Finance: India on top

Print edition : December 28, 2012

REMITTANCES of the Indian diaspora have now made India the top recipient of officially recorded remittances for 2012. According to the World Banks latest Migration and Development Brief, the top recipients of officially recorded remittances for 2012 are India ($70 billion), China ($66 billion), the Philippines and Mexico ($24 billion each) and Nigeria ($21 billion). Worldwide remittances, including those to high-income countries, are expected to total $534 billion in 2012 and are projected to grow to $685 billion in 2015.

Economists said an unexpected depreciation of the home currency could spur a surge in remittance flows via a sale-effect that encourages migrants to remit home their savings to make large purchases such as land, houses and durable assets. With India riding on a remittance overflow when rupee value against the dollar was depreciating, the high cost in real estate value in recent months is not surprising, say analysts.

Interestingly, remittances to developing countries, including India, are projected to grow by 7.9 per cent next year, 10.1 per cent in 2014 and 10.7 per cent in 2015. While the true size of remittance flows, including unrecorded flows through formal, informal and clandestine channels, is believed to be significantly larger, officially recorded remittances have been showing phenomenal resilience since the onset of the global financial crisis, registering a modest fall in 2009, followed by a swift recovery. The size of remittance flows to developing countries is now more than three times that of official development assistance (ODA) doled out by the rich countries to the developing and least developed countries.

Figures from the United Nations reveal that more than 215 million people live outside their countries of birth and over 700 million migrate within their countries. In the coming decades, demographic pressures, globalisation and climate change will intensify migration both within and across borders.

The World Bank reckons that among the developing country regions, South Asia, West Asia and North Africa saw the strongest growth, driven primarily by robust economic activity in the Gulf Cooperation Council (GCC) countries. In contrast, policies inimical towards migrants in many countries, especially Europe, could discourage the flow of migrants and weaken remittance flows. A striking contrast to weak remittance outflows from western Europe has been flows from Russia, which has benefited from elevated oil prices in the last few years.

The United States is the largest recipient of migrants from developing countries and the largest sender of remittances. Its economy has resumed growth and this recovery has favoured migrants in high-skilled jobs in health care and technical services.

G. Srinivasan

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