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Impact of Covid-19 on Remittance: WB

  • 23 Apr 2020
  • 3 min read

Why in News

Recently, the World Bank released a report on the impact of Covid-19 on migration and remittances.

Key Points

  • According to the report, India’s remittances are projected to fall by about 23% in 2020.
  • Globally remittances are projected to decline by about 20% in 2020.
  • The projected fall is largely due to a fall in the wages and employment of migrant workers due to the recession caused by the Covid-19 pandemic.
    • The migrant workers are vulnerable to loss of employment and wages during an economic crisis in a host country.
  • The sharp decline in crude prices will also hurt remittances from oil-producing countries such as Saudi Arabia and the United Arab Emirates.
  • This will lead to loss of income for expatriate Indians working in the Gulf and elsewhere across the world.

Remittance

  • A remittance is money sent to another party, usually one in another country.
  • The sender is typically an immigrant and the recipient a relative back home.
  • Remittances represent one of the largest sources of income for people in low-income and developing nations. It often exceeds the amount of direct investment and official development assistance.
  • Remittances help families afford food, healthcare, and basic needs.
  • India is the world’s biggest recipient of remittances. Remittances bolsters India's foreign exchange reserves and helps fund its current account deficit.

World Bank

  • The Bretton Woods Conference held in 1944, created the International Bank for Reconstruction and Development (IBRD) along with the International Monetary Fund (IMF).
  • The IBRD later became the World Bank.
  • The World Bank Group is a unique global partnership of five institutions working for sustainable solutions that reduce poverty and build shared prosperity in developing countries.
  • It has 189 member countries.
  • Few important reports released by the World Bank are:
  • The five development institutions of the World Bank are.
    • International Bank for Reconstruction and Development (IBRD): provides loans, credits, and grants.
    • International Development Association (IDA): provides low- or no-interest loans to low-income countries.
    • International Finance Corporation (IFC): provides investment, advice, and asset management to companies and governments.
    • Multilateral Guarantee Agency (MIGA): insures lenders and investors against political risk such as war.
    • International Centre for the Settlement of Investment Disputes (ICSID): settles investment-disputes between investors and countries.

Source: IE

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