Why India remains top of remittances league
- 26 February 2013
- From the section India
Indians working abroad continue to send more money home than their counterparts from other countries.
In 2012, India topped the list with $70bn (£47bn) of remittance inflows, followed by China ($66bn), the Philippines and Mexico ($24bn each), Nigeria ($21bn), according to the latest World Bank figures on migration and remittances.
Nothing surprising about that: India has been the top recipient of remittances in the world for 15 of the past 23 years and the past five years in a row.
I asked Dilip Ratha, economist and manager of the World Bank's migrations and remittances unit, how migrant Indian workers continued to send so much money home despite the global slowdown.
What he said gave me an interesting insight into the resilience of migrant workers.
Mr Ratha said the global financial crisis actually resulted in a small and brief decline in remittance flows to India in 2009.
The crisis, he says, seems to have affected new migration flows from India. But most of the existing workers stayed put and stuck it out.
They cut consumption, saved on rent and continued to send money home. A large number of Indians working in the construction sector in Gulf countries, for example, moved to retail trade and building maintenance after the downturn there.
The depreciation of the rupee against the US dollar in 2008 and 2009, and in late 2011 also helped, Dr Ratha explained.
This resulted in a fall in the dollar prices of Indian goods, services and assets like housing, bank deposits and stocks - making them more attractive to migrants and encouraging remittances.
"Although migrant workers are to a large extent adversely affected by the slow growth in the global economy, remittance volumes have remained remarkably resilient, providing a vital lifeline to not only poor families but a steady and reliable source of foreign currency in many poor remittances recipient countries," agrees Hans Timmer, director of the bank's Development Prospects Group.
Overall migrant workers are sending more money home than ever.
Worldwide remittance inflows, according to the World Bank, are expected to touch $534bn in 2012 and grow to $685bn in 2015. Remittance flows to developing countries are now actually more than three times that of official development assistance.
More than 200 million people live and work outside their countries, according to the United Nations. Indian migrant workers, like many of their counterparts from developing countries, must be some of the most resilient around.