India- top recipient of remittances from migrants among the developing countries

 (World Bank’s Migration and Development Brief 2013)

The developing world is expected to receive $414 billion in migrant remittances in 2013, an increase of 6.3% over the previous year with India being the top receiver among developing nations with an estimated remittance of $71 billion followed by China with $60 billion, the Philippines with $26 billion, Mexico with $22 billion, Nigeria with $21 billion, and Egypt with $20 billion.

According to the latest issue of the World Bank’s Migration and Development Brief, globally, the world’s 232 million international migrants are expected to remit earnings worth $550 billion this year and over $700 billion by 2016 with developing countries expected to receive $414 billion in migrant remittances in 2013 which is an increase of 6.3% over the previous year. The remittances for the developing countries are projected to rise to $540 billion by 2016.

With an estimated remittance of $71 billion, India is the top receiver of remittances in 2013 followed by China with $60 billion, the Philippines with $26 billion, Mexico with $22 billion, Nigeria with $21 billion, and Egypt with $20 billion. Other large recipients include Pakistan , Bangladesh , Vietnam , and Ukraine . In Bangladesh , Nepal , Pakistan and Sri Lanka , remittances are larger than the national foreign exchange reserves. In India , remittances are larger than the earnings from IT exports. Further, with the weakening of the Indian rupee, a surge in remittances is expected as the NRIs will take advantage of the cheaper goods, services and assets back home. As a percentage of GDP, the top recipients of remittances, in 2012, were Tajikistan with 48%, Kyrgyz Republic with 31%, Lesotho and Nepal with 25% each, and Moldova with 24%.

The Brief also highlights that the global average cost for sending remittances is 9%, broadly unchanged from 2012. This high cost of sending money through official channels encourages people to seek out informal channels as their preferred means for sending money home which continues to be an obstacle to the utilization of remittances for development purposes.

While remittance costs seem to have stabilized, banks in many countries have begun imposing additional ‘lifting’ fees on incoming transfers, including remittances. Such fees can be as high as 5% of the transaction value.

Warm regards,

Dr. S P Sharma

Chief Economist