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World Bank report on remittances

Topics Covered: Indian diaspora.

World Bank report on remittances

What to study?

For Prelims: Remittances- inward and outward- country- wise.

For Mains: Significance of remittances and challenges therein.

Context: The World Bank has released a report on the impact of the COVID-19 on migration and remittances.

India specific observations:

Remittances to India are likely to drop by 23 per cent from $83 billion last year to $64 billion this year due to the coronavirus pandemic, which has resulted in a global recession.

India’s neighbourhood:

  1. In Pakistan, the projected decline is about 23 per cent, totalling about $17 billion, compared to a total of $22.5 billion last year, when remittances grew by 6.2 per cent.
  2. In Bangladesh, remittances are projected at $14 billion this year, a likely fall of about 22 per cent.
  3. Remittances to Nepal and Sri Lanka are expected to decline by 14 per cent and 19 per cent, respectively, this year.

India’s remittances:

  • India is the world’s biggest recipient of remittances.
  • In 2019, India is estimated to have received $83.1 billion in remittances from people working overseas, about 12% of the total expected global inflow.
  • International remittances in 2018 (2020 report) reached $689 billion, out of which India received $78.6 billion from the 17.5 million living abroad.

Global scenario:

Globally remittances are projected to decline sharply by about 20 per cent this year due to the economic crisis induced by the pandemic and shutdowns.

The projected fall is largely due to a fall in the wages and employment of migrant workers, who tend to be more vulnerable to loss of employment and wages during an economic crisis in a host country.

Remittance flows are expected to fall across all World Bank Group regions, most notably in Europe and Central Asia (27.5 per cent), followed by Sub-Saharan Africa (23.1 per cent), South Asia (22.1 per cent), the Middle East and North Africa (19.6 per cent).

Significance of remittances:

Studies show that remittances alleviate poverty in lower- and middle-income countries, improve nutritional outcomes, are associated with higher spending on education, and reduce child labor in disadvantaged households. They are a vital source of income for developing countries. A fall in remittances affect families’ ability to spend on these areas as more of their finances will be directed to solve food shortages and immediate livelihoods needs.

decline_due_to_drop

Insta Links:

Prelims Link:

  1. India’s top sources of remittances.
  2. Past 10 years trend.
  3. Indian diaspora across the world- top 3 countries.
  4. What are FCNR accounts?

Sources: World Bank.