Research by central bank economists showed that the US has overtaken the UAE as the top source country, accounting for 23% of total remittances in 2020-21. “This confirms the World Bank report (2021), which cites an economic recovery in the US as one of the key drivers of India’s remittance growth,” says the research paper by Soumasree Tewari and Ranjeeta Mishra of the Department of Economic and Policy Research, Reserve Bank of India (RBI).
“A lot of the remittances have to do with the jobs and economic conditions in the host countries,” said Madan Sabnavis, chief economist at
. “Remittances from the Gulf region were near zero due to the slowdown and many faced job losses. But in the US, where most Indians are employed in IT and other white-collar jobs, employment has been more resilient during the pandemic lockdown. In addition, the US government also helped its individual residents with cash transfers, making it easier for them to financially support their relatives back home.”
As the main recipient, India was expected to be one of the worst hit, with a projected 23% contraction as the diaspora host country was vulnerable to the twin impacts of the economic slowdown and the collapse in oil prices. However, despite early forecasts, India remained the top recipient, accounting for 12% of total global remittances, posting a modest 0.2% decline in 2020 and 8% growth in 2021.
“This implies that countries with severe Covid-19 impacts have received greater family support from the foreign diaspora than others,” the RBI economists said. “This finding confirms the altruistic motive of referrals.” Views are those of the authors and not RBI.
Domestic remittances, reflected in private remittances in India’s balance of payments, totaled US$89 billion in FY22.
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