Note4Students
From UPSC perspective, the following things are important :
Prelims level: Remittances received by India
Mains level: Paper 3- Remittances received by India bucks pandemic effect
What the World Bank report says
- India received over USD 83 billion in remittances in 2020, according to a World Bank report.
- In 2019, India had received USD 83.3 billion in remittances.
- The report said India’s remittances fell by just 0.2 per cent in 2020.
- Much of the decline was due to a 17 per cent drop in remittances from the United Arab Emirates, which offset resilient flows from the United States and other host countries.
- The World Bank, in its latest Migration and Development Brief, said despite COVID-19, remittance flows remained resilient in 2020.
Trend analysis
- China, which received USD 59.5 billion in remittances in 2020 against USD 68.3 billion the previous year, is a distant second.
- India and China are followed by Mexico (USD42.8 billion), the Philippines (USD34.9 billion), Egypt (USD29.6 billion), Pakistan (USD26 billion), France (USD24.4 billion) and Bangladesh (USD21 billion).
- Remittance outflow was the maximum from the United States (USD68 billion), followed by UAE (USD43 billion), Saudi Arabia (USD34.5 billion), Switzerland (USD27.9 billion), Germany (USD22 billion), and China (USD18 billion).
- The relatively strong performance of remittance flows during the COVID-19 crisis has also highlighted the importance of timely availability of data.
- Given its growing significance as a source of external financing for low- and middle-income countries, there is a need for better collection of data on remittances, in terms of frequency, timely reporting, and granularity by corridor and channel.
B2BASICS
Remittances
- Remittances are usually understood as financial or in-kind transfers made by migrants to friends and relatives back in communities of origin.
- These are basically sum of two main components – Personal Transfers in cash or in kind between resident and non-resident households and Compensation of Employees, which refers to the income of workers who work in another country for a limited period of time.
- Remittances help in stimulating economic development in recipient countries, but this can also make such countries over-reliant on them.
Remittance and the Indian Economy
Benefits
- Increased inward remittance is a boon for the economy at both macro and micro levels.
- At the macro level, remittances contribute to maintaining stable foreign reserves.
- Remittances help Indian Rupee hold its value against the US dollar and forms a significant part of the GDP.
- On a micro level, remittances have shown a positive impact on healthcare, entrepreneurship, education, and overall economic development of the recipient families.
Issues
An increase in outward remittances however, raises an alarm. It causes the rupee to weaken against the dollar, which in return impacts the businesses exposed to foreign exchange, and the economy overall.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
