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Globally, remittances to low- and middle-income countries grew by nearly 5% to around $626 billion in 2022. Image Credit: Reuters

Migrant workers from India are on track to send home a record amount of money this year, boosting the finances of Asia’s third largest economy poised to retain its spot as the world’s top recipient of remittances.

Remittance flows to India will rise 12 per cent to reach $100 billion this year, according to a World Bank report published on Wednesday. That puts its inflows far ahead of countries including Mexico, China and the Philippines.

Highly-skilled Indian migrants living in countries such as the US, UK, and Singapore were sending more money home, according to the report. Wage hikes, record-high employment and a weakening rupee also supported growth.

Inflows from the world’s largest diaspora are a key source of cash for India, which lost almost $100 billion of foreign exchange reserves in the past year amid tightening global conditions that weakened currencies including the rupee against the dollar. Remittances, accounting for nearly 3 per cent of India’s gross domestic product, are also important for filling fiscal gaps.

Cash transfers to India from high-income countries climbed to more than 36 per cent in 2020-21, up from 26 per cent in 2016-17. The share from five Gulf countries declined to 28 per cent from 54 per cent in the same period, the World Bank said, citing Reserve Bank of India data.

The trend isn’t uniform across South Asia. Remittances earned by migrants from Bangladesh, Pakistan and Sri Lanka are expected to drop this year, the World Bank noted, as domestic and external shocks hit those countries especially hard.

Globally, remittances to low- and middle-income countries grew by nearly 5 per cent to around $626 billion in 2022 - about half the expansion seen last year - and growth is expected to slow further to around 2 per cent next year.

Officially recorded remittances grew in 2022 as host economies reopened and employment rose as the COVID-19 pandemic receded, but rising prices adversely affected migrants’ real incomes, the World Bank said.

It said the strong growth rate forecast for 2022 was noteworthy given that it came after a surge of 10.2 per cent in 2021.

Global remittance flows, including advanced economies, are expected to reach $794 billion in 2022, the report said.