Business

Record-Breaking Remittances: India Crosses $100 Billion Mark in 2022

In 2022, India achieved a significant milestone by becoming the first nation in the world to receive annual remittances from overseas surpassing $100 billion. As per the World Bank, private remittances or money transfers from NRIs to their acquaintances in India grew by 12% year-on-year, crossing the aforementioned threshold. It is anticipated that India will continue to maintain its position as the leading remittance recipient in FY23, a title it claimed from China in FY21.

Also Read: Government Increases Procurement of Wheat Under MSP by 13%

The most recent data indicates that the trend of steady and rapid growth in “personal transfers” to India, which was halted during FY21 due to the pandemic, has not only resumed but also strengthened. This rise in remittances comes at a time when foreign direct investment (FDI) flows between countries appear to have slowed. In 2022, multilateral development financing body reported that low- and middle-income nations received roughly $630 billion in remittances, a 5% increase from the previous year. These countries’ remittance inflows were on par with their FDI inflows during the year.

Foreign direct investment (FDI) in India declined by 15% YoY to $36.75 billion between April-December of the current fiscal year, as per data from the department for promotion of industry and internal trade. TerraPay, a mobile payments provider in London, asserts that India is receiving funds through remittances from nations such as Qatar, Saudi Arabia, Australia, and the US. The surge in remittances can be attributed to the fact that India has the largest diaspora globally, with approximately 18 million Indians living abroad, and the resumption of work and travel after vaccination, as well as higher oil prices, which enable overseas workers to send more money to their families.

Also Read: FOREX Reserves Surge to Record Highs, Boosting Economic Outlook

Indian migrants from the US, UK, and Australia, who are highly skilled, are sending more money back home. It is aided by job support programs during Covid-19 restrictions. Additionally, the depreciation of the rupee against the US dollar may have also contributed to the rise in remittances. Private remittances serve as a significant advantage to India’s current account, which often faces a merchandise trade deficit. Furthermore, an increase in service exports has enabled the country to maintain a comfortable balance of payments position in recent quarters.

The current account deficit (CAD) of India decreased to 2.2% of GDP, or $18.2 billion in Q3FY23, as compared to 4.4% in Q2, primarily due to a decline in the goods trade deficit. Analysts estimate that with a reduction in the average trade deficit in Q4FY24 as compared to the previous quarter, the CAD for FY23 would be around $77-80 billion, which is a relatively low level.

Shruti Rag

Recent Posts

ASEAN-India Alliance: A formidable Force Amidst Shifting Global Dynamics

The bilateral trade between India and ASEAN reached USD 86.9 billion in FY 2020-21, making…

1 year ago

India To Serve As Center For Green Hydrogen

By 2030, there will likely be a demand for more than 100 MMT of green…

1 year ago

How Bhutan’s Cross-Border Railway Connectivity With India Opens New Possibilities

Bhutan is gearing up to establish its first internationally connected cross-border railway with India’s north-eastern…

1 year ago

How Political Stability Under PM Modi Is Rocket-Fuelling New India

Opening his company’s first retail outlets in Mumbai and Delhi in May, Tim Cook, the…

1 year ago

COP28: INDIA’S IMPACTFUL ROLE

India’s robust engagement in COP28 amplifies its powerful message on the world stage. At this…

1 year ago

B20: INDIA’S VISION AND ACTION

The B20’s endeavors are carried out through Task Forces (TFs) and Action Councils (ACs), entrusted…

1 year ago