New Delhi CNN Business —
The extensive Indian diaspora will help the South Asian country reach a special milestone this year.
Asia’s third largest economy is on track to receive more than $100 billion in yearly remittances in 2022, according to a World Bank report published Wednesday. This will be the first time a country will reach that milestone figure, it said.
Remittances, or money transfers from migrant workers to families back home, are an important source of income for households in poorer countries. They not only reduce poverty in developing nations but have also been associated with higher school enrollment rates for children in disadvantaged households.
Over the last few years, the World Bank report said, Indians have moved to high-skilled jobs in high-income countries such as the United States, United Kingdom, and Singapore — from low-skilled employment in Gulf countries such as Saudi Arabia, Kuwait and Qatar — and sending more money back home as a result.
India had received $89.4 billion in remittances in 2021, according to the World Bank, making it the top recipient globally last year.
“Remittance flows to India were enhanced by the wage hikes and a strong labor market in the United States,” and other rich countries, the bank said.
Despite being poised to reach the record figure, India’s remittance flows are expected to account for only 3% of its GDP in 2022, it said.
Apart from India, the other top recipient countries for remittances in 2022 are expected to be Mexico, China, and the Philippines. The next year may be more challenging for Indian diaspora, however.
2023 will “stand as a test for the resilience of remittances from white-collar South Asian migrants in high-income countries,” because of rising inflation in the United States and slowing global growth, according to the report.
Globally, remittances to low and middle income nations are expected to grow an estimated 5% to $626 billion this year, it added.