{"id":33909,"date":"2022-12-08T03:20:02","date_gmt":"2022-12-07T21:50:02","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=33909"},"modified":"2025-04-20T02:44:52","modified_gmt":"2025-04-19T21:14:52","slug":"sustained-growth-in-remittances","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/sustained-growth-in-remittances\/","title":{"rendered":"Sustained growth in remittances"},"content":{"rendered":"<h3><strong>What\u2019s in today\u2019s article?<\/strong><\/h3>\n<ul>\n<li><strong>Why in News?<\/strong><\/li>\n<li><strong>About Remittance (Meaning, India\u2019s remittance)<\/strong><\/li>\n<li><strong>Major Highlights of the WB Report (General trend in 2022, Reasons behind growth, etc.)<\/strong><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>Why in News?<\/strong><\/h2>\n<ul>\n<li>Remittances to India are set to touch a record $100 billion in 2022, according to the World Bank\u2019s latest report titled \u2018<strong>Remittances Brave Global Headwinds<\/strong>\u2019.<\/li>\n<li>India received <strong>$89.4 billion in 2021<\/strong> \u2014 this is the first time a country will reach the $100 billion mark.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>What is a Remittance?<\/strong><\/h2>\n<ul>\n<li>When migrants send home part of their earnings in the form of either cash or goods to support their families, these transfers are known as workers\u2019 or migrant remittances.<\/li>\n<li>They have been growing rapidly in the past few years and now represent the largest source of foreign income for many developing economies.<\/li>\n<li>In the case of India, the largest sources of remittances have been from Indians working in the <strong>Gulf Cooperation Council countries<\/strong> (UAE, Bahrain, Saudi Arabia, Oman, Qatar, Kuwait), the <strong>S.<\/strong> and the <strong>U.K.<\/strong><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>What is the general trend in remittances in 2022?<\/strong><\/h2>\n<ul>\n<li>World remittances are expected to touch <strong>$794 billion in 2022<\/strong>, up from $781 billion in 2021.\n<ul>\n<li>This represents a growth of 4.9%, compared to 10.2% in 2021, which was the highest since 2010.<\/li>\n<\/ul>\n<\/li>\n<li>Of the $794 billion, $626 billion went to low- and middle-income countries (LMICs).<\/li>\n<li>The top five recipient countries this year are expected to be \u2013\n<ul>\n<li><strong>India<\/strong> ($100 billion),<\/li>\n<li><strong>Mexico<\/strong> ($60 billion),<\/li>\n<li><strong>China<\/strong> ($50 billion),<\/li>\n<li><strong>Philippines<\/strong> ($38 billion) and<\/li>\n<li><strong>Egypt<\/strong> ($32 billion)<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>What are the reasons behind the sustained growth in remittances to India?<\/strong><\/h2>\n<ul>\n<li>According to the World Bank, one of the main reasons is the <u>gradual reopening of various sectors in host-country economies, following Covid-19 pandemic-induced closures and travel disruptions<\/u>.<\/li>\n<li>World Bank\u2019s latest report points to a structural shift in India\u2019s remittance economy, both in terms of the top destination countries, and the nature of the jobs held by migrants.<\/li>\n<li>It notes that <u>remittances have benefitted from a gradual structural shift in Indian migrants\u2019 key destinations from largely low-skilled, informal employment in the GCC countries to a dominant share of high-skilled jobs in high-income countries such as the U.S., the U.K., and East Asia<\/u>.<\/li>\n<li>In fact, between 2016-17 and 2020-21, while the remittances from the U.S., U.K. and Singapore increased from 26% to 36%, the share from five GCC countries dropped from 54% to 28%.<\/li>\n<li>In 2020-21, <strong>the U.S., with a share of 23%, surpassed Saudi Arabia to become India\u2019s top source country for remittances<\/strong>.<\/li>\n<li>The report also adds that <u>Indian migrants may also have \u201ctaken advantage\u201d of the depreciation of the Indian rupee vis-\u00e0-vis the U.S. dollar \u2013 it fell by 10% between January and September 2022 \u2013 to increase their remittances<\/u>.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>What does the report say about future trends?<\/strong><\/h2>\n<ul>\n<li>The report predicts that growth in remittances will fall to 2% in 2023 as the GDP growth in high-income countries continues to slow, eroding migrants\u2019 wage gains.<\/li>\n<li>For South Asia as a whole, the <u>growth in remittances is expected to fall from 3.5% in 2022 to 0.7% in 2023<\/u>.<\/li>\n<li>Nonetheless, <strong>remittances to India are forecast to grow by 4% next year<\/strong>, \u201csupported by the large share of Indian migrants earning relatively high salaries in the U.S., the U.K. and East Asia\u201d.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<hr \/>\n<h3><strong>Q1) Is remittance part of current account or capital account?<\/strong><\/h3>\n<p>In the balance of payments framework, compensation of employees is a component of income while workers&#8217; remittances are a component of current transfers; both are part of the current account.<\/p>\n<p>&nbsp;<\/p>\n<h3><strong>Q2) What is the limit of free remittance in India?<\/strong><\/h3>\n<p>LRS allows Indian residents to freely remit up to USD $250,000 per financial year for current or capital account transactions or a combination of both. Any remittance exceeding this limit requires prior permission from the RBI.<\/p>\n<p>&nbsp;<\/p>\n<hr \/>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Remittances to India are set to touch a record $100 billion in 2022, according to the World Bank\u2019s report.<\/p>\n","protected":false},"author":5,"featured_media":33910,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[],"class_list":{"0":"post-33909","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/33909","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=33909"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/33909\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/33910"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=33909"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=33909"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=33909"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}