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India remains top recipient of remittances
The World Bank said in its Migration and Development Brief “a flooding disaster in Kerala likely boosted the financial help that migrants sent to families”. A total of 483 people were killed by the floods that hit the state in August.
India was the top recipient of remittances in 2018 again, retaining its grip on the top position in the World Bank’s annual log of money sent home by expatriates, which the global body also said was on track to becoming the largest source of external funding for low and middle income countries.
But the good news for India came on the back of a tragedy. The World Bank said in its Migration and Development Brief “a flooding disaster in Kerala likely boosted the financial help that migrants sent to families”. A total of 483 people were killed by the floods that hit the state in August.
Remittances to India grew by 14% over 2017 and ended 2018 with $79 billion, way ahead of China, which came second with $67 billion. Mexico with $35 billion, the Philippines with $34 billion and Egypt with $29 billion were the others in top five. Egypt knocked out Nigeria to grab the No 5 position.
The low and middle income countries (LMIC) as a group, to which all the above countries belonged, received $529 billion in 2018, which was an increase of 9.6% over the previous record high of $483 billion in 2017. The rest pitched in an additional $160 billion to take the global aggregate to $689 billion.
India-led South Asia also topped regional growth with 12% increase over 2017. The growth for Pakistan was a “moderate” 7%, chiefly on account of decline in remittances from Saudi Arabia, its largest source.
The World Bank said the global increase in remittances was driven by a stronger economy and employment situation in the United States and a “rebound” in outflows from the Gulf Cooperation Countries, because of an increase in oil prices that is the chief source of their income, and Russia.
Remittance flows to low and middle income countries are, significantly, expected to outstrip foreign direct investment in 2019 to become their largest source of external funding; the remittances inflow for India in 2018 at $79 billion was twice the $38 billion in FDI (possible for someone to check/confirm the 2018 FDI figure; else, knock it out), the same year.
But the bank pointed to high costs of transferring money. It said the global cost of sending $200 remained high at 7%. And banks were the most expensive remittance channel charging 11% fee on the average, followed by post offices with 7%.. Reducing these charge is a goal.
“The high costs of money transfers reduce the benefits of migration,” said Dilip Ratha, the lead author of the World Bank brief, in a statement on the new report. “Renegotiating exclusive partnerships and letting new players operate through national post offices, banks, and telecommunications companies will increase competition and lower remittance prices.”
The report also pointed to other factors driving up remittances charges, such as the closure of the bank accounts of some service providers as part o on-going “de-risking practices”.
And it called for reducing recruitment charges, specially for low-skilled workers. “We need to boost efforts to create jobs in developing countries and to monitor and reduce recruitment costs paid by these workers,” said Michal Rutkowski, a senior Work Bank official, the announcement.
