Impact of Covid-19 on Remittance: WB
- 23 Apr 2020
- 3 min read
Why in News
- 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.
- 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.
- 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.