World's first: India’s remittance receipts to reach record $100 bn in 2022

The year 2022 will be a memorable one for India as its remittance flows soar to $100 billion from $89.4 billion in 2021, growing at 12% compared to 7.5% in 2021, according to the latest World Bank Migration and Development Brief. This will be for the first time that a single country will achieve that mark in yearly remittances. The reason for enhanced remittances to India were wage hikes and a strong labour market in the U.S. and other OECD countries.

According to the World Bank, several longer-and short-term trends that were obscured by the pandemic were catalytic in spurring remittance flows to India. First, remittances have benefitted from a gradual structural shift in Indian migrants’ key destinations from largely low-skilled, informally employment in the Gulf Cooperation Council (GCC) countries to a dominant share of high-skilled jobs in high-income countries such as the United States, the United Kingdom, and East Asia (Singapore, Japan, Australia, New Zealand). Second, the economic conditions in the GCC (30% share of India’s remittances) also played out in India’s favour. 

"Migrants help to ease tight labour markets in host countries, while supporting their families through remittances,” said Michal Rutkowski, World Bank global director for Social Protection and Jobs.

With a share of 23% of total remittances, the U.S. surpassed the United Arab Emirates as the top source country in 2020-21. Between 2016–17 and 2020–21, the share of remittances from the United States, United Kingdom, and Singapore increased from 26% to over 36%, while the share from the 5 GCC countries (Saudi Arabia, United Arab Emirates, Kuwait, Oman, and Qatar) dropped from 54 to 28% (fifth round of the survey on remittances for 2020–21, Reserve Bank of India).

About 20% of India’s emigrants are in the U.S. and the United Kingdom. According to the US Census, of the approximately 5 million Indians in the US in 2019, about 57% lived in the nation for more than 10 years. During this time, many earned graduate degrees that groomed them to move rapidly into the highest-income-earner category. The Indian diaspora in the US is highly skilled, finds the report. 

The top five recipient countries for remittances in 2022 are expected to be India, establishing a benchmark of $100 billion in the year, followed by Mexico, with a tally of $60 billion (which replaced China in second position during 2021), and China, the Philippines, and the Arab Republic of Egypt.

Also, the majority of the GCC’s Indian migrants are blue-collar workers, who returned home during the pandemic. Vaccinations and the resumption of travel helped more migrants to resume work in 2022 than in 2021. Besides, Indian migrants may have taken advantage of the depreciation of the Indian rupee vis-à-vis the US dollar (10% between January and September 2022) and increased remittance flows. 

Among other nations, remittances to low- and middle-income countries withstood global headwinds in 2022, growing an estimated 5% to $626 billion. This is sharply lower than the 10.2% increase in 2021, says the World Bank report.