Remittances to India are projected to increase by 2.5 per cent this year, the World Bank has said in its latest report, even as weak economies in Europe, especially Russia, are slowing the growth of remittance flows.
In 2014, India is estimated to have received remittances worth USD 70.3 billion or nearly Rs.4.5 lakh crore.
In its latest report, the World Bank said remittances to India, South Asia’s largest economy and the world’s largest remittance recipient, are projected to increase by 2.5 per cent in 2015, below the regional average but well above the 0.6 per cent increase in 2014.
“Stronger remittance growth in India reflects improving economic prospects in the United States and continued fiscally-supported economic resilience in the GCC (Gulf Cooperation Council),” the World Bank said.
According to the Reserve Bank of India, about 35 per cent of remittances to India originate in North America, and another 35 per cent in the GCC countries.
The Bank said the recent depreciation of the Indian rupee may have boosted investment-oriented remittances to India.
Nevertheless, the regional growth rate of remittances is projected to moderate to about four per cent over the next two years, in part because remittances to Nepal and Pakistan are expected to decelerate after the large inflows following the earthquake, while lower oil prices may reduce remittance inflows from the GCC countries eventually.
In its report, the Bank said remittances to developing countries are expected to reach USD 435 billion in 2015, registering a modest growth rate of two per cent from last year.
This represents a significant slowing in the growth of remittances from the rise of 3.3 per cent in 2014 and of 7.1 per cent per year from 2010 -13.
Global remittances, sent home from some 250 million migrants, are projected to grow by 1.3 per cent to USD 588 billion.
Slowing remittances this year will affect most developing regions, in particular Europe and Central Asia where flows are expected to decline by 18.3 per cent in 2015.
A weakening of the Ruble against the US Dollar is the main cause of that decline, it said.
Global flows of remittances are expected to recover in 2016 to reach USD 610 billion, and then rising to USD 635 billion in 2017.