Remittances to India Projected to Reach $160 Billion by 2029: RBI

Remittances to India Projected to Reach $160 Billion by 2029: RBI

Sub: Eco

Sec: Inflation and unemployment

Current and Projected Remittance Levels:

• Remittances to India are expected to rise to $160 billion by 2029, up from $115 billion in 2023, according to the RBI’s latest Report on Currency and Finance (RCF).
• India is the world’s largest recipient of remittances, accounting for 13.5% of the global total.

Significance to India’s Economy:

• The remittances-GDP ratio for India has grown from 2.8% in 2000 to 3.2% in 2023.
• This ratio now surpasses the ratio of gross FDI inflows to GDP, which was 1.9% in 2023, indicating the significant role of remittances in bolstering India’s external sector.

Labour Market Dynamics:

• India is positioned to become the leading global supplier of labor as its working-age population is expected to grow until 2048, even as this demographic is declining in major advanced economies.
• This trend, coupled with the ongoing skill upgradation of the workforce, is likely to sustain high demand for Indian workers abroad, boosting inward remittances.

Impact of Digitalisation:

• The cost of sending remittances globally has decreased over time, largely due to digitalisation, making it easier and cheaper for the diaspora to send money back to India.

These insights from the RBI’s report underline the growing importance of remittances to India’s economy and the potential for continued growth driven by demographic trends and digital advancements.