Remittances to fall

Subject: Economy

Context:

According to a global banking group, remittances to India are estimated to decline sharply by about 25 per cent in FY2021 amid the economic crisis induced by the COVID-19 pandemic and shutdown.

Concept:

• India is the largest recipient of remittances (in value terms) in the worId and received nearly $76 billion of flows (2.7 per cent of GDP) in FY20.
• These flows help boost household income, support private consumption and add stability to current account balance (CAB).
• Many Indians working in the Gulf region had recently lost jobs and more layoffs are in the offing as lockdown and the decline in global trade are set to hit the global economic growth.
• Kerala, which is one of the largest recipients of remittances in India is expected to witness a decline in remittances.
• The projected fall, which would be the sharpest decline in recent history, is largely due to a fall in the wages and employment of migrant workers, who tend to be more vulnerable to loss of employment and wages during an economic crisis in a host country.