World Bank report finds India to be the biggest recipient of Remittance globally for 2018 among the list of countries that received the most remittances last year.
According to the Global Knowledge Partnership on Migration and Development (KNOMAD), the South Asian country received an astonishing amount of $78.6 billion in remittances in 2018. India is then followed by China with $67.4 billion, Mexico with $35.7, the Philippines with $33.8, and Egypt with $28.9. Other countries that made it to KNOMAD’s top 10 list include Nigeria, Pakistan, Vietnam, Bangladesh, and Ukraine.
Since 2016, India has been exhibiting a year-on-year increase in the total amount sent to the country. In 2017, the flow of money transfers went up from 2016’s $62.7 billion to $65.3 billion, showing a 4.15 percent pickup. However, the surge from 2017 to last year translated to a 20.37 percent increase in remittance performance.
Not only that India saw an uptick in the total remittance amount, but the entire South Asian region outpaced its performance the year before. The World Bank Group found out that the total money sent to the region reached $131 billion–and India is responsible for two-thirds of that inflow.
India, along with other countries classified by the World Bank as members of the middle-income economies, has experienced a nice increase in the money sent back to their countries. In 2017, total remittances from the group were at a whopping amount of $483 billion. Last year, this was further topped after the segment recorded remittances to the tune of $529.
The total amount of global remittances for 2018 was $689 billion.
Bigger Inflow of Money to India
How did India outperform itself in terms of remittances? And despite the growth in the region, why did it posit a better performance?
For context, a neighboring country Pakistan may have also contributed to the growth of remittance in the region. However, its performance was moderate with only a seven-percent growth rate. Meanwhile, Bangladeshi expatriates sent 15 percent more last year compared to their 2017 rates.
In India’s case, the World Bank concluded that the higher amount of money transfers to the country was boosted by the financial help sent by Indian families to their relatives back home in the wake of the 2018 Kerala flooding.
For a more regional perspective, the global lender believed that the brisk uptick across all members of the South Asian region was due to the “stronger economic conditions in the United States and a pick-up in oil prices, which had a positive impact on outward remittances from some GCC (Gulf Cooperation Council) countries.” Members of the GCC included Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman.
The need for cheaper remittance rates
Despite the upswing in the amount of remittances sent, the World Bank still believes that sending money is still expensive. According to the research, the global average cost of sending money was still at seven percent for the first quarter of 2019.
This is definitely a far cry from the three-percent target to make sure that every amount earned by expatriated workers will benefit the receiving parties. The said percentage is part of the World Bank’s Sustainable Development Goals.
According to Dilip Ratha, head author of the KNOMAD study, lowering the amount paid for money transfer will greatly increase the benefits of working overseas, which can especially benefit members of low and medium-income earning countries.
“Remittances are on track to become the largest source of external financing in developing countries. The high costs of money transfers reduce the benefits of migration. Renegotiating exclusive partnerships and letting new players operate through national post offices, banks, and telecommunications companies will increase competition and lower remittance prices,” Ratha said.
Despite the higher global average, South Asia remains as one of the regions with the cheapest cost of remittance in the world. In 2018, the region concluded the year with an average of 5.2 percent.
Meanwhile, some corridors such as GCC and Singapore to South Asian countries can keep up with the three-percent target of the World Bank due to “high volumes, competitive markets, and deployment of technology.” Some of the corridors with the lowest money transfer cost rate include Singapore to India, Nepal to India, and Singapore to Sri Lanka.