Explained | The sustained growth in remittances

The story so far: Remittances to India are set to touch a record $100 billion in 2022, according to the World Bank’s latest Migration and Development Brief titled, ‘Remittances Brave Global Headwinds’. The report notes that the 10.2% growth in remittances achieved in 2021, that too against the backdrop of the pandemic, owed a lot to the stimulus measures enacted “to underpin faltering high-income economies”, especially in the U.S. and Europe, which helped to support employment levels and maintain or increase incomes of migrant workers, enabling them to send money home. It notes that “remittances have benefitted from a gradual structural shift in Indian migrants’ key destinations from largely low-skilled, informal employment in the Gulf Cooperation Council countries to a dominant share of high-skilled jobs in high-income countries such as the U.S., the U.K., and East Asia.” In fact, between 2016-17 and 2020-21, while the remittances from the U.S., U.K. and Singapore increased from 26% to 36%, the share from five GCC countries dropped from 54% to 28%. With 20% of India’s emigrants in the U.S. and the U.K., “the structural shift in qualifications and destinations has accelerated growth in remittances tied to high-salaried jobs, especially in services,” states the report. This made a big difference during the pandemic, when “Indian migrants in high-income countries worked from home and benefitted from large fiscal stimulus packages” while in the post-pandemic phase, “wage hikes and record-high employment conditions supported remittance growth in the face of high inflation”.