transfers made by individuals working abroad to support their families in their home country.
Trend in Remittances flow
- Top five recipients in 2024: India at $129 billion ($125 billion compared to 2023), Mexico, China, Philippines, and Pakistan, driven by recovery in job markets in high-income countries of OECD.
- Remittances to Low- and Middle-Income Countries are projected to surge to $685 billion in 2024, with 5.8% growth rate.
- China's share of global remittances dropped to 5.3% in 2024, its lowest share in two decades, due to reduced low-skilled emigration stemming from its rising economic prosperity and aging population.
Factors responsible for High Remittances in India
- Scale of Migration: India has one of the largest diaspora populations in world, with over 18 million Indians living abroad as of 2023 (UN World Migration Report 2024).
- Shift in Destination Trends: Increasingly, Indian migrants are moving to high-income economies like US, UK, and Australia.
- Skilled and Unskilled Labor: Indian migrants range from highly skilled professionals (IT, healthcare) to semi-skilled and unskilled labourers.
Significance of High Remittances
- For Recipient Households: Used for essential expenses like food, healthcare, and education, directly improving living standards.
- For Macro-economy: Major source of foreign exchange, reduced reliance on foreign aid, funding current account deficits and fiscal shortfalls etc.