India remains top remittance recipient with $6.2 billion earnings, but China closing in
Remittance, the money citizens of a country send home from working abroad, has witnessed a decline globally with India registering the steepest fall of $6.2 billion in 2016.
Despite the slump, India remained the world’s top remittance recipient but it runs the risk of being unseated by China.
According to the latest World Bank data, last year India received $62.7 billion in remittance, which was 8.9% less than the money sent to the country in 2015.
The World Bank has attributed the decline to fewer people finding jobs abroad due to a slump in the Gulf economy, stricter visa norms, and people from countries such as Pakistan sending workers abroad.
China, which received $61 billion in remittance, finished a close second - just $1.7 billion less than India.
“While the global average decline in remittance is 2.4%, India’s decrease of 8.9 % is the highest percentage drop”, Seeta Sharma, national project coordinator at the International Labour Organisation said. She added that if the trend continued, China may again become the top remittance receiving country, a position India has held since 2008.
The drop is worrying for India because from a balance-of-payments perspective, remittances are crucial as they ensure permanent foreign currency inflows and help finance current account deficit.
Unlike NRI deposits that can be repatriated and FDI that can be withdrawn instantly, remittances are more stable. Remittances to developing countries are expected to grow by 3.3%, while India’s projected growth rate is just 1.9%.
Experts argued that the government should work towards safeguarding remittance inflows and find ways to secure overseas markets through its policies.
Adjustments can be made to e-migrate system being followed by India to further facilitate migration of workers .
Similarly, policies restricting women’s migration should be re-considered by the government in consultation with representative groups.