Remittances to India: Projected Growth and Drivers
Remittances, a significant external financing source for India, are anticipated to rise by 3.7% to $124 billion in 2024 and 4% to $129 billion in 2025, according to the Economic Survey presented by Finance Minister Nirmala Sitharaman.
India remains the top remittance recipient country and has the largest emigrant population. The World Bank estimates that remittances reached $120 billion in 2023.
The primary source of remittances is oil-exporting countries. However, the diversification of India’s migrant workforce, including skilled professionals in OECD nations and unskilled workers in GCC regions, provides stability to remittances amidst external challenges.
India’s efforts to integrate its Unified Payments Interface (UPI) with source countries like the United Arab Emirates and Singapore aim to reduce remittance costs and expedite transactions.
In 2023, remittances surged due to declining inflation and robust labor markets, particularly in the United States, Europe, and OECD destinations.
Net services receipts witnessed a jump from $143.3 billion in 2022-23 to $162.8 billion in 2023-24, primarily driven by growth in software, travel, and business service exports.
A weaker rupee against foreign currencies benefits remitters, as the value of remittances increases in rupee terms. A positive association exists between exchange rate movements and remittance flows.
