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Indian Economy

Report On Global Remittances: World Bank

  • 15 May 2021
  • 4 min read

Why in News

According to the latest edition of the World Bank’s Migration and Development Brief, despite Covid-19, remittance flows remained resilient in 2020, registering a smaller decline than previously projected.

Key Points

  • Remittance Inflow of India:
    • India being at top, received over USD 83 billion in remittances in 2020, a drop of just 0.2 per cent from the previous year, despite a pandemic that devastated the world economy.
      • India’s remittances fell by just 0.2% in 2020, with much of the decline due to a 17% drop in remittances from the United Arab Emirates, which offset resilient flows from the United States and other host countries.
      • In 2019, India had received USD 83.3 billion in remittances.
  • Global Remittances
    • China is second in terms of global remittances in 2020.
      • China received USD 59.5 billion in remittances in 2020.
    • India and China are followed by Mexico, the Philippines, Egypt, Pakistan , France and Bangladesh.
  • Remittance outflow :
    • Remittance outflow was the maximum from the United States (USD 68 billion), followed by UAE, Saudi Arabia, Switzerland, Germany, and China.
  • Reason for the Steady Flow of Remittances:
    • Fiscal stimulus that resulted in better-than-expected economic conditions in host countries.
    • Shift in flows from cash to digital and from informal to formal channels.
    • Cyclical movements in oil prices and currency exchange rates.

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

  • About
    • 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.
  • Members:
    • It has 189 member countries.
    • India is also a member country.
  • Major reports:
  • Its Five development institutions:
    • 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.

World Bank’s Migration and Development Brief

  • This is prepared by the Migration and Remittances Unit, Development Economics (DEC)- the premier research and data arm of the World Bank.
  • The brief aims to provide an update on key developments in the area of migration and remittance flows and related policies over the past six months.
  • It also provides medium-term projections of remittance flows to developing countries..
  • The brief is produced twice a year.

Source: IE

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