New Delhi: India is at the risk of losing the top place in the list of the world’s largest remittance receivers, a report by India Ratings and Research (Ind-Ra) said. India received as much as $83 billion in foreign remittances in 2019, the highest in the world.
According to Ind-Ra, COVID-19 induced lockdown and the subsequent joblessness and other key structural issues are making it difficult for the country to retain the title. The subsidiary of the credit rating agency Fitch mentioned in its report that the muted growth of India’s foreign remittances is more of a “structural” issue than transitory.
The report further added that the share of remittances as a percentage of gross disposable income also dropped from 3.5 per cent in the fiscal year 2010 to 2.5 per cent in the fiscal year 2019.
Indian diaspora consists of more than 17 million people living in different parts of the world, according to an estimate released by the United Nations, and around 55 per cent of them are situated in the Gulf Cooperation Council. The GCC region constitutes 54 per cent of the total remittances to India, reported Khaleej Times. Falling oil prices and job losses in the Gulf countries started muting the growth even before the COVID-19 pandemic, which further deepened the existing crisis.
Earlier this year, the World Bank predicted a 20 per cent decline in foreign remittances to low and middle-income countries (LMICs) in 2020 due to the COVID-19 pandemic and global lockdowns, making it one of the sharpest declines in history. In 2019, remittances to LMICs reached $554 billion; the number overtook the total Foreign Direct Investment made in these countries. The top five countries with the highest remittances were: India ($83.1 billion), China ($68.4 billion), Mexico ($38.5 billion), the Philippines ($35.2 billion), and Egypt ($26.8 billion).
India has been hit the hardest by the ongoing pandemic, while the South Asia region expected to take a hit of 22 per cent decline in remittances, India takes the biggest hit as the country’s remittances are expected to fall below $67 billion in 2020. In the quarter ended (April – June) 2020, remittances dropped to $11.69 billion, down from $13.534 billion in (January to March) 2020. The finance minister of Kerala, which holds the largest share of remittances in the country, said in a recent media talk that “people are returning home” addressing the issue of the bleak jobs market overseas due to the ongoing pandemic.
The top three countries with the highest remittances to India are: the UAE ($14 billion), the US ($12 billion), and Saudi Arabia ($11.5 billion).
(With information and statistics taken from an article written by Bilal Jafar, which appeared on Khaleej Times.)