In a recent report by the World Bank, it has been revealed that Bharat is set to become the leading recipient of remittances in 2023, with an anticipated increase of 12.4 percent, reaching a staggering $125 billion. This growth, although a slight slowdown from the peak of 24.4 percent in 2022, is attributed to various factors such as a tight labor market in the United States, significant employment growth in Europe, and a decrease in inflation in high-income countries.
Following Bharat, Mexico is expected to receive $67 billion, securing the second position, while China trails with $50 billion in remittances. Bharat’s share in South Asian remittances is predicted to rise from 63 percent in 2022 to 66 percent in 2023.
The report highlights the crucial role played by declining inflation and robust labor markets in high-income source countries. Remittances from highly skilled Indians in the United States, the United Kingdom, and Singapore collectively contribute 36 percent to total remittance flows to India.
Bharat’s collaboration with the United Arab Emirates (UAE) in February 2023, aiming to establish a framework for promoting the use of local currencies in cross-border transactions, has further bolstered remittances. Notably, Saudi Arabia, Kuwait, Oman, and Qatar account for 11 percent of Bharat’s total remittances.
Looking ahead to 2024, the World Bank projects a moderation in remittance growth to 8 percent, reaching $135 billion. The report underscores the impact of cell phones and digitalization in revolutionizing Bharat fintech, facilitating migrants in transferring funds.
The growth of remittances to Bharat in the coming year will closely hinge on developments in the Gulf Cooperation Council countries (GCC). Nearly 29 percent of the remittance flows to India come from less-skilled migrants in the GCC region. The World Bank is optimistic about 2024, anticipating economic recovery and further inflation reduction in the GCC, both favorable conditions for remittance flows to Bharat.
Additionally, as of September 2023, non-resident Bharatiye deposits in Bharat have reached a substantial $143 billion, reflecting an increase of over $10 billion in just one year. This signals a strong financial connection between the Indian diaspora and the homeland.
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