Remittances to India set to increase: World Bank

Remittances to India are projected to increase by 2.5 per cent this year, the World Bank has said in its latest report. The report comes amidst continuing slowdown in Europe, especially Russia, which is slowing the growth of remittance flows.

In 2014, India received remittances estimated around USD 70.3 billion. The World Bank in its report said remittances to India, South Asia’s largest economy, is projected to increase by 2.5 per cent in 2015, below the regional average, but well above the 0.6 per cent increase in 2014.

“Stronger remittance growth in India reflects improving economic prospects in the United States and continued fiscally-supported economic resilience in the GCC (Gulf Cooperation Council),” the World Bank said. About 35 per cent of remittances to India originate in North America, and another 35 per cent in the GCC countries. The recent depreciation of the Indian rupee may have played a role in boosting investment-oriented remittances to India.

The regional growth rate of remittances is projected to moderate to about four per cent over the next two years, in part because remittances to Nepal and Pakistan are expected to decelerate after the large inflows following the earthquake. Lower oil prices may reduce remittance inflows from the GCC countries eventually, according to the report.

Remittances to developing countries are expected to reach USD 435 billion in 2015, which is a modest growth rate of two per cent from last year with a significant slowing in the growth of remittances from 3.3 per cent in 2014 and of 7.1 per cent per year from 2010 -13.

Global remittances, sent home from some 250 million migrants, are projected to grow by 1.3 per cent to USD 588 billion. Slowing remittances this year will affect most developing regions, especially Europe and Central Asia where flows are expected to decline by 18.3 per cent in 2015.

A weak ruble against the US dollar is the main cause of that decline, the report said. In 2016, remittances to developing countries are expected to rise by about four per cent at an estimated USD 453 billion, buoyed by the continuing recovery in the United States and a modest acceleration of economic activity in Europe. Remittances are expected to recover in 2016 and reach USD 610 billion. It is expected to rise to USD 635 billion in 2017.

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