India remained the world’s largest recipient of remittances from abroad in 2015, despite a $1 billion drop from the previous year, the first such decline since 2009, the World Bank said on Thursday. It attributed the decline to the impact of falling oil prices on remittances from the Gulf countries and depreciation of major sending country currencies. In 2015, the country got $69 billion in remittances. Remittances into India constituted 2.9 times the foreign direct investment ($24.3 billion) in 2014. This declined to 1.75 per cent of foreign direct investment, or FDI ($39.3 billion) in 2015 (also due to a rise in FDI).
Other large remittance recipients in 2015 were China, with $64 billion, Philippines ($28 billion), Mexico ($25 billion) and Nigeria ($21 billion). Officially recorded remittances to developing countries amounted to $431.6 billion in 2015, an increase of 0.4 per cent over 2014. The growth pace in 2015 was the slowest since the global financial crisis, the report said. Global remittances, which include those to high-income countries, contracted by 1.7 per cent to $581.6 billion in 2015, from $592 billion in 2014, the report said. “Remittances are an important and fairly stable source of income for millions of families and of foreign exchange to many developing countries,” PTI said, quoting Augusto Lopez-Claros, director of the Bank’s Global Indicators Group. “However, if remittances continue to slow, and dramatically as in the case of Central Asian countries, poor families in many parts of the world would face serious challenges, including nutrition, access to health care and education,” he added. According to the report, the growth of remittances in 2015 slowed from eight per cent in 2014 to 2.5 per cent for Bangladesh, from 16.7 per cent to 12.8 per cent for Pakistan, and from 9.6 per cent to 0.5 per cent for Sri Lanka. Besides oil price slide, depreciation of major sending country currencies (for example, the euro, the Canadian dollar and Australian dollar) vis-à-vis the US dollar, might be playing a role. Remittances to Nepal rose dramatically in response to the massive earthquake there, by 20.9 per cent in 2015 versus 3.2 per cent in 2014. Also, many migrant workers returned to take care of their families, as the average number of returns at the airport jumped five times to around 4,000 per day, it said.
Remittances to Pakistan, Sri Lanka, Nepal and Bangladesh exceeded 6% of their respective gross domestic product in 2014.
According to the report, the average cost of sending $200 to regional countries in the fourth quarter of 2015 was 5.4%, down from 5.9% in the fourth quarter of 2014 and the lowest rate among developing regions. "In India, following the approval of new payments banks, the Digital India and Start-up India initiatives have the potential to improve the environment for new start-ups and disruptive technologies to reduce remittance costs," it said.
"However, regulations governing overseas transactions, including AMLCFT (anti money laundering/combating the financing of terrorism) requirements and foreign exchange controls, may impede extending these services to international remittance transactions," the report said.