Indian diaspora sends home over $100 billion for second year in a row

Overseas Indians sent back home a record $107 billion remittances to their relatives back home in 2023-24, crossing the $100 billion mark for the second financial year in a row. At these levels the net remittances are almost double the level of net foreign investments – FDI and portfolio investments combined- of $54 billion during the year.

Remittances by the Indian diaspora, as reflected in private transfers in the balance of payments, touched a gross level of $119 billion in FY’2023-24. After factoring in repatriation of income by private foreign residents and other remittances, net private transfers work out to be $107 billion.

Various global studies as well research back home have indicated that remittances are linked to the level of migration in different economies and the job opportunities and situation in the source countries. The cost of remittances is also considered to be a factor influencing overseas remittances.

A post-Covid survey on remittances conducted by the RBI showed that the US is the largest source of remittances, accounting for 23% of the total. By contrast, flows from the Gulf region declined.

The bulk of these remittances are reckoned to be going toward family needs, while a portion is also invested in other assets such as deposits, an RBI survey on remittances showed.

India continued to be the largest recipient of the remittances from its diaspora according to the “Migration and Development Brief” released by the World Bank in December. India has been the top recipient of remittances by its diaspora for over 20 years, mostly driven by the surge in IT professionals going to North America and Europe from the nineties.

The United States continued to be the largest source of remittances. The top five remittance recipient countries in 2023 are India ($125 billion), Mexico ($67 billion), China ($50 billion), the Philippines ($40 billion), and Egypt ($24 billion).

“Remittance flows to developing countries have surpassed the sum of foreign direct investment and official development assistance in recent years, and the gap is increasing,” said Dilip Ratha, lead economist and lead author of the World Bank report.

Based on the trajectory of weaker global economic activity, growth of remittances to low-and-middle income countries is expected to soften further to 3.1% in 2024, the World Bank Report said. Driving the moderated forecast are slowing economic growth and the prospect of weaker job markets in several high-income countries.