2022 Remittances Projection: India Set to Hit $100 billion in 2022
An increased remittance rate from 2022 could allow for increased social equality as lower-income families begin gaining access to more resources through the money sent home from their partners working abroad.
During their Migration and Development Brief, the World Bank stated that India is expected to receive a record $100 billion in remittance in 2022, the first time a single country has reached this number. This is a significant increase compared to the $89.4 billion made from India’s remittance rate last year. The increases led by wage rises and strong labor markets in the United States and other developed countries could perhaps account for this drastic remittance surge to 12% this year from 7.5% last year.
This increased cash flow is a crucial source of household income in low and middle-income countries, such as India. Remittances are generally associated with improved health and social indicators such as reduced malnutrition and improved housing infrastructure. Despite such high remittance flows, this cashflow will only account for 3% of India’s GDP in 2022, demonstrating the surge in India’s economic growth on a holistic level this year.
The pandemic could have largely contributed to this influx of remittances in India, given that governments globally began easing cash flow, as reflected through the establishment of increased informal channels that offered better exchange rates, thus contributing to the additional marginal revenue that Indians living abroad generated.
Money transfers from migrant workers to families back home are a vital source of income for households in poorer countries. Such cash flows not only contribute to poverty alleviation, but are also associated with higher school enrollment rates for children in disadvantaged households. India’s remittance surge could stimulate a higher female high school enrollment rate in the working class next year.
Many Indian migrants have transitioned into higher paying jobs in developing countries and thus have earned more money to send home to their families. Photo: BBC
The World Bank report stated that many Indians have moved to high-skilled jobs in high-income countries such as the United States, United Kingdom, and Singapore, from low-skilled employment in Gulf countries such as Saudi Arabia, Qatar, and Kuwait – and thus have increased the amount of money that they send home.
Apart from India, other top recipient countries for remittances in 2022 are expected to be China, Philippines, and Egypt. The World Bank’s report predicts that India’s remittance rate may decline in the coming years given that white-collar South Asian migrants in high-income countries, such as the United States, are expected to experience external global shocks such as rising inflation, slowing demand, and slowing global growth.
Although India and Nepal have experienced an increase in remittances, other neighboring countries in South Asia have faced quite the opposite, with several nations suffering a 10% decline in their remittance rate compared to last year. Overall, however, remittances to low and middle-income countries have grown by 5% in 2022, to around $626 billion (around half the growth seen in 2021). Building resilient economies that can withstand the incoming recession and financial shocks has become a global priority for governments, especially for lower income nations.