As per the Economic Survey, Remittances to India, which is the second largest source of external financing after service exports, are projected to grow at 3.7 percent to reach USD 124 billion in 2024 Similarly it is projected to further grow at 4 percent to reach USD 129 billion in 2025. Furthermore, India's primary source of remittances has been the oil-exporting countries.
And if we look at it from the World Bank’s perspective, India has the largest emigrant population and is the top remittance recipient country. If we look back to 2023, the remittances to India had hit USD 120 billion. The Economic Survey tabled in Parliament by Finance Minister Nirmala Sitharaman said, “The outlook for remittance in India for 2024 is strong, with the expectation that remittance growth will moderate to 3.7 per cent, taking... levels to $124 billion in 2024.”
According to the survey, the diversification of India's migrant pool which is between a large share of highly skilled workers employed mostly in high-income OECD markets, and the less-skilled migrants employed in the GCC markets is expected to lend stability to their remittances in case of an event of external shocks. "India's efforts to link its Unified Payments Interface (UPI) with source countries such as the United Arab Emirates and Singapore are expected to reduce costs and speed up remittances," the Survey highlighted.
In 2023, the increase in remittances was driven mainly by declining inflation and strong labor markets in the United States and Europe. The aforementioned countries are the largest destinations for India's skilled migrants and other OECD destinations. Also, there is a positive demand for skilled and less-skilled workers in the GCC countries.
Moreover, the net services receipts increased to USD 162.8 billion in 2023-24 from USD 143.3 billion during 2022-23. This is primarily due to the rising exports of software, travel and business services. The survey further said that the remitters get better value in rupee terms if it depreciates in terms of foreign currencies. For instance, every one dollar a worker earns in distant land, he returns an augmented amount after necessarily being converted according to the foreign land he works in. Therefore, remittances have exhibited a positive association with the exchange rate movement.
