Remittance

Remittance

Subject: Economy

Context: THE raids on the office of online news platform NewsClick and residences of its directors by the Enforcement Directorate (ED) continued for third day w.r.t. remittance cases

Concept:

• It is linked with the foreign remittances allegedly totaling Rs 30.51 crore. This includes a remittance classified as FDI of Rs 9.59 crore from April 2018, and another of Rs 20.92 crore, which has been shown as receipts for “export of services”.

About remittances:

• A remittance is a payment of money that is transferred to another party. However today term is used today for money sent by someone working abroad to his or her family back home.
• Remittances represent one of the largest sources of income for people in low-income and developing nations, often exceeding direct investment and international development assistance.
• Remittances are part of private transfer payment under net transfers which in turn is considered “invisibles” under current account in Balance of Payment.

Role of remittances:

• At the macro level, remittances contribute to maintaining stable foreign reserves.
• On a micro level, remittances have shown a positive impact on healthcare, entrepreneurship, education, and overall economic development of the recipient families.

India and remittances:

• In 2019, India is estimated to have received $83.1 billion in remittances from people working overseas, about 12% of the total expected global inflow making it one of the largest recipients of remittances.
• International remittances in 2018 (2020 report) reached $689 billion, out of which India received $78.6 billion from the 17.5 million living abroad.